Mapping the Vision Insurance Revenue Cycle From Start to Finish

The journey from performing a service to receiving payment is more convoluted in healthcare than in almost any other industry. Doctors have to seek reimbursement from a menagerie of private insurance companies and government programs, all of them with different fee structures and billing procedures — and many of whom seem to be looking for any excuse to deny payment.

Maintaining a steady income stream amid this confusion requires a systematic, diligent approach to calculating, submitting, and collecting payment claims. This discipline is known as revenue cycle management, and it’s the field I’ve worked in for more than a decade. In this article, I’ll introduce you to the core elements of the revenue cycle and explain how they fit together to get you paid for your work.

Why Understanding the Revenue Cycle is Crucial for Your Vision Care Practice

Several years ago, I was called in as a consultant to help settle a question about the value of a vision care business. The business owner was trying to sell his practice and was sure he was being grossly underbid. By his estimates, the value of his uncollected revenue alone was worth $400,000. The prospective buyer — a private equity firm — was only offering $80,000 for it.

I went over the practice’s reimbursement and accounting processes with a fine-toothed comb, interviewed his staff about their workflows, and trawled through his AR records. In the end, I was able to confirm that the buyer’s valuation was way off.

The ARO was only worth about $3,000.

It might sound bizarre that anyone could so badly miscalculate how much income their practice was owed. In reality, it’s all too common in the vision care industry. I’ve worked with clients who didn’t realize they were missing out on literally millions of dollars in billable revenue until we took a hard look at their reimbursement cycle.

The most common reason for this phenomenon is the lack of a systematic, streamlined approach to the process of getting paid. When you treat booking, billing, and bookkeeping as a collection of disconnected tasks, there’s lots of room for payments to slip through the cracks.

Instead, you need to learn to see these processes as phases of a single continuous workflow — what we call the vision insurance revenue cycle.

Key Players in the Vision Insurance Revenue Cycle

Revenue collection in the eye care industry involves a lot of people and a lot of moving parts. Management must cultivate a deep understanding of how all these elements work together, as well as the potential complications each one can bring to the process.

Patients

The first players to consider are your patients. Every transaction that makes its way through your practice’s revenue cycle begins with them. They’ll also usually end up footing at least a portion of every bill in the form of copays and deductibles.

Managing patient information is a huge part of optimizing your reimbursement cycle. Miscommunications about details like legal name changes or coverage providers can throw a wrench into the workflow early on. We'll come back to best practices for avoiding these types of issues.

Coverage Providers

Insurance providers can be grouped into two major categories. First are the traditional health insurance companies, like United Health, Blue Cross Blue Shield, and Aetna, as well as government providers like Medicare and Medicaid.

Because they cover so many different kinds of care, medical insurance providers have more intricate rules for correctly submitting claims. It’s easy for billers to get tripped up by these hyper-specific requirements, especially when they have many other tasks demanding their attention.

Then there are managed vision care (MVC) companies like EyeMed or Spectera. These companies handle coverage for most vision services like updated prescriptions or new eyeglass frames. Unlike the sprawling complexity of medical insurance, MVC billing only involves a few standardized codes.

On the other hand, these companies all have different reimbursement procedures, which often require copying data from your records to their websites by hand. Navigating these quirks can be one of the bigger challenges in vision insurance revenue cycle management. In contrast, you can generally submit all your healthcare claims through a single electronic clearinghouse, such as:

• Trizetto
• Apex
• Waystar
• Emdeon

This added centralization makes invoicing traditional insurance providers a bit more convenient.In-House SystemsMost modern vision care practices have some type of practice management (PM) software to handle everyday office tasks. From scheduling appointments to calculating bills to sending out invoices, the PM system plays a role in just about every stage of the vision insurance reimbursement cycle. Notable PM systems include:

• OfficeMate
• Revolution
• Crystal
• Acuity Logic

You may also use an electronic health record (EHR) system to store and manage detailed medical information for your patients. EHRs can simplify the billing process in a variety of ways, most importantly by helping you correctly document and code the procedures you’re charging for.Many leading EHRs now offer built-in PM capabilities, which can help avoid redundancy and cut down on opportunities for transcription and data entry errors. Some of the leading EHR/PM systems include:

• Uprise
• EMA Ophthalmology
• drChrono
• Medflow

Some practices still handle routine in-office tasks using a jumble of different software programs (and, in some cases, paper and ink). But it’s easy for human error to creep into the gaps between these disconnected systems. You’re usually better off handling things with a unified software suite.

