Consultative Approach to Improving Revenue Cycle Management

Every non-profit or for-profit healthcare institution needs financial stability to keep providing care to the community they serve. While the COVID-19 pandemic put immense pressure on the operations of hospitals and health systems, it has also forced executives, policymakers, and other stakeholders to relook at the regulations, processes, and financial state of healthcare organizations.

According to a report published by Kaufman Hall, “Under an optimistic scenario, hospitals could face a $53 billion total revenue loss and under a pessimistic scenario, hospitals could lose $122 billion in 2021”.

No healthcare organization has stayed immune to the fallout of the pandemic. While healthcare leaders were busy getting the necessary equipment, PPEs, and vaccines for their patients and hospital staff, there was little focus on the increase in nationwide denials. According to a research report published by Change Healthcare, denials have risen 11% nationally since the onset of COVID-19.

If we consider a hospital to be a human being, revenue cycle management (RCM) would constitute the heart of that human body. Controlling denials and making the related processes future-ready is the only way to ensure a healthy RCM process, which leads to sustainable hospital operations.

So let’s discuss some plans for sustainability.

How are hospitals going to improve their cash flow and revenue?

Create and use Pareto to understand what to fix. Once you have identified an area, ask the question, why. You can also use a fishbone diagram to understand the issue and identify the root cause.

Pareto Chart - Types of Data Defects

Using the diagram above, you will understand that most denials were related to prior authorization or coding errors and, in some cases, clerical errors.

So you have identified the errors. What is your next step? What problem are you going to solve? How are you going to solve it? Who is going to help you solve the problem? And what are the costs associated?

To answer all these questions, healthcare organizations and RCM leaders need to develop a roadmap. Like Rome wasn’t built in a day, no one can solve all problems at one go. It is a continuous process that needs rigorous management and monitoring.

Achieving healthy RCM can be tough, but it is definitely not impossible if you can effectively use the SMART framework (Specific, Measurable, Achievable, Relevant, and Time-bound).

Let’s consider “Claims denial due to coding errors” as one of the problems and build a SMART approach towards solving it.


What do you want to accomplish?

As a Health Information Manager (HIM), Director/Supervisor of Coding, or the Chief Financial Officer (CFO) of a hospital, your aim is to reduce or stop “Claims denial due to coding errors”.

If you are in charge of the project, set realistic or high goals. I would personally recommend going for “Stopping claims denial due to coding errors” altogether.

Why is this goal important?

Stopping or reducing denials due to coding errors will increase your hospital’s revenue by $XX,XX,XXX. You can come up with a dollar value using your hospital’s past claims data.

Who is involved?

Create a team. You will need expertise from the HIM, Coding Supervisor, Coder, Auditor, and/or an Analyst from the finance team. If you are using a consulting company or have outsourced your coding/billing process, you may want to work with your vendor.

Also, clearly define the role of each and every team member.


How much?

Put a number in front of the identified key performance indicators (KPIs). For instance, I want to reduce my outpatient coding denials by 1-2%.

How will you know when the objective is accomplished?

Continuous performance monitoring is important to check the progress of the initiative and make the necessary changes for improvement. The performance data will give you an insight into how your activities are performing and what are the possible next steps for further improvement.

For instance, after putting the processes in place, you may find out that Coder A needs more training on particular specialty charts or Coder B is excellent at handling complex inpatient coding charts.


How realistic is the goal, based on other constraints like employee resources or financial factors?

Your goal also needs to be realistic and attainable to be successful. In other words, it should stretch your and your team’s abilities, but still remain possible.

Your team may need specialized software/tools such as Computer-Assisted Coding, Computer-Assisted Coding Compliance Software, or Computer-Assisted CDI to improve documentation quality.

Depending on your root cause analysis (RCA), you may also want to append related resources to the project so that your team can focus exclusively on achieving the desired results.


Does this seem worthwhile? Or is this the right time?

Is this a pressing issue for your organization? Personally, you may want to focus on improving coding quality, but do you have other priorities (from high to low) that need to be addressed first? For example, you may have a large backlog of charts for CDI or coding, which is more of a priority than reducing “Claims denial due to coding errors”.

While you are at it, also consider the relevance of the project in the current pandemic and post-pandemic environment. Design a process that is applicable and relevant under both scenarios.

In this step, you can ensure that your goal matters to you and aligns with other relevant goals within the organization.


When? What can you do 6 months/weeks from now? What can you do today?

Every goal needs a target date. This gives you a deadline to focus on and a milestone to work toward. This stage of a SMART process makes sure that your everyday tasks do not take priority over your longer-term goals.

Carefully consider if you have provided enough time to address all improvement opportunities, regardless of whether the opportunity is small or large.

For example:

  1. Your coders/auditors may need additional training to improve their knowledge.
  2. Your physicians may need to be trained on queries and documentation needs.
  3. Your teams and the hospital may need to deploy Computer-Assisted Coding or Computer-Assisted Audit software.

Give sufficient time to achieve each of these goals. A realistic timeframe to accomplish the smaller goals is imperative for achieving your final objective – “Stopping claims denial due to coding errors”.

Conclusion –

SMART is just one methodology that you can use to identify the red flags or set the goals. You could also consider a CLEAR or a FAST approach. But as the person responsible for making the decision and changing things at your hospital or health system, you definitely need a precise goal-setting methodology.

Conduct an analysis to determine where the majority of your denials come from. You can also use analytics to drill down and identify the root causes. Then on, prioritize your interventions and determine the area where your internal resources and actions can have the maximum impact. Outside resources, tools, and technology are always available to supplement your efforts wherever required.

Good luck.

Hardik Kevadiya

Hardik Kevadiya

Hardik Kevadiya is a Senior Manager, Business Development and Marketing at EZDI, Inc. - an AGS Health Company. Hardik is passionate about Healthcare Information Technology and Innovations - Innovations that enhance human lives. He is also a healthcare trend and news follower, his passion for helping Healthcare IT professionals in all aspects of online trends and research flows through in the expert industry coverage he provides. In addition to writing for EZDI, Hardik also mentors a team of Data Analysts and Marketing professionals.

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