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One orthopedic management services organization’s “good problem to have” was proving a problem nonetheless.
On the verge of rapid growth, they found they couldn’t depend on their legacy vendor Experian to support a key aspect of the revenue cycle: underpayments.
On their own, the MSO often unearthed areas where payers paid less than the amounts agreed to in their contracts. Research revealed that Experian’s inaccurate payment variances stemmed from faulty calculations. When the MSO raised this issue, however, Experian often took weeks to respond. Experian’s ineptness forced the MSO to manually check actual and contracted payments via spreadsheet, a time-consuming, cumbersome process.
The MSO solved their underpayments problem with automated underpayments and healthcare contract management software. Within months, they identified $10.3 million in underpayments from 7 payers, which amounted to 13% of reported revenue.
Every year, orthopedics physician groups and healthcare MSOs lose hundreds of millions of earned dollars via payer underpayments. A study reported in Becker's Hospital Review reveals that providers lose 1 to 3% of their net revenue annually to underpayments. We’ve seen physician groups losing anywhere from 5 to 15% of net revenue due to reimbursement shortfalls.
Underpayments are just one area – although a lucrative one – in the orthopedics revenue cycle. Physician group and MSO revenue cycle executives can clean up their entire revenue cycle when they focus on the specialty’s unique challenges. Here, we go through orthopedics revenue cycle vulnerabilities and list ways the revenue team can build defenses against them.
What is RCM for Orthopedics?
RCM for orthopedics is a comprehensive financial process that covers the entire patient care journey in orthopedic practices, from initial registration to final payment collection. It involves managing complex coding for intricate orthopedic procedures, handling high-cost treatments and equipment and navigating evolving reimbursement models.
Marked by frequent surgeries, orthopedics can involve lengthy payment cycles. Revenue cycle management for orthopedics depends on both clinical and administrative data to improve billing accuracy, monitor underpayments, manage contracts, and create upfront estimates, all of which contribute to optimal financial performance.
RCM for orthopedics challenges and their solutions
Read through the challenges unique to orthopedics as well as the strategies to address them. Despite your specialty’s complexities, you can plug your revenue cycle leaks.
RCM for orthopedics challenge #1: Complex coding and billing
Often involving complex surgeries, orthopedics procedures tend to have multiple steps that require intricate coding. Orthopedists also struggle to capture all billable services. Both issues can be addressed with the following tactics.
Orthopedics coding repair tactic #1: Comprehensive documentation
Comprehensive documentation provides coders with the necessary information to assign correct codes, reducing the likelihood of errors and claim rejections. This solution means you and your team must:
- document all procedures and treatments in detail.
- record any complications or follow-up visits.
- note all equipment used.
Orthopedics coding repair tactic #2: Find specialized coding staff
Investing in specialized orthopedic coders or partnering with experienced RCM providers can improve coding accuracy. Ensure those coders are:
- experts in ICD-10, CPT, and HCPCS coding standards
- employed by a company that provides ongoing professional training. Coders must stay updated with the latest guidelines.
Orthopedics coding repair tactic #3: Utilize current coding systems
Staying current with coding systems is essential for accurate billing. Make sure you are:
- using the latest ICD-10, CPT, and HCPCS codes for all orthopedic procedures.
- regularly updating coding software and resources.
- monitoring changes in coding requirements, such as new CPT codes introduced for specific procedures.
Orthopedics coding repair tactic #4: Regular audits and compliance checks
Conduct internal audits and compliance checks to identify and correct coding errors. This practice:
- reduces the risk of financial penalties and legal issues.
- ensures adherence to federal, state, and industry regulations.
- helps in identifying areas for improvement in the coding process.
Orthopedics coding repair tactic #5: Lean on technology and analytics
Advanced technology and analytics can improve coding accuracy and efficiency. That 98% of providers submit claims electronically today speaks to its efficacy. The technology you use should:
- have sophisticated analytics tools for financial performance analysis.
- identify potential coding errors or missed billable services.
- streamline the coding and billing process.
By implementing these steps, orthopedic physician groups and MSOs can enhance their coding accuracy, capture billable services more effectively, and ultimately improve their revenue cycle management.
RCM for orthopedics challenge #2: High-cost procedures and equipment
Orthopedic practices deal with intricate, often expensive treatments and equipment. Further, orthopedists are some of the highest paid physicians in medicine. High cost services translate into heavy financial burdens for patients, leading to payment issues that further strain revenues. Given orthopedists' high overhead, it takes careful revenue cycle optimization to keep many provider groups in business.
Managing high orthopedics costs tactic #1: optimize revenue cycle management
Orthopedic physician groups and MSOs can take several proactive revenue cycle steps to counter the high costs associated with procedures and equipment. Our recent article on revenue cycle processes covers the 12 steps in revenue cycle management and recommends process mapping, which involve documented lists and diagrams of all the tasks in each step in the revenue cycle. Healthcare leaders agree that process mapping reflects organizational maturity, a departure from the chaos that plagues immature health systems. Orthopedics practices can recoup millions in leaked revenue by optimizing areas in the revenue cycle like underpayment, denial, and contract management.
Take a quick, self-guided tour through a powerful contract management and underpayments identification tool:
The research below reveals that investment in automated revenue cycle management tools streamlines invoicing, collections, and payment processing while reducing administrative burden.
- In a recent survey by the State of the Revenue Integrity Industry Survey, 85% of respondents experienced positive revenue impacts in the past year due to RCM technology automation.
- Black Book's survey of 1,302 healthcare professionals found that those utilizing revenue cycle automation software saw an average 27% reduction in cost-to-collect and a 6% increase in net patient revenue.
- McKinsey & Co. shares that the US healthcare sector could potentially reduce administrative costs by $200 to $360 billion through the adoption of technologies like automation, AI, and analytics.
Managing high orthopedics costs tactic #2: track all expenses
Tools like QuickBooks or Xero allow orthopedic practices to track income and expenses in real-time, generate financial reports, and make informed decisions quickly. Providers should then use these budgets to identify cost saving opportunities and plan for future investments.
Physician groups and orthopedic MSOs can use contract modeling to forecast impact to revenue from their own or proposed payer changes to rates.
Take a quick tour of efficient contract modeling in action here:
Managing high orthopedics costs tactic #3: negotiate supplier contracts
Build relationships with suppliers to secure discounts on bulk orders or extended payment terms for expensive orthopedic equipment. The larger your organization, the better prices you can secure.
Managing high orthopedics costs tactic #4: lease rather than buy equipment
Consider leasing high-cost machinery instead of purchasing outright. Orthopedic technology evolves rapidly, so leasing allows practices to easily upgrade to newer models at the end of each lease term. This ensures access to the latest features and capabilities without being locked into outdated equipment. Predictable monthly payments also help with budgeting and cash flow management.
RCM for orthopedics challenge #3: patient payment responsibility
The healthcare industry is adapting to a new paradigm where patients are increasingly responsible for a larger portion of their medical costs. As such, they’re providing the revenue orthopedics practices depend on. According to the Healthcare Financial Management Association (HFMA), patients now account for 30% of provider revenue, a substantial increase from previous years.
This shift has driven the rise in lagging A/R, bad debt, and write-offs. After a recent MGMA Stat poll asked medical practice owners about days in A/R, the majority (56 percent) reported increases. Further, the higher the balance, the harder it is to collect. Advisory Crowe LLP finds:
• the collection rate for $5,000 to $7,501 claims is just 32%
• the collection rate for $7,501 to $10,000 was just 17%
Because orthopedics typically has higher balances than most specialties, they are particularly dependent on patient payments. Moreover, not only must providers secure these patient-sourced funds to ensure their financial viability but they must also take on the role of educating patients about their financial obligations and payment timelines.
To address this new reality, providers need to develop and implement strategies that facilitate patient understanding of their financial responsibilities while also optimizing the collection of patient payments.
Improve patient collections tactic #1: collect more upfront
Assertive upfront collections are the new reality for orthopedics groups and practices. Research shows that the probability of securing payment decreases after the patient leaves the healthcare facility. Our upfront collections article covers how you can emphasize its importance to staff and help them use compassionate, appropriate patient financial responsibility language when dealing with the public.
Improve patient collections tactic #2: rely on patient payment estimate technology
Patient payment estimate technology supports staff in collection efforts. According to CMS, manually researching insurance EOBs and compiling estimates manually can take a staff member up to 1.3 hours. Pre-service patient estimates delivered at point of service or even days before care helps patients understand and plan for their financial responsibility. The good news for all involved is that patients want to know their financial responsibility upfront. In fact, a study from Patient Rights Advocate, Inc. and Marist of 1,130 American adults reveals that 94% want to know what their healthcare will cost them upfront. Echoing this finding, an InstaMed study reveals that 80% of patients want this information before receiving care.
Take a quick tour of how you can simplify upfront collections when you automate eligibility verification and estimate generation here:
Maximizing collection efforts at or before the time of service reinforces revenue. When one three-hospital healthcare organization in Florida brought in an automated patient payment estimate solution, it improved upfront collections by 45%.
Improve patient collections #3: Institute payment plans
High-cost procedures may warrant flexible financing options so that patients can meet their obligations in a reasonable way and even appreciate the provider’s efforts. The last thing you want is for patients to avoid their responsibility, a move that can impact their credit and your revenue. Ally Deale, director of patient access operations at Maryland’s Luminis Health, explains in a Becker’s white paper,
“Too many patients don’t have a clear understanding of what their responsibility may be or what options are available to help them. So, they either don’t continue care or hide from attempts to get them aid.”
Deale goes on to envision front end staff as patient advocates and educators apprised of how to work with financial counselors and lending partners for the patient’s benefit. With the financial piece taken care of, staff can focus on clinical outcomes rather than the financial impact of the organization’s care.
It takes a proactive approach to patient payments and education for orthopedic providers to navigate high patient balances effectively. These upfront patient collection approaches not only secure crucial revenue but also foster a more transparent and patient-friendly financial experience, ultimately benefiting both the practice and its patients.
RCM for orthopedics challenge #5: Accounts receivable management
Orthopedic practices often struggle with managing complex and lengthy payment cycles for surgical procedures. Underlying lagging accounts receivable is the need for multiple CPT codes that accurately represent the combination of treatments, surgeries, and follow-up care provided. Further, as mentioned above, lengthy pre-authorization processes can delay the start of the payment cycle and add administrative burden.
Another unique factor of orthopedic billing is the prevalence of global surgery packages, which cover both the procedure and post-operative visits for up to 90 days. This extended period can complicate the billing process and delay final payments.
Orthopedics practices are using these tactics to overcome their complex A/R challenges:
Reduce days in A/R tactic #1: Leverage technology
Given the complexity of today’s ICD, CPT and HCPCS codes, staff must have the support of untiring, AI- and ML-powered billing software and tools. These tools automate repetitive tasks, reduce errors, and offer real-time insights into financial performance. Implementing AI-driven prior authorization software speeds up the process and reduces administrative burden, allowing staff to focus on more critical tasks.
Implementing efficient, modern scheduling systems can improve patient flow and reduce no-show rates. Verifying patient eligibility and coverage upfront minimizes denials and payment delays. Additionally, using a reliable clearinghouse for streamlined claim submission reduces errors and rejections, ensuring that claims are processed correctly and promptly.
Reduce days in A/R tactic #2: Use checklists to improve documentation
Implementing a standardized checklist ensures all necessary documentation is collected early in the care process. In all industries, checklists have proven to reduce errors and speed work.
MD Clarity - A specialist in RCM for orthopedics physician groups and MSOs
While orthopedists enjoy some of the most lucrative businesses and salaries, their costs and complex processes threaten to weigh down their opportunities. Further, given the relentless pace of orthopedic medical technology, the pressure to modernize in all aspects of practice is more dire than for other specialties.
Orthopedists were some of the first clients MD Clarity partnered with when it started over 10 years ago. Since then, our contract, denial, and underpayment management software RevFind has helped orthopedic physician groups and MSOs recoup millions of dollars from payers. Patient payment estimate software Clarity Flow ensures providers optimize patient collections before patients walk out the door.
To see how you can reinforce your revenue and additional hires using these two platforms, schedule a demo today!
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