What is behavioral health revenue cycle excellence? Cynthia Sikina, SimiTree Behavioral Health Vice President of Financial Strategy, says it’s “the ability to bill and collect the correct amount for all services provided on a timely basis.”
This might seem straightforward but achieving behavioral health revenue cycle excellence can actually be challenging. Fortunately, you can simplify the process by:
- Understanding how many steps — along with how many personnel — are involved in the behavioral health revenue cycle
- Using data-driven key performance indicators (KPIs) to ensure that your behavioral health organization is meeting or exceeding industrywide benchmarks
Understanding Your Behavioral Health Revenue Cycle
Accurate billing and prompt collecting are essential elements of healthy behavioral health revenue cycle management. But if you only pay attention to these two functions, you miss many touchpoints that can influence how successful you are at getting paid for the services you render.
According to Sikina, successful behavioral health RCM management requires detailed attention to each of the following steps in the revenue cycle:
- Pre-visit: A client’s first call to your office is the ideal time to collect their insurance information, get necessary authorizations, and establish expectations for payment.
- Appointment scheduling: When scheduling, it is essential to ensure that the client is matched with an appropriately credentialed treatment provider.
- Check-in & check-out (for outpatient services) or admission & discharge (for inpatient or residential programs): These are optimal times to confirm all relevant information, collect copays or balances due, and make any necessary follow-up appointments.
- Charge capture: This step involves documenting the services provided (ideally in an electronic format) so they can easily be reviewed by the providers and compared to the services that had been scheduled.
- Billing: Key elements of this ongoing process include meeting all payer requirements, providing thorough documentation, and using technology to flag missing or inaccurate information prior to submission.
- Insurance payment posting: Posting payments on a timely basis ensures that underpayments and overpayments can be quickly noted and efficiently resolved.
- Denial management: You must track and categorize all payer denials so that you can identify trends and rectify errors before they become ongoing problems.
- Self-pay billing & accounts receivable follow-up: Payment should be collected from self-pay clients the day that scheduled services are provided. Any uncollected payments should be resolved via concise statements sent monthly.
- Deposits: Security and accurate accounting are vital components of this step. The importance of factors such as dual custody, duty segregation, and timeliness cannot be overstated.
- Payer management: This is another ongoing process. It involves confirming that your organization is aware of and in compliance with all your payers’ billing requirements and vice versa.
- Month-end close: At the end of each month, all billing transactions should be posted to the general ledger. For reporting consistency, once the accounting period is closed, no additional transactions should be posted for the month in question.
When you break the behavioral health revenue cycle into its component steps, it is easy to see the key roles that non-billing personnel play in this process.
“Everyone has to do their part to keep the revenue cycle turning,” Sikina emphasized.
Identifying Your Behavioral Health RCM KPIs
Once you have a clear understanding of each part of the behavioral health revenue cycle, you can use key performance indicators (KPIs) and benchmarks to identify areas of concern and promote continued improvement.
As Sikina observed, “Unless it can be measured, it can’t be improved.”
For successful revenue cycle management, she advises behavioral health organizations to focus on the following four KPIs:
KPI #1: Average Days in Accounts Receivable
- Definition: This first KPI focuses on how long it takes your organization to receive payment for services that you have billed.
- Calculation: To assess performance toward this KPI, divide accounts receivable by average daily charges.
- Goal: The benchmark for this KPI is 35 days. If your organization averages more than 35 days to collect for billed services, you are not managing one or more of the revenue cycle processes effectively.
KPI #2: Rate of At-Risk A/R Balance
- Definition: For this KPI, “at risk” is defined as accounts receivable balances that are more than 120 days old.
- Calculation: To determine your at-risk rate, divide the balance of accounts receivable that have not been paid after 120 days by your total accounts receivable balance.
- Goal: The benchmark for this KPI is that no more than 14.6% of your accounts receivable should be 120 days or older. Failing to meet or exceed this standard means that you are placing an untenable strain on your behavioral health organization’s financial well-being.
KPI #3: Net Collection Rate
- Definition: Our third behavioral health revenue cycle management KPI assesses how successful your organization has been in terms of collecting payment for services rendered.
- Calculation: The formula for this KPI is actual collections divided by the sum of your gross charges minus contractual adjustments.
- Goal: The benchmark for net collection rate is equal to or greater than 97%. If your organization’s collection failure rate exceeds 3%, you are leaving an unacceptable amount of money on the table at the end of each month.
KPI #4: Denial Rate on First Submission
- Definition: This behavioral health RCM KPI assesses the quality of your team’s insurance submissions.
- Calculation: To assess this KPI, divide the number of claims denied upon first submission by your total number of claims submitted.
- Goal: The benchmark for first submission denials is a maximum of 4%. If your success rate falls below 96%, this may indicate a systemic problem in your processes and/or electronic health record setup. It also means that your staff is being forced to spend an unacceptable amount of time on corrections and resubmissions.
To monitor your organization’s progress toward these four behavioral health RCM KPIs, you must gather consistent, accurate, and timely data, Sikina stated. If it turns out that you’re coming up short on any benchmarks, she added, this data can help you identify the root cause of the problem.
“Root cause analysis can be daunting, but you can’t fix the problem until you have identified why your processes aren’t working,” Sikina said.
How SimiTree Behavioral Health Can Help
Achieve behavioral health revenue cycle excellence with expert guidance tailored to your organization’s unique needs. SimiTree Behavioral Health is a trusted partner for behavioral health organizations, offering industry expertise that optimizes your financial processes.
From streamlining billing to enhancing collections, we empower behavioral health organizations to achieve financial wellness while focusing on delivering exceptional patient care. Contact us today to schedule a complimentary one-on-one consultation!