Staff

Perhaps the most important players in the entire reimbursement cycle are the people who have to juggle all of the above: your practice's office staff. They need to maintain up-to-date coverage information, correctly calculate payment responsibility, and handle every step of the billing and reconciliation process.

And they have to do all that while providing the personalized attention and empathy that leave your clientele feeling cared for. The more time they’re spending correcting billing errors, the less time your people have for the work that enables a stellar patient experience.

A well-trained team might be your single most valuable asset from an RCM perspective. You’ll rarely regret investing in the education and tools they need to function effectively.

‍Automating some of the most error-prone parts of the vision insurance revenue cycle can lead to massive gains in efficiency and effectiveness. revBot by Revival Health is a fantastic tool for this purpose — it’s an adaptable virtual worker capable of taking over the tasks that cause the biggest headaches for your staff. Error-free data transfer and healthcare billing are as easy for revBot as they are frustrating for humans.

Breaking Down the Vision Insurance Revenue Cycle

Each phase of the reimbursement cycle offers a unique set of challenges. Let's go through the process step-by-step and explain some specific ways to improve performance at each stage.

Phase 1: Verifying Benefits

The revenue cycle starts the moment a patient picks up the phone or logs into your online portal to schedule a visit. How you handle this stage will lay the groundwork for everything that follows.

Setting up an appointment involves three essential RCM tasks:

1. Recording all relevant patient information, such as name, date of birth, insurance provider, and policy number.
2. Checking with the coverage provider to get the details of the patient’s coverage.
3. Obtaining prior authorization for procedures whenever possible.

All of the information you obtain in this step should be loaded into your practice management system long before the patient steps through the door. This will reduce the risk of delays at every step that comes afterward. It also cuts down on errors by giving your staff time to spot and correct any discrepancies or inaccuracies.

Best practices for Phase 1 include:

Pull patient benefits at least three days ahead of the visit.

Whenever possible, this should be done at the time the appointment is requested so there’s no chance the task will be forgotten or pushed off until the last minute. This may be easier if your practice management software includes an online portal where patients can request appointments. That way, the system can automatically prompt the user for the necessary details during scheduling.

Use appropriate technology.

At its core, verifying benefits is mostly about copying information between different digital systems. You’re usually better off cutting out the middleman and letting your software do it for you. Virtual tools like revBot can handle this task seamlessly the moment a patient schedules an appointment.

Don’t make assumptions.

Even for “routine” appointments, your staff should be collecting both medical and vision insurance information. Patients don’t always know the real reason for a visit, even if they think they do.

Let’s say someone comes to your clinic because their vision is getting blurry. They think they need a new prescription, but when you examine them, you discover the problem is caused by a corneal edema. Since that’s a medical issue, coding, pricing, and billing for this appointment will go much more smoothly if your staffers have already pulled their medical benefits.

Phase 2: Checkout

The next major transition in the revenue cycle comes at the end of a visit, when your staff has to figure out what the patient owes. Getting an accurate accounting at this point is vital for several reasons.

First of all, if a procedure you performed doesn’t make it into the record, you’re simply leaving money on the table. Second, if you have to collect a payment from a patient, you’ll have a much easier time taking it at checkout than trying to chase them down after the fact. Third, patient satisfaction suffers every time you have to invoice for something you initially said was covered by insurance.

Best practices for phase 2 include:

Record services as you work.

Correct accounting for a patient’s bill begins during the appointment itself. Log every procedure you’re performing in real time so nothing gets left out. Any experienced medical coder will tell you that rule #1 is: “Don’t code or bill for anything that’s not documented in the medical record.”

Having a unified EHR/PM system greatly simplifies this aspect of the checkout phase. The software can pull data directly from the visit record when tallying up the bill.

Pre-load fee schedules.

A single procedure may qualify for several different reimbursement amounts depending on who’s insuring the patient. Each payer will likely have a different contracted fee schedule, and you’ll need to make sure you’re applying the right one to correctly assess coinsurance charges. I can’t stress enough how helpful it is to have this information stored ahead of time in your practice management system so that staffers don’t have to search for it at checkout.

Phase 3: Claim Submission

After you’ve invoiced your patient and collected their copay, it’s time to send the remainder of the bill to their insurance providers. If you get this step right, you may be able to skip right over Phase 4. Unfortunately, errors and processing delays are common at this stage.

That’s partly due to the finicky and repetitive nature of the work. Much of eye care billing is about looking at data in one system and typing it into another, over and over again. Even the most diligent employees are likely to make occasional clerical errors under those circumstances.

The problem can be compