We recently received a report issued by Gateway EDI (one of Kareo’s clearinghouse partners) and professional services firm LarsonAllen on The Impact of Technology on the Physician Revenue Cycle, which we believe contains important information for every practice looking to improve their revenue.

In a survey of 528 physician practices and leading technology partners in the health care industry commissioned by Gateway EDI, LarsonAllen found a number of interesting points, which we will summarize here. We strongly recommend that you download your own copy of the free report for the additional valuable information it includes.

In the report, LarsonAllen defined high performers as "practices consistently outperforming their peers when comparing A/R data" and said that characteristics of revenue cycle Gold Standard performers included:

• Faster access to revenue

• Better realization in gross revenue

• Less cost associated with collection of revenue

"Higher performers utilized more technology and technology services than lower performers," according to LarsonAllen. "Our survey showed that high-performing practices that applied technology to their revenue cycles collected a significantly higher percentage of their outstanding receivables in 15 days or less, and carried a significantly lower average for days in A/R."

Eligibility and benefits

"The single most important technology used by medical practices was the tool used to check patient eligibility," reported LarsonAllen. "While nearly all medical practices check eligibility manually or electronically, high-performing practices check this information each visit and utilize technology (either their practice management system [PMS] or a clearinghouse [CH] to achieve timely, accurate results."

Compared to low performers, the report found, more high performers:

• Check eligibility and benefits for all patients

• Verify eligibility every visit

• Use a practice management system or clearinghouse to check eligibility

Electronic claim submission

"As the cost of collection in health care approaches 20 percent of what is actually collected (Amednews.com, February 18, 2008), medical practices must streamline all of the processes related to revenue," said LarsonAllen. "Having an efficient claims submission is the core of the revenue cycle for any medical practice. Faced with decreasing reimbursements on claims that are paid, practices cannot afford to have less than optimal claim processing solutions in place."

Coding assist software

Based on the results of our Gateway EDI Technology Survey, this technology has not been widely adopted," LarsonAllen reported. "However, practices that utilized this software showed a reduction in denied claims. Further, those that used coding software integrated with their practice management system reported fewer days in A/R than practices that used stand-alone coding products."

Revenue cycle management

"Denial management has become key to achieving optimal revenue for medical practices," stated LarsonAllen. "The results of our research indicate that practices using technology to help manage their denials have lower account-receivable-days than those using a manual process.

"Employing technology to assist in denial management allows staff more time to analyze denials, correct them, and explore ways of reducing or eliminating denials. In The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid, the authors state that while 90 percent of denials are preventable, only 67 percent of denials are recoverable. Reducing preventable denials offers the potential for significant revenue improvement.

"Practices also use RCM to monitor reimbursement levels and manage payer contracts to ensure they receive the appropriate amount for each service rendered. Our research confirmed that practices that monitor their reimbursement levels against their contracted amounts tend to find incorrect payments from payers, and this can amount to a significant loss of revenue.

Processes: Implementing Technology Successfully

According to LarsonAllen, key steps to implementing technology successfully, according to the study, included:

• Evaluate and streamline procedures

• Ample training

• A positive culture that accepts and promotes change

• Creating benchmarks to measure the practice’s performance

"…Practices that take time to measure, analyze, and assess financial results related to the revenue cycle position themselves to be among the best performers," LarsonAllen summarized. "While benchmarking against a practice’s previous year provides an internal measure of change, benchmarking against industry standards allows a practice to understand where it ranks in the industry.

"A tool frequently used to track benchmarks is a one-page scoreboard that provides a monthly snapshot of various aspects of the revenue cycle." The report recommends using these key elements to track impacts to the revenue cycle:

• Gross collection rate (allows a comparison of reimbursement from third-party payers)

• Co-pay collection rates

• Electronic claim filing success rate

• Turnaround time for charge entry, payment entry, and denial resolution

• Days in A/R

• Percentage of A/R over 120 days

• Bad debt percentage

"Best performers understand that good reporting from their practice management system is essential," LarsonAllen said. "Sharing the scoreboard of important benchmarks is an effective way to include everyone in improving revenue cycle performance."

Obviously, we at Kareo agree with these points and have been making these same arguments for some time. However, it’s interesting to see the statistics that support our belief that technology can make a huge impact on improving the practice revenue cycle. We hope you will download and read this insightful report for yourself.