Optimizing Your Revenue Pipeline With Efficient Medical Billing

Optimize your practice's revenue pipeline by reducing claim rejection rates. Learn key strategies to ensure accurate medical billing and improve efficiency.

Entrepreneurial Physician

Key Takeaways

A whopping 80% of medical bills have errors.
When managed correctly, revenue isn’t as much of a cycle as it is a pipeline.
Rooting out the causes of claim rejections and keeping them below 2.5% are key for optimizing medical billing.

If there’s anything I’ve learned over the past few decades practicing medicine, it’s that people become physicians to help others. But there’s another fact of life that’s essential to understand in this industry: regardless of the underlying mission, practices can’t run without steady revenue. And ensuring consistent cash flow hinges on effective medical billing operations.

So, how’s healthcare doing in this area? Not as great as it should. According to one study, a whopping 80% of medical bills contain errors and 42% of Medicare claims denials are due to coding mistakes. The lesson is clear: providers can and must do better to be solvent. And an ideal place to start is with deconstructing the concept of revenue cycle management.

Revisiting Revenue Cycle Management in Healthcare

Let’s start with medical billing and the revenue pipeline—the lifeblood of any business. First, let’s model this concept. The first billing misconception that I’d like to dispel is the notion of a revenue “cycle.” Implicit in this model is a process of claim submission, rejection, and then resubmission multiple times—thus a “cycle.” Properly done, your revenue should be a pipeline with a low rejection rate and low aging. And if you fail to execute this properly, it will lead to a cycle of mismanagement.

Let’s explore how to apply value statements to a robust revenue pipeline.

All services rendered are completely, correctly, and promptly billed.
All claims billed are completely, correctly, and promptly paid.
You know where you make your money and understand revenue drivers.

Answering “yes” to the above statements and having data to support them indicates a healthy and optimized revenue pipeline. If you’re unsure or can’t answer positively, attaining a healthy state is a matter of answering the question, “If not, why not?”

Additionally, you should be able to describe your medical billing system (people, processes, and software) as having the following attributes: efficiency, reliability, transparency, and accountability. Any system lacking these traits is fragile and at risk of breaking. In a future blog post, I will address the attributes of a well-run business system. For now, let’s focus on operationalizing specific billing key performance indicators.

By focusing on just these measures and endeavoring to optimize the activities that contribute to their outcome, you should be able to answer the question, “If not, why not?”

By putting in place the processes necessary for optimization, you’re helping to build a durable revenue pipeline and system.

Reducing Rejection Rates for Optimal Billing Performance

Keep the rejection rate below 2.5%.
Remove the root causes of claim rejections.

Key Question: Have All Causes of Claim Rejection Been Removed?

So where should we start when optimizing our revenue pipeline? Start at the beginning. Claim rejection is the primary cause of poor medical billing performance and subpar results for all other downstream performance indicators.

Before discussing how to approach optimizing this measure, we should dispel the next billing misunderstanding, which holds that insurance companies reject claims purposefully to hold money that they should be paying to physicians and medical practices. Although this action may appear to be in the economic interests of insurance companies, it violates prompt payment laws. Ultimately, those with improper revenue cycle management with high rejection rates perpetuate this myth.

Given that most claims are paid without human review, it’s reasonable to infer that the process is regular and not random. It’s just a matter of understanding the reasons for claim rejection and acceptance.

The primary reason for rejection? Your medical practice provided incorrect demographic and insurance information. Why does that happen? It’s caused most commonly by entering demographic and insurance information at the time of the first office visit. Gathering additional administrative and clinical information at the front desk creates an unnecessary burden and bottleneck, as well as increasing the chance of system or random errors infiltrating your registration process.

Thus, a properly constructed registration process should include the following subprocesses:

The patient enters (or reconciles) demographic, insurance, and clinical information in the patient portal.
An automated eligibility check confirms insurance information prior to the encounter. The results of that automated check, or a manual check, are visible to the front desk and billing personnel.
Eligibility denials are managed by direct outreach prior to the patient checking in for their office visit.
Prior authorization and eligibility occur well in advance of service delivery. A routine process for services requiring prior authorization should be scheduled regularly and managed if this is a large part of your practice.

Connecting the above processes to leading and lagging indicators begins with proper initial registration, which enables online processes and captures mobile numbers and emails. After a successful registration, monitor the percentage of newly registered patients with confirmed eligibility. If >99% of patients have eligibility confirmed prior to their in-person encounter with your practice—and the processes that enable this state are systematized and persist—then all that needs to be managed and viewed regularly is the claim rejection rate.

Put simply, eligibility confirmation is not the only performance indicator, just the key performance indicator for the initial part of the medical billing pipeline.

Ensuring Clean Claims for Streamlined Billing Operations

After effective registration and eligibility systems are instituted, the next concept is ensuring that all claims are clean. Claim rejection reasons should be systematically reviewed and removed. This usually relates to the proper understanding of local coverage decisions, the proper use of modifiers, and the necessary supportive diagnoses to ensure claim acceptance.

Without an understanding of the reasons for rejection, billers frequently repeat the same mistakes. This is why proper review and education are essential aspects of a healthy billing pipeline. Most enterprises deliver a consistent set of services to their patient population. Therefore, we can optimize the process of ensuring clean claim submission and methodically remove the root causes of claim rejection.

Reasons for claim rejection are not random. By removing the underlying causes of claim denial, the rest of the billing process should flow with minimum friction and inefficiency. If there is one indicator to focus on, rejection rate reduction is the most beneficial.

Streamline Revenue Operations With Medical Billing Services

Small practice operators wear just about every hat, including managing revenue. But you don’t have to go it alone. WRS Health’s best-in-class medical billing services and revenue cycle management solutions are here to help. Experience fewer denials, reduced costs, and expanded opportunities for revenue growth.

Achieve Better Financial Workflows With Our Medical Billing Services

Dr. Lawrence Gordon, MD

He is a practicing Otolaryngologist and the founder of ENT Specialty Care located in Goshen, NY. He is also the CEO and Founder of WRS Health. The software is an all-in-one platform, designed by physicians, providing clinician-centered workflow solutions to continually improve and grow your practice.