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Answers to Frequently Asked Questions About Revenue Cycle Management

September 2023, Vol 13, No 9
Kem Tolliver, CMOM, CPC, FACMPE
President, Medical Revenue Cycle Specialists
Bowie, MD
Shawntea (Taya) Gordon, MBA, FACMPE, CMOM
Chief Revenue Cycle Officer
H4 Technology

Successful revenue cycle management (RCM) is a team effort that requires continuous collaboration across multiple departments of an organization. Although all institutions aim for standard industry best practices, the way in which these goals are attained may vary greatly, based on unique workflows, workforces, and needs. If you have ever wondered how other organizations are managing the same RCM challenges you encounter, we invite you to continue reading. This article was curated with careful consideration of some of the most frequently asked questions we have received from professionals across the country, including podcast listeners and attendees of educational programs and other meetings, as well as individuals who have reached out to us through a variety of online platforms.

Q: Should we outsource our billing department?

A: This is a challenging question. Before deciding to outsource your billing services, your organization must factor in a due diligence process that includes determining goals and intended return on investment. If your primary concerns are related to productivity, turnover, or staffing shortages, you may want to consider a hybrid model that only outsources certain efforts, which gives the leadership team an opportunity to observe both methods.

As you weigh decisions regarding outsourcing, it is imperative to consider your current performance with key performance indicators (KPIs), such as clean claims rate, net collections ratio, aging accounts receivables more than 90 days and 120 days, and avoidable write-offs. It is also important to identify the KPIs in your organization that should be monitored to measure performance. Analyze your current billing department expenses, including those related to staff salaries and benefits, patient statements, software/technology, and opportunity costs as a result of limited capacity.

Many organizations decide to outsource billing because they are concerned about their internal teams’ expertise related to unraveling and managing complex payer reimbursement guidelines. If your practice falls into this category, it may be a good idea to conduct a billing staff skills assessment before making a decision.

Q: Is the number of denials we receive normal?

A: Denials are an unfortunate reality of healthcare delivery. Even with preventive measures in place, denials will occur. The goal is to minimize the volume and number of denials expected and received. There is no “normal” when it comes to denial rates and there are many factors that will drive outcomes for a particular organization. When analyzing denial rates, you will want to review claims that were fully adjudicated and zero paid. These are claims for which you did not receive reimbursement due to something that was preventable. There are times when claims are not paid for reasons that should not be considered true denials. Therefore, the first thing to do is to ensure that you are looking at your true denial rate, which will not include deductible adjustments, sequestration adjustments, or other nonpreventable reasons.

Currently, national averages for denial rates fall between 5% and 10% across all payers, plans, and states, with a few outliers. The best practice standard for high achievers is to aim for a denial rate of less than 5%. Set your denial expectation threshold, monitor it regularly, and find the root cause of trends.

Q: How do we decrease denial rates?

A: Oftentimes in the healthcare industry, we look reactively at revenue cycles. We want to know why something was denied or why we spend so much time on appeals. However, a better approach is to be proactive. We should be studying the data in our systems and making inferences based on that information so we can identify the most frequent causes for denials. Once that is done, the next step is to evaluate the root cause of those denials. For example, a very common reason is “this patient could not be identified as our insured.” If this is the primary reason for denials in your organization, you know there is an issue during intake with eligibility and benefit verification or with patient demographic entry. Digging deeper will help you identify opportunities to improve your intake process and automate your eligibility and benefit verification process, thereby decreasing your denials related to those processes.

There is no “normal” when it comes to denial rates and there are many factors that will drive outcomes for a particular organization.

Q: There is a lot of pressure on our revenue cycle department to improve our net collection rate. What are some things we can do?

A: It is common for net collection rates to be a primary area of concern within an organization. The challenge is that revenue cycle departments are getting the opportunity for revenue recovery after a lot of potential pitfalls have already taken place. That is why it is important to review your data and approach the RCM process from the perspective of prevention. It is not possible to solve for every potential reason that claims cannot be collected. Ideally, you should strive to identify the top 3 to 5 reasons that collection rates are lagging, create accountability metrics for related departments, and then work collaboratively towards solutions. One area in which the revenue cycle department could be accountable is reducing timely filing of write-offs or decreasing the number of days between charge entry and claim submission. These are just suggestions. To identify what will make the biggest impact in your organization, it will be necessary to assess your own data to see what is driving the delays.

Q: What can we do to improve the productivity of our billing team?

A: This is a great question because it speaks to something that is not addressed often enough: properly supporting our teams with the resources they need to adequately perform their jobs. In healthcare administration, we often shy away from the use of technology. I have heard many discussions pointing to the fact that our industry still relies heavily on fax machines, spreadsheets, and printouts.

There are many opportunities to use technology that already exists in your institution to improve productivity. If you work in a large organization, tools such as SharePoint can be very valuable for quickly sharing information across departments. If you are in a smaller organization, consider the use of Health Insurance Portability and Accountability Act–compliant shared documents, which several team members can edit simultaneously to complete assigned work on lists. For example, let’s say that on a daily basis you want your team to work all rejected claims. If the current process is to print out a list of rejected claims and then highlight which ones go to which team members, you are taking more time than necessary to accomplish this task. Alternately, consider automating the report so it drops daily to a shared folder, assign your team different payers or providers that they will regularly work, and have them document updates directly in the report. This not only lets your team see what other team members are working on, it also allows you, as the supervisor, to maintain regular oversight in terms of progress and to highlight any work that is top priority. Not every solution for enhancing productivity must involve complex technologic integrations. Usually, the simplest solution will drive the most immediate and largest impact for your organization while informing you on which technologies you may want to adopt in the future.

Q: What language should I focus on within my payer participation agreements?

A: Unless you are an attorney, complex payer contract language can be difficult to interpret. Many organizations have participation agreements that are collecting dust. Even if your practice has been participating with commercial or private payers for years, contracts have expiration and renewal dates, which offer you an opportunity to address language that may need to be tweaked.

Pay close attention to medical rental networks, which may be used as outsourcing vendors by payers to adjudicate and pay claims. Medical rental networks or third-party administrators may have their own rules that will be applied to your participation agreement. Be aware of timely filing deadlines within payer contracts to ensure that they align with your state’s Insurance Commissioner’s set dates. Review the payer’s contract amendment clause, which will bind your organization to new terms in the event you do not respond within the allocated timeframe. Many payers also include malpractice financial limits, so be sure your liability coverage is in line with those requirements. The contract renewal date is key, so it is a good idea to keep all contract renewal dates in a spreadsheet and align this date with language related to approved contract negotiation dates. Payers will include terms and language that work in their favor, so continue to prioritize your understanding of payer participation agreement language interpretation.

Q: How often should we conduct internal coding audits?

A: As a best practice, internal medical record audits should be done at least once per year. If there are red flags, new providers and/or staff, frequent medical necessity denials, or poor coding audit results, these audits should be conducted more frequently.

Set an accuracy benchmark and judge performance from there. If your organization has set a 90% accuracy benchmark and providers are a few points below, it may not be necessary to reaudit immediately. Providers who are significantly below the benchmark should be put on a corrective action plan, which may include prospective documentation reviews prior to claim submission, monthly or quarterly reaudits, and/or custom training. Providers’ documentation patterns and understanding of correct coding initiatives will vary. Education is the cornerstone of accuracy, so educate, audit, measure, and communicate.

Review the payer’s contract amendment clause, which will bind your organization to new terms in the event you do not respond within the allocated timeframe.

Q: Why should we prioritize Social Determinants of Health?

A: Social determinants of health (SDoH) are the conditions in which people live, learn, work, and play. These factors can have a significant effect on health risks and outcomes. For example, patient populations that lack access to necessities, such as healthy food choices, employment, transportation, and technology, will likely have a more difficult time adhering to providers’ treatment plans. When a patient must decide between paying for food and buying medications, food typically wins. In this scenario, it is likely that the food option is inexpensive and low in nutritional value. Patients with poor SDoH status are also more likely to experience chronic illnesses, such as heart disease, diabetes, stroke, depression, or substance abuse. These conditions have a higher morbidity and mortality rate, which increases medical complexity and the cost of care.

Documenting SDoH allows providers to demonstrate higher risk adjustment factors, thereby helping payers to better predict healthcare costs. It is important to provide patients with preventive services, coordination of care, and referrals to social services to mitigate exacerbations and help educate them on improved disease management.


As healthcare leaders, we are encouraged to investigate, think outside of the box, and question everything. We would like to thank the hardworking RCM professionals who have sought to fix broken processes, educate their workforces, and ensure patients have access to care by asking questions and turning answers into sustainable improvements.

Article provided through a partnership with
Practice Management Institute
Michigan Society of Hematology & Oncology

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