A guide to medical billing automation and revenue cycle management for your independent practice

In recent years, independent medical practices have been pushed to do more with less. Between staffing shortages, cuts to Medicare reimbursement, and prevalent claim rejections, practices are facing tough challenges. To capture more revenue, medical practices increasingly embrace medical billing automation. “When used correctly, digital tools, including analytics and revenue cycle automation, can manage compliance risks, better protect patient and staff data, reduce healthcare costs, eliminate process inefficiencies, and much more,” write the authors of a 2023 PwC report.

Other practices outsource the time-consuming and complex process to medical billing companies, preferring to enlist specialized professionals. 

Independent healthcare practices can reap significant benefits from implementing revenue cycle automation or outsourcing the process. But both options come with considerations. Here’s what you need to know. 

Practice management systems that enlist technology such as robotic process automation (RPA) can ease the billing and coding burden. RPA is an automation technology that uses software-script bots to replicate tedious manual front- and back-office billing process tasks — and it’s reshaping the medical billing landscape. One 2021 survey found that 78% of healthcare providers are already using or implementing automation in their revenue cycles, up 12% from 2020. 

As a technology that increases accuracy and can work around the clock, RPA has enormous potential. In a recent IDC survey, 79% of respondents agreed that RPA “reduced errors or mistakes, reducing time spent in rework.” In an article for McKinsey, Brandon Carrus, Sameer Chowdhary, and Rob Whiteman determined that automation can relieve the significant cost burden associated with the administration of the US healthcare system.

“The net result is that if automation’s full potential were achieved, it could have a significant impact on reducing costs and improving affordability of healthcare,” they conclude.

RPA is best used for error-prone tasks, including manual data entry, that don’t require human decision-making. In medical billing automation, RPA can process claims, generate and send patient invoices, process payment, and automate follow-up. Beyond billing, independent practices can leverage RPA to secure prior authorizations, verify insurance, extract data from records or lab results, and more. 

A Deloitte survey found that leaders who had implemented RPA agreed that it: 

Managing the medical billing process can be daunting and time-consuming, especially for independent practices. The intricacies of coding, dealing with payers, and collections are often too much for a growing practice’s staff. Yet in-house billers can be hard to find and expensive to hire. In addition to salaries and benefits, practices must provide the medical billing technology — all of which can cost more than outsourcing. 

For practices without an in-house biller or the budget to support one, outsourcing medical coding and billing is an effective way to navigate the critical but convoluted process.

As dedicated specialists, medical billing companies are well-versed on medical coding and stay on top of the always-evolving requirements to ensure accurate claims submission. Submitting clean claims the first time is critical as a staggering estimated 50% of denied claims are never resubmitted — resulting in significant revenue loss for practices. 

Additionally, medical billing companies offer a comprehensive range of services, including claims management and follow-up communications, like resubmissions, corrections, and appeals. They have established systems and workflows to optimize revenue collection, so your practice can avoid having to hire or train staff. 

Medical billers also leverage the newest technology for medical billing automation, which supports a better first-pass acceptance rate (FPAR). Healthcare business consultant and industry expert Aimee Heckman recommends that practices aim for a FPAR of greater than 95% for the shortest revenue cycles and best profitability. Achieving this prevents practices from front-end rejections; reduces costly follow-ups on accounts receivable, and decreases the labor-intensive need for appeals; claims corrections, and resubmissions.

Engaging a medical billing company is a way to support your practice’s revenue cycle. Doing so allows your practice to:

The more clean claims your practices submits, the more profitable it will be. But the process is rife with the potential for human error given the complexity of medical coding and the accuracy that acceptance requires. 

A clean claim is one that contains the complete and accurate information the payer requires, and is submitted and accepted into its adjudication system within the timely filing window. 

Most payers do not allow appeals for claims that have been denied on the grounds of timely filing, so if a claim is denied for another issue, like incorrect demographic info, it’s imperative to correct and resubmit it as soon as possible. 

Practices need standardized claim management systems to handle amends, resubmissions, and claim corrections to capture revenue. But the most effective way to drive revenue is to boost your FPAR. 

By improving accuracy and streamlining and standardizing workflows, electronic claims processing can significantly improve your practice’s clean claims rate. It checks for things like proper setup of providers, payers, patient demographics, and under- or over-coding. 

Electronic claims submission transmits in real time, and gives practices real-time status visibility. Practices can easily track claims and proactively follow-up or resolve issues. This works to ensure speedy claims processing and reimbursement, a shorter revenue cycle, and better cash flow. 

Bringing your independent practice into the future is key for its longevity. With stringent payer requirements and shrinking margins, independent practices must rethink the revenue cycle with a focus on medical billing and claims submission. 

By embracing automation or outsourcing, your practice can streamline the billing process and claims management to reduce claim denials, minimize reimbursement delays, and shorten payment cycles. At the same time, you can liberate staff from the most tedious (and error-prone) tasks of their jobs, allowing them to focus on more strategic revenue generation initiatives. Medical billing automation or outsourcing can ensure your practice’s financial health and support the quality patient care you deliver.