Riding the revenue cycle: Coping with seasonal fluctuations

Experts offer tips for smoothing the peaks and dips of your money flow.

By — Posted Feb. 9, 2009

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Managing a practice's finances can be like riding a roller coaster. The annual revenue cycle begins with a full case load, but climbs slowly as patients struggle to meet health plan deductibles, experts say.

Revenues climb higher and quicker in the second quarter, as patients move beyond deductibles and into allergy season. There's a big dip in summer and an uptick in fall. But the smoothest part of the ride, experts agree, is in the fourth quarter, when both patient volume and payments peak.

While marked highs and lows may be appealing at the theme park, physicians can use various practice management strategies, quarter by quarter, to tame their revenue cycles, experts say.

First quarter

Cold and flu season can be busy, but not necessarily profitable. Since many patients start the year with out-of-pocket costs for health plan deductibles, payments may be slow in coming.

Justin Bartos, MD, a family physician in Fort Worth, Texas, said he and his partners try to be as productive as possible during their version of the holiday retail season. The practice cuts back on elective procedures to allow more time for acute care. Half of the appointment slots are set for same-day visits and weekday office hours are extended.

Experts suggest this is also a good time to book more visits by patients with HMOs and other plans without deductibles.

Start the collection year off right by concentrating on the front end, advises Ilene Gilbert, regional vice president of ambulatory services for Provena Medical Group in Joliet, Ill., and a former administrator at various small family practices.

"Make sure the office pre-certifies patients, and doesn't wait until the patient is there. Collect any money up front that you can, because the odds of collecting drop dramatically after the patient is gone," Gilbert said.

It's also crucial that physicians are coding correctly and that the staff is properly trained in revenue collection, said Cheryl Carr, national director of operations for Bill Dunbar and Associates, an Indianapolis-based consulting company.

Superbills need to be reviewed for coding updates. "If a code has changed and the office didn't make appropriate changes to reflect that, it will lose revenue," Carr said.

Second quarter

Time to check the balances. Practices should make sure the balance listed in their superbills matches the amount reimbursed by the patient's insurance company, Carr said.

Allen DeKaye, president and CEO of DeKaye Consulting Inc. in Oceanside, N.Y., said it's more efficient to do this process not by patient, but by plan. Group all plans offered by the same insurance company together. Total what each company owes for all members seen by your practice and present that amount to the insurer.

"You need to have one person dedicated to doing this follow-up, without doing any billing. Some doctors would rather outsource this. It's up to the practice, but you must make sure you hold the insurers accountable," DeKaye said.

The second quarter is also a good time to appeal any disputes on insurance payments made in the first quarter. These appeals should continue to be timely, as companies impose time limits, Carr said.

If patient volume drops as flu stops circulating and the spring allergy season wanes, practices can offer specials on well-care procedures and screenings, said Jeffrey Milburn, a consultant for Medical Group Management Assn., and former director of contracting for a multispecialty practice in Colorado Springs, Colo.

Now and into the beginning of the third quarter are prime times for physicians and staff to take vacations. "We don't need three full-time physicians and a full staff in the summer, when fewer patients are coming in. We encourage them to take turns going on vacation," Milburn said.

Third quarter

Slow summer months can give physicians the opportunity to reach out to the community and potential new patients. Gilbert and Milburn suggest linking with the local Chamber of Commerce to hold a health wellness fair.

Gilbert said her practice sets up a temporary site at a local school and offers sports physicals at a reduced rate. "We get a large number of students at one time."

The practice also benefits when doctors visit nursing homes, Gilbert said. "One doctor comes back with six or more new patients each time he goes to the nursing home."

Dr. Bartos encourages patients to schedule annual exams. School physicals also can be booked.

Gilbert recommends checking charts of chronic care patients to see who hasn't been seen as often as they should be. "Let them know you would like to get them in for a visit and set a date."

Fourth quarter

This is one of the busiest times of the practice year, and also when practices need to come up with a financial strategy for the following year, DeKaye said.

Bill Dunbar, of Bill Dunbar and Associates, an Indianapolis-based practice revenue consultant, said a practice needs to have its payment system in place by the end of the year to make sure insurers don't add other discounts.

DeKaye recommends going after accounts receivable in November and December. "If you take a more proactive approach in the fourth quarter, you will do better in the first quarter."

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Scheduling your revenue cycle

The fourth quarter has the smoothest cash flow for many practices, as patients who have met their insurance deductibles are more willing to seek out preventive care and elective procedures. Likewise, the start of new deductibles often makes the first quarter slower. Visits generally pick up in March and April, slow again during summer, then hit a pre-school surge in August and September. Experts offer suggestions for each phase:

January through March

  • Book more preventive visits by patients with HMOs and other plans that don't have deductibles.
  • Cut back on elective procedures and open half the schedule for same-day appointments during the busy flu season.
  • Extend hours for urgent care visits.
  • Be vigilant in collecting co-pays at time of service. Institute a payment plan for patients who cannot pay in full each visit.
  • Go over insurance policies with patients to make sure they understand what their deductible and co-pays are for the year.
  • Make sure the office staff is following correct, up-to-date codes and that superbills reflect these codes.

April through June

  • Schedule more routine chronic care appointments, women's and men's health exams and preventive health care visits.
  • Check your billing and claims documents to ensure that the balance, charges and reimbursed amount are correct for each document. Take any corrective action needed.
  • Calculate how much each private insurer owes you, then ask the plan for the total amount.
  • Make any appeals to insurance companies over payment from the first quarter.

July through September

  • Schedule more routine annual visits and school physicals in July; allergy season and the fall pre-school rush should keep doctors busy in August and September.
  • Continue to work appeals with insurance companies and track bills sent.
  • Determine which insurance plans have paid the full amount by tracking the plan, not the patient. Group all plans offered by the same company.

October through December

  • Be more aggressive in suggesting elective procedures and preventive treatments that should be done.
  • If any insurer was slow in paying, approach the plan representative to work out a solution.
  • Prepare a first-quarter strategy for the following year, including possible investments in new practice management software, updated CPT and ICD codes and staff training.

Sources: Allan DeKaye, president and CEO of DeKaye Consulting Inc., Oceanside, N.Y.; Bill Dunbar and Associates, Indianapolis; Justin Bartos, MD, Ft. Worth, Texas, and Matthew Johnson, MD, Park Forest, Ill.

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