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Six areas to consider before buying healthcare revenue cycle software

Hospitals and other organizations that are close to buying healthcare financial software should evaluate their charge capture and submission capabilities, as well as coding processes.

Whether a healthcare organization is a large hospital or a small private practice, its financial systems are key...

to ongoing business operations. Such software must recognize standard ICD-10 coding and must also comply with Medicare reimbursement rules, as well as terms set by third-party payers.

With so many different financial systems available -- from modules within an ERP system to standalone financial products -- deciding on a billing application can be a daunting task. The easiest way to narrow down this task is to consider the organization's needs and then determine which software application best meets those needs. With that in mind, if your organization is close to purchasing healthcare revenue cycle software, consider the following six areas.

Admission and charges

1. Process integration. One of the most important concepts that must be addressed by an ERP or revenue cycle system is that of facility-wide integration. While it is tempting to think of revenue cycle management as relating solely to billing and claims reimbursement, the truth is that billing and accounts receivable management are really the final steps in the revenue cycle.

Earlier steps in the process are performed on the floor as functions of registration and patient care. As such, it is important for healthcare financial software to integrate into a healthcare organization's existing operational processes.

2. Admissions and registration. When a patient seeks treatment, the front-end staff must take down the patient's insurance information and verify their insurance eligibility. Front-end workers may also need to obtain prior authorization for treatment from a third-party payer -- such as an insurer -- or obtain physician referrals.

The hospital revenue cycle is complex and must, therefore, be efficiently managed to avoid billing errors or disruptions in the organization's revenue stream.

A revenue management system should be able to capture this data so that the proper documentation can be submitted to third-party payers as a part of the billing process. Collecting such information is also necessary for determining insurance coverage for treatment and patient responsibility for co-pays and deductibles.

3. Charge capture. Like any other business, a hospital sells goods and services. Goods include items such as needles, prescription drugs and X-ray film. Services are exams and procedures provided by physicians, laboratory technicians and other staff members.

Goods are billed as hospital facility charges. Hospital facility charges incorporate far more than medical or surgical supplies and instruments. These charges also include patient accommodations, pharmacy charges, ancillary services -- such as X-rays and blood work -- and, in some cases, outpatient clinical services.

Conversely, professional charges are those billed by physicians and other clinical providers. In some cases, professional charges are billed directly by the hospital, but, often, physicians are not hospital employees and may perform billing independently.

Revenue management software must be able to differentiate between facility and professional charges because they must be billed differently. Facility charges are billed via claim form UB-04, while professional charges are billed via the CMS-1500 claim form. Revenue software should be able to capture such charges as they occur and to add the charges to the appropriate form.

4. Chart review and coding. Medical billing is based on codes, and hospital financial software must adhere to the hospital's coding scheme. Hospitals use a series of chargemaster numbers that represent items and services provided by the hospital.

The numbers appearing on the chargemaster are made up of a department code, a procedure code and a revenue code. In addition to these standardized codes, the charge description also includes a quantity or dose listing and the amount charged. In some cases, the amount charged may vary depending on whether the service was performed on an inpatient or outpatient basis.

In any case, it is critical that all services are coded correctly according to ICD-10 standards. Mistakes in the coding process can lead to overbilling and failed audits. A revenue management system should perform presubmission audits in an effort to reduce coding mistakes. For example, the software might look for ICD-10 codes that are not allowed to be billed together.

Claims payment

5. Charge submission. Charge submission is another significant aspect of the revenue cycle. Each payer has its own unique billing requirements, which are outlined in the participating provider agreement. This agreement commonly stipulates requirements for documentation, coding, filing deadlines, form requirements and other areas.

The primary goal behind the charge submission process is to file clean claims. In other words, claims that are immediately accepted and paid by a third-party payer without requests for corrections or additional information.

Unclean claims are costly to healthcare organizations. They are labor-intensive because those responsible for claims submission are generally required to edit the claim or to provide the payer with additional information. Unclean claims are also disruptive to the revenue cycle because the rejection and resubmission process delays reimbursement.

To avoid these problems, hospitals scrutinize claims information prior to submission. Although once a completely manual process, modern healthcare revenue cycle software is able to assist with the presubmission review process. Such software should ideally be able to check that a claim meets the provider's requirements for submission and that the claim passes basic error checks.

6. Accounts receivable management. The final step in the revenue cycle is accounts receivable management. Healthcare revenue cycle software should automate the accounts receivable process by tracking accounts receivable and generating patient payment reminders when necessary.

Reporting is another key aspect of accounts receivable management. ERP systems and financial software should be able to use reporting to quantify long-term trends because negative trends may indicate a need to renegotiate terms with third-party payers. Similarly, accounts receivable reporting should be able to generate cash-flow projections for individual departments and the organization as a whole.

The hospital revenue cycle is complex and must, therefore, be efficiently managed to avoid billing errors or disruptions in the organization's revenue stream.

Ideally, healthcare revenue cycle software should avoid the creation of data silos. It should focus instead on capturing relevant data from throughout the organization in order to streamline the revenue collection process and avoid costly errors.

Next Steps

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This was last published in October 2016

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