Don’t Sleep on this Revenue Cycle Metric
By Rosalyn Powers, VP RCM, Northwell Health
In theory, managing accounts receivable (AR) is a straightforward business. Often this entails gauging the health of the aging, ensuring the timely follow-up of accounts, submitting quality appeals, or having a handle on underpayments and systemic issues. How well an organization manages these tasks can be measured with standard key performance indicators (KPIs) such as a clean claims rate, the percentage of AR greater than ninety days of age, appeal win rates, and a plethora of other metrics we see on every traditional dashboard.
To maximize financial opportunity in your aged receivables, staff must get to every account that requires a touch in a timely manner and conduct quality actions to progress the balance toward resolution. A major challenge many organizations face is building a metric to demonstrate whether your business office is getting to all accounts that require a human touch, and if they are doing so within an expected timeframe. Easily put, can management see if the team is keeping up with the volume?
A solution used within the many businesses at Northwell Health is a metric termed work-in-process (WIP). This provides our business office management a snapshot of the volume of claims that require a touch by staff, offering the ability to react in real time. This can trigger the shifting of team assignments and proactive communication of risks to leadership in the event of staffing shortages or unexpected complications. If the business office falls behind on follow-up, it will be evident in real time.
WIP is calculated by counting the volume of all untouched claims that are aged in excess of a set number of days post billing, plus the volume of claims that have an expired tickler of more than 24 hours. Both buckets represent claims that require a touch by follow-up staff, showing your management exactly the volume of work needed to stay current with follow-up. These volumes can be translated to days using incoming volume trends or remain in volume form.
Measuring the staff’s ability to keep up with the backlog of aging receivables can eliminate the highly avoidable timely filing denials related to follow-up. Additionally, when a backlog reaches unhealthy levels, the staff spend time working on accounts that have become less collectible, meaning their time spent was not driving cash and a clean receivable.
WIP can also provide insight into the state of current staffing levels. For example, if fully staffed with majority of team members meeting daily productivity standards yet the WIP is not nearing zero, it would be an ideal time to reevaluate the appropriate number of staff to meet the volume of accounts requiring a touch. As your volume increases or payor behavior changes, you want to see how that impacts the department’s ability to keep up. WIP is an exceptional barometer in regard to how your business office responds to those various challenges.
In addition to WIP, two complementary units of measure required to gauge a successful follow-up team at the staff level: Productivity and Quality Audits.
A global pandemic forced many business offices to a remote setting, emphasizing the need for productivity. At Northwell Health, productivity is credited when an account note is created by the user because without a note, there is no record of the activity that took place. Measuring productivity daily and providing those results back to the staff members is key when fostering a sense of accountability through expectations and performance. Goals should be achievable, but often reviewed when efficiencies like bots or automation are implemented to ensure they are still appropriate expectations.
Recently one of our business units began publishing a grid of monthly productivity of all staff members using unique numerical identifiers in the place of names. Each person knows who they are on the list and can see where they fall in line with their peers, without advertising over and under performers. It gives many staff a sense of accomplishment, and we often see the competitive spirit boost their desire to meet or exceed the goals.
It goes without saying being productive and getting to all accounts means very little without a quality touch. Quality audits are at the core of collecting cash from aging receivables. The selection and review of random accounts that were worked recently by each staff member should be done monthly. If possible, this should be done across all staff members, as there is always room for improvement and healthy discussion. Quality audits are often where management learns of broken processes or issues and can identify the need for additional training.
Many business offices are doing variations of quality audits and productivity, but without WIP, they will have difficulty reaching their full potential. That trifecta of metrics, consisting of WIP, productivity, and quality audits, will provide the needed insights. Hence, leadership recognizes if they are keeping up with the volume and doing the kind of work that will continue to contribute to the financial success of your organization.