In Healthcare Payments, Lockbox Environment Key to Meaningful Revenue Cycle

By John Reynolds, FIS Healthcare Payment Solutions

Ideally, revenue cycle management (RCM) for healthcare providers is simple: Eliminate the paper chain from claims and payments handling and significantly reduce the time spent exchanging information about payment responsibility. The outcome should allow a provider to considerably speed its receivables by collecting from the patient at the point of care, accepting an electronic payment from the insurer, and easily linking it to the original claim. By improving the work processes, RCM can also help reduce operational costs.However, the reality has been far from simple or successful. Until recently, all solutions have fallen short of capturing 100 percent of a claim's lifecycle. Previous attempts promised work process improvement, only to fail by requiring health clinics and hospitals to change their workflow. And because previous electronic claim solutions often connected to only a small number of health plans, providers were required to juggle multiple systems and procedures, prompting many workflow changes and the resulting inefficiencies.

Recent trends suggest the key to meaningful revenue cycle management can be found by re-imagining a familiar tool within the financial industry-the lockbox.

Automation trends Electronic payments between health plans/insurers and healthcare providers are the catalyst for the most recent trends in RCM. For example, because an insurer's ability to send electronic payments to providers is only as good as the account and financial institution routing information it has on file, such info sharing is becoming a top priority.

The call to translate an 835 healthcare electronic remittance advice request form into a "human readable" format and the ability to "break out" claims requiring further attention are additional trends. The healthcare industry standard file format for sending remittance information with electronic payments-the electronic remittance advice or 835-enables a health plan to communicate claim information to the provider. In situations where an insurer remits payment and rejects no claims, an 835 automates RCM and seamlessly marks a claim as paid.

However, this isn't the norm-especially for large clinics or hospitals that receive sizeable insurance payments linking back to hundreds of claims. Inevitably, a significant number of claims will be denied, or paid at a lesser amount. With an automated process, a provider can resubmit only the relevant information and documentation requested by the insurer.

A healthcare provider must also collect from the patient. As consumer-directed healthcare (CDH) has expanded, so, too, has the patient payment component of RCM, and with it the need for an automated reconciliation with the insurer payment. Automation can only become reality if a provider can efficiently account for the two payment lifecycles (patient and insurer) attached to a claim. RCM will drive a trend to assess/estimate the patient obligation at the point of care, collect the fee up-front and conduct final reconciliation (including the insurer payment) after the fact.

Lockbox: Making RCM a reality Rerouting all health plan payment and claim information through the lockbox makes it the one environment capable of capturing 100 percent of a claim's payment lifecycle. An integrated view of all receivables is created, automating the process of knowing a claim's history and status to facilitate a streamlined, timely patient collection cycle that reduces revenue lost through charged-off billings.

By expanding financial institution cash management services to include additional healthcare transaction collections and reconciliation solutions, the lockbox becomes a key cog in providing the information and technology required to complete the lifecycle of a claim by presenting a bill/explanation of benefits and collecting the patient payment. With the paper or electronic patient payment returning to the same lockbox, 100 percent of the revenue and information related to each claim is captured at a central location, and true automation becomes a reality. Healthcare payments automation can only succeed with a complete picture of the claims lifecycle. A financial institution's lockbox is the most natural environment to capture everything health plan- and patient-related to bring each claim to closure with minimal manual labor. Without the lockbox, a sizeable portion of incoming payment and claims data is captured by hand at the provider, negating the concept of work process improvement.

Financial institutions can make the lockbox environment, familiar to both health plans and providers, a key player in revenue cycle management. As a central hub for all payments-paper and electronic from both insurers and patients, as well as 835s and explanation of payment documents-the lockbox enables a financial institution to offer health clinics and hospitals a single stream of payments and claim information. Although paper may not completely disappear, providers can now handle claims and payments in a paperless manner.

Providers have been waiting for true revenue cycle management. With a re-imagined lockbox, their wait is over.

John Reynolds is president of FIS Healthcare Payment Solutions (Jacksonville, Fla.). The division provides solutions to accelerate the exchange of information and funds between patients, payers, administrators, providers and financial institutions.