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Revenue Cycle Management(RCM) is an extensive process that starts right from the patient’s appointment scheduling and ends with reimbursements from all the concerned parties whether it be the insurances or the patients themselves. Effective management of the revenue cycle requires prolific knowledge of the dental industry and the complete billing process. Every single step of the process has to be optimized and standardized to reap the best results. Oversight at any stage of the process can have a detrimental effect on the practice.
Evaluation metrics that should be carefully examined to ensure an effective Revenue Cycle Management:
- First Pass Resolution Rate (FPRR): This metric evaluates the number of claims that are reimbursed the first time they are submitted. It is calculated by dividing the numbers of claims cleared at the initial level by the total number of claims submitted in the given time period. The ideal FPRR number, which is 90% and above, tells about the effectiveness of the revenue cycle management system.
- Net Revenue Collection Rate : As the name suggests, this metric measures the amount of revenue reimbursed against the expected amount. It is calculated by dividing the reimbursements by the charges, excluding the adjustments. The lesser the gap between the two, the better is the RCM.
- Days Accounts Receivables (Days A/R): The number of days in which the complete revenue is generated holds great importance in ensuring effective RCM. Claims reimbursed in 30 days portray a healthy and effectual RCM system. Higher A/R days depict inefficiency in the Revenue Cycle Management, which can lead to bad debt.
- Claim Denial Rate : Claim denials are an inevitable part of the dental billing industry. The claim denial rate is evaluated by calculating the number of claim denials in a specific time period. The lower is the claim denial rate; the more effective is the RCM of the system.
- Claim Reimbursement Rate : This metric calculates the total amount reimbursed by the insurance companies. Ideally, this amount should be equal to the amount submitted in the claims. However, only in very few cases is the ideal scenario achieved. An efficient RCM keeps the monetary gap between the claim submitted and the reimbursed amount as low as possible.
What are the key factors that have to be optimized for effective Revenue Cycle Management?
- Clean Claims : The submission of clean claims is the first step towards attaining an effective RCM. Prolific knowledge of the insurance policies, patient’s eligibility, a narrative of the rendered treatment, furnishing all the relevant supporting documents with insurances, and accurate coding are some of the major factors that have to be thoroughly evaluated to attain clean claim submission and keep claim denials & bad debt at bay.
- Denial Management : Expecting zero claim rejections can be a far fetched reality. However, a denied claim doesn’t always conclude in revenue loss. Even the denied claims can be reimbursed by evaluating the reason and building a proper strategy to resolve it. With consistent efforts and follow-ups, a constructive denial management process can be established.
- Patient’s Deductibles : The cases of patients not paying their dues have increased in the past decade. This is mostly caused by unawareness and lack of effort in the RCM. Educating the patients proactively prior to their treatment about the extra cost that has to be incurred by them, can make a drastic difference. Provisioning various payment methods and continuous follow-ups are other steps that can be incorporated in the billing process to reimburse patient deductibles with the lowest turn around time.
- Outsourcing to Dental Billing Service Providers : Outsourcing the dental billing services to a reliable company can make a considerable difference in the effectiveness of the RCM. Opting for a dental billing service company which provides its services at each stage of revenue generation can highly optimize the RCM. Substantial experience, versatility in offered services, impressive client testimonials, accreditation & certifications are some positive factors to look for in a dental billing service provider.
What are the positive impacts of effectiveness of the Revenue Cycle on Dental Practices?
- Continuous Cash Flow : The first and foremost factor that an effective RCM has a positive impact on is the cash flow of your practice. Almost 50% of America’s medical practices are small and middle-scale, and heavily rely on the constant revenue generation to keep them going. An effective RCM system bolsters the dental practice’s revenue generation by submitting clean claims and denial management.
- Smooth Functioning : With an effective RCM in the dental practice, the processes are streamlined and simplified, contributing to the smooth functioning of the organizational setup. It ensures a drastic reduction in the burden on the administration as well as dental practitioners themselves, thereby helping them to provide better patient care and satisfaction.
- Decreased Reimbursement Turnaround Time : An effective RCM aims to get revenue reimbursements at the very initial level of claim submission. It facilitates a set system for ensuring regular & timely follow-ups on the claims filed, complete & timely submission of the claims documentation and a rigorous system of denial management. This helps in maximizing the revenue collection for the dental practices along with reducing the turnaround time for reimbursements to flow in.
- Lower Denial Rate : A low claim denial rate is an important factor that helps in the growth of a dental practice. Lower denial rate is one of the biggest advantages that comes with an effective RCM. Because of the streamlining and better handling of the end to end revenue generation cycle, claims denial ratio of the practice decreases drastically.