7 ways medical practices can leverage data analytics to improve revenue cycle management
For today’s medical practices, promoting short- and long-term financial sustainability requires detailed data analysis—knowing what payers deny, how often, and why. Data analysis can also reveal other valuable insights into financial and operational performance. Ultimately, fact-based, data-driven decisions improve healthcare revenue cycle management (RCM). Following are seven ways medical practices can leverage claims data, payment data, denial data, and more to improve revenue integrity.
1. Make informed business decisions. For example, analyzing claims data helps physicians understand what procedures and services drive the bulk of their revenue. This may make it easier to justify marketing and promoting these procedures and services, capital investments, and hiring additional staff.
2. Drill down into root causes of denials. Payment and denial data also help physicians and staff identify why payers deny claims. For example, when denials occur due to untimely claim filing, perhaps a technical glitch or gap in the claims transmission process could be the cause. When denials occur due to lack of physician documentation, perhaps a certified medical coder can explain to physicians what documentation payers need and why. When denials occur due to credentialing errors, perhaps there’s an opportunity to improve an otherwise mismanaged credentialing and enrollment process.
Equally as important is claims data from clearinghouses and practice management systems that catch pre-bill errors. Medical practices can use this information to identify educational opportunities, perform focused medical coding audits, develop compliance policies and procedures, and improve the overall revenue cycle.
3. Determine how long it takes to get paid. This timeframe—also known as days in accounts receivable (A/R)—helps physicians ensure they have enough funds to cover operating expenses. Days in A/R can also be used to provide data-driven feedback to open conversations with payers and resolve payment delays. To calculate days in A/R, leverage financial data. Divide the total A/R by the average daily cost.
4. Understand how much money the practice ultimately collects. Known as the net collection rate, this is the amount of revenue the practice collects minus write-offs, refunds, and contractual/non-contractual amounts. To calculate it, divide payments by all allowed charges, then multiply by 100.
5. Identify how often denials occur. Digging into denial data is important because it helps medical practices understand whether claims are paid on first pass or whether they require costly and time-consuming rework. Lowering the denial rate can increase cashflow and reduce administrative expenses.
6. Automate workflows. For example, if a medical practice knows that a payer never covers a particular service, it can adjust internal workflows and potentially auto-adjust those claims.
7. Improve the patient experience. Medical practices can use data analytics to track patient satisfaction and identify areas where they can improve the billing process and patient financial experience. For example, practices can analyze common patient complaints and develop solutions such as being more transparent with pricing information, providing easier payment options, or offering payment plans.
Creating a plan for financial, operational improvement
The first step is to ensure your practice management and EHR systems capture the right data. These systems must also be able to present that data in user-friendly ways through customized reports and comprehensive dashboards. Armed with the data in hand, medical practices can—and should—create multidisciplinary teams to talk about important insights and how to leverage the data accordingly.
Conclusion
In RCM, data truly is the new currency. Medical practices can leverage data analytics in a variety of ways to improve revenue cycle management and promote better cashflow. It’s about making data-driven decisions to promote high-quality patient care, avoid operational setbacks, and ensure short- and long-term financial sustainability. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
