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Tuesday March 2, 2021  |  Todd Brown, Director of Financial Product Management at MEDHOST

Revenue Cycle Practices – Part two: Managing Billing Flow

Revenue Cycle Practices – Part two- Managing Billing Flow-01

Last week in part one of this series on revenue cycle management best practices, we discussed the importance of contract management and maintenance.

In the second portion of this three-part review, we take a closer look at another important facet of revenue cycle management (RCM) – billing flow, primarily, processes relating to pre-payment billing.

Why You Can’t Afford Billing Flow Errors

Billing flow is one of the areas most impacted by staff performance. It’s estimated that up to 80 percent of medical bills contain errors.[1] Denied claims resulting from billing errors most obviously impact how quickly a facility gets paid. However, the cost of appealing the claim is often overlooked. More importantly, high-dollar claims are cause for even greater concern as appeals are typically more complex and may require multiple levels of appeals. These high dollar claims typically require a higher cost resource in each subsequent appeal cycle.

Elevated Importance of Pre-Payment Billing Processes

To quickly and accurately reduce billing errors, every stage of the pre-billing process must be considered critical with a strict attention to detail. For example, Coordination of Benefits (COB) denials still occur routinely but are one of the most easily avoided types of denials.

Accurate gathering, verification, and recording of the patient’s insurance information—key aspects of COB—may not seem challenging, but difficulties within this process are compounded by regulatory and economic drivers. For instance, as more patients become insured, lose insurance, or pick-up employer sponsored plans, more variables are thrown into the equation.[2]  These complications further re-enforce the need for vigilance and a high level of attention in COB and other pre-billing processes.

One of the less glamorous, but still important, RCM performance metrics is “discharged not final billed” or DNFB for short. This is the ratio of accounts held for billing. Poor documentation and coding during the episode of care can significantly and adversely impact the process of completing a patient’s chart, and coding and abstracting. For these reasons, proper recording of a patient’s status and place of service are also important components to creating a correct bill.

Clean Claim Rate or Real Revenue?

It is common to read a lot about clean claim rates (CCR). Most RCM consultants aim for hospitals to achieve a CCR above 90 percent and many clearinghouses will promote clean claim percentages over 95 percent.[3]

How important is that metric?

True CCR as promoted by clearinghouses refers to the percentage of claims that are accepted by the payors from the clearinghouse.  Given the complexity of scrubber rules this number should be high.  However, it does not directly correlate to a low percentage of denials and underpaid claims.

A better metric to focus on is the first pass yield which is the percent of claims that actually get paid upon their first submission and how completely they are paid.

Reducing claim denials and maximizing full and timely payments requires pre-billing processes that incorporate detailed performance monitoring and insight at every stage. The bulk of these processes will rely heavily on your staff and their ability to execute with both accuracy and speed.

A hospital business office focused on performance improvement via processes analysis will often find itself worrying less about clean claims, focusing more energy on ensuring faster and consistent returns.

To learn more about how MEDHOST can help you with operations, analytics, and performance monitoring, please reach out to us at or call 1.800.383.6278.

[1] Gooch, Kelly. (2016). “Medical billing errors growing, says Medical Billing Advocates of America.” Becker’s Hospital Review. Retrieved from
[2] Benjamin D. Sommers & Sara Rosenbaum, “Issues in Health Reform: How Changes in Eligibility May
Move Millions Back and Forth Between Medicaid and Insurance Exchanges.” 2011                                                                    

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