TO ASSESS THE HEALTH OF YOUR REVENUE CYCLE

USING ASC-SPECIFIC BENCHMARKS

One of the toughest challenges for surgery center leadership is determining the health of their revenue cycle. Lacking standardized revenue cycle measurement tools, particular to ambulatory surgery centers (ASCs), leadership leaned on hospital or physician practice metrics. Given the differences in payer mix, case mix, and contracts, those metrics not only caused confusion, they failed to provide the assessment tools centers needed to be successful and to compete in an increasingly competitive healthcare market.

“Centers needed visibility into revenue cycle performance,” said Regent RCM Vice President Michael Orseno. “Until now, ASC-specific measurement tools did not exist. We addressed that head-on and by doing so, armed center leadership with tools they can customize and deploy to gauge their center’s financial health.”

Regent Revenue Cycle Management (Regent RCM), a leading provider of innovative and cost-effective revenue cycle management services exclusively for ASCs, has developed nine ASC revenue cycle benchmarks, one of them an essential stand-alone metric. In this paper, Regent RCM shows centers how to use benchmarks to measure the health of an ASC’s revenue cycle; including understanding how numbers can be improved, why they might fluctuate and how they can often be misleading.

Staffing/1,000 Cases

Days Outstanding

1.5 FTEs

Less Than 30

Days

A/R Over 90

Days

12% or <

Claim Lag

48 Hours

Charge Lag

48 Hours

Statement Lag

< 5 Days

Clean Claim %

97%

Denials

< 10%

Net Collections

Rate

> 97%RRCM GOLD STANDARD

BENCHMARK

Staffing/1,000 CasesMore business office staff does not equate to more efficiency. A center’s business office staff varies; in addition to a business office manager, office staff includes receptionists, medical records clerks, billers, collectors and coders, as well as personnel dedicated to insurance verification, patient financial counseling and scheduling.

In order to maximize efficiency, the company created the Regent RCM gold standard, which is 1.5 FTEs per 1,000 cases. The unique metric was developed by Regent RCM after it mined data from ASCs for several years. From 2010 to 2014, data indicated that busier ASCs actually operated at a more efficient level in terms of staffing. Conversely, staff at less busy centers were found to be underutilized.

“We’ve found that busier centers are typically more efficient,” said Orseno. For example, a receptionist and scheduler are fully utilized at centers that see 600 to 700 cases per month. While 1.5 FTEs is an average, centers with lower acuity, such as an endoscopy center, should be less than that average. “Centers that have more than 1.5 FTEs, and don’t contain a high-acuity case mix or out-of-network payer mix may want to examine their business office practices,” said Orseno.

Days OutstandingThe Regent RCM gold standard is less than 30 days, but depending on outside forces, such as case mix, payer mix and whether or not the center is in-network, the number of days can fluctuate from the high teens up to 50 days.

“You need to take a look at payer mix and case mix,” said Orseno. “For centers that have a high Medicare population, or if their payer mix is pain and ophthalmology, our gold standard is closer to 20, and 18 at one of our endoscopy centers.”

But for out-of-network centers, Regent RCM’s gold standard is 50 days as it takes considerably more time to negotiate payments. “So, if you’re hitting 50 when out-of-network, you’re probably doing an excellent job,” said Orseno.

To make this a meaningful metric for a facility, the payer mix and case mix must be determined to know where in the range a facility should be located.

“This metric does not mean a whole lot on its own,” stated Orseno. “Writing off balances prematurely or capturing only lower hanging fruit can make this metric look very good, which can be deceptive.” Centers strive for this number to be low, but if the net collections rate is also low, there is a problem, cautioned Orseno.

REGENT RCM’S NINE ASC REVENUE CYCLE BENCHMARKS

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Claim Lag/Charge LagClaim Lag is the number of days from date of service until the billing date. Claims should be sent out the same day as charges are entered and coded. Charge Lag is the date of service until the charge entry date.

“If centers are experiencing a difference between the two lags, this is an indication that the billing department may be holding claims or entering charges but not sending them out in a timely manner,” said Orseno. “Transcription and coding for each should be completed in 24 hours or less – that is the gold standard.”

A/R Over 90 DaysThis metric can highlight issues with patient collections processes and/or insurance denials. The Regent RCM gold standard is 12% or less. For those centers that have a high Medicare population, or that have low-acuity cases such as pain or ophthalmology, the metric should be less than 10%.

While the centers that have a high out-of-network or high workman’s compensation population, or a high spine or orthopedic case mix, should be closer to 15%. Keeping this benchmark within a specific range of 8 to 15% will help ensure the health of an ASC’s revenue cycle.

“If the A/R greater than 90 days is very low, that could be an issue,” said Orseno. “If this percentage is too low, it could mean that revenue cycle staff are writing off balances prior to receiving the full contractual amount,” said Orseno. He also cautioned that if the percentage is too high, it could indicate a lack of follow up.

Statement LagThis metric is defined as the date a balance becomes a patient’s responsibility to the time the statement is sent. Regent RCM’s gold standard for statement lag is less than five days. Although it is recommended that patients be put on a 30-day cycle, statements should be run at least once per week. A center that has a high statement lag is indicative of not running statements in a timely manner, noted Orseno.

Not running statements once per week unnecessarily adds to days outstanding. “If a patient doesn’t receive the statement, they’re not going to pay their bill. The sooner they can get the statement, the quicker they will pay their bill,” said Orseno.

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Regent RCM is helping ASCs around the country become more efficient in A/R. An out-of-network facility in the southeast experienced its busiest month in March 2016 and partnering with Regent RCM, broke a trio of records: 42 days in A/R, $895,590 in collections, and at 26.3%, its lowest percent of outstanding accounts in A/R over 90 days.

The center made the gains under revenue cycle supervisor Vianca Bautista and revenue cycle specialist Luce Renteria. The main driver for this improvement is consistent follow-up Renteria has been doing on the accounts, said Bautista, such as cleaning up the old A/R. Bautista said Renteria’s understanding of how each payer processes claims and what their requirements are was also crucial in reaching the new milestones.

Clean Claim %This benchmark aims to keep the denials rates low and clean claims rate high. No center can achieve a 100% clean claim rate; but, proper coding, a knowledgeable billing staff, and the use of a robust clearinghouse to scrub claims prior to submission are paramount for achieving the Regent RCM gold standard, which is a 98% clean claims rate.

Ultimately, maximizing the reimbursement is most important, according to Orseno. “If that comes at the cost of a higher denial percentage or a lower clean claim percentage, so be it,” he said.

Due in part to Clean Claims, Regent RCM helped a high-volume orthopedic center in the southeast nearly double its collections from May to December 2015.

The results were reached with no significant changes to volume or case mix. To reach this achievement, Regent RCM ensured each claim was submitted accurately by working hand-in-hand with its clearinghouse to develop custom edits to ensure clean claim submission.

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DenialsThe Regent RCM gold standard is less than 10% denials. A high denial rate may highlight issues with a certain payer, while a low clean claim percentage may pinpoint some issues with either a center’s biller or front office. The numbers can be manipulated by under-coding claims or not maximizing reimbursement, playing it safe in order to keep these percentages looking healthy.

“Keeping the denial percentage low will help keep days in A/R and percent of A/R over 90 low as well,” said Orseno.

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9 Net Collections Rate, “The Great Lie Detector” The Net Collection Rate is called the great lie detector because it reveals the percentage of eligible money that was actually collected by the facility. The Regent RCM gold standard is greater than 97% collected from contracted payers.

While striving for an efficient revenue cycle, facility leadership face hurdles with accurately calculating net collections, which is critical for determining how well the business office is collecting on contracted accounts.

The net collection rate is measured on in-network claims only. It is defined as the payment, (how much a center actually collected), compared to the contractual amount (the amount a center was supposed to collect). If a center’s percentage is low, it may be a sign that the business office is accepting whatever the third-party pays and not fighting for what is contractually owed.

A multi-specialty center in the southwest that features three operating rooms, first and second stage recovery rooms, as well as convalescent facilities for extended stays, learned first-hand the impact Regent RCM has on improving collections.

Regent RCM started working with the center in 2013, and since then, has significantly improved its billing efficiency and significantly increased collections. Originally, Regent RCM partnered with the center to transition to a new management information system, but it also succeeded in streamlining accounting process.

Moving forward, the nine Regent RCM ASC Revenue Cycle Benchmarks will be critical in helping a surgery center accurately measure the health of its revenue cycle, and ultimately, account for every dollar the center is entitled to.

With reimbursement dollars continuing to be stretched, Regent RCM’s smart staffing, gold standard benchmarks and net collections calculation rate will assist ASCs around the country in receiving the most revenue for care that they can.

Regent RCM offers a no cost Business Office Audit that goes well beyond a traditional reimbursement assessment. Coding and implant assessments as well as onsite analysis of business office process and workflow are standard components of the audit process.

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Ed TschanRegent RCM Director of Business Development (312) 882-7228 | etschan@regentrcm.com

Contact for more information:

www.regentrcm.com

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Regent RCM provides turnkey billing and collections services exclusively for ambulatory surgery centers in the United States. The team leverages 11 years of ASC revenue cycle experience to drive competitive advantage for its partner centers focused on both efficiencies and growth.