When a healthcare provider provides services to a patient but doesn't get paid, this is referred to as revenue leakage. Typically, it occurs when accounts receivable go too long without being paid or are unintentionally forgotten.
Healthcare providers are less likely to recover payment, even in part, the longer an account receivable is unpaid. Providers may typically expect no more than a cent on the dollar reimbursement rate if the AR cycle lasts more than 120 days.
Really no strategy addresses the causes of leakage since the provider's operations, patients, or payers may be at fault. Nevertheless, a broader strategy or outsourcing to a revenue cycle management (RCM) business may assist in reducing revenue loss and the ensuing financial impact.
AR cycles and revenue cycle management
Accounts receivable and revenue are considered by healthcare providers as part of a cycle that starts with the patient's first appointment booking and lasts until that care provider gets payment.
The goal of revenue cycle management is to lessen inconsistencies that result in ARs being ignored by patients, rejected by payers, and aging without notification or follow-up. From the moment the front desk begins gathering the patient's information, a more comprehensive RCM improves the provider's process flow.
Leading reasons for revenue leakage in healthcare
Many factors may contribute to revenue leakage, but healthcare practitioners can find alternatives by understanding the main causes. Revenue leakage can be ascribed to major factors, according a site that offers management services to healthcare organizations:
The best part is that by simply evaluating their processes, identifying inefficiencies, and setting improvement goals, providers may address many of these causes of income leakage.
The primary source of claim denials continues to be unverified insurance coverage. Medicare and Medicaid claim denials are typically caused by coding mistakes.
Claims that are denied due to erroneous insurance and billing information will be less likely to be denied if simple administrative errors are corrected.
The following are some of the main methods healthcare providers can use to reduce or stop revenue leakage:
The time the revenue cycle with a patient starts, incidents that cause revenue leakage might happen. When staff enters patient and insurance information improperly, providers face the risk of payers rejecting claims at the very start of the cycle. Making errors while adding line items for services provided and the equipment utilized for claims further increases the likelihood that a claim will be denied.
More payment options
By not accepting a variety of payment options, many practitioners unintentionally restrict the amount of money they may collect from patients. This frequently occurs when businesses don't provide payment plans or accept certain credit card kinds. Patients who leave without making a payment are 50% more likely to avoid paying their medical expenses later on.
Knowing the actual pricing of the services is one of the best ways to generate revenue. Planning and swiftly changing the charge schedule in accordance with the various insurance carriers can help you prevent underpayments. Ask for professional advice while creating the charge schedules.
Consider outsourcing your revenue cycle and receivables management if you are a healthcare provider who struggles with revenue leakage.
When deciding whether to outsource your RCM, you should consider these key aspects:
Additionally, outsourcing can assist the practice in overcoming the difficulties posed by rising regulations and declining reimbursement rates. VLMS Global Healthcare can assist you in increasing the productivity and profitability of your operation. We can help you stop your revenue cycle leaks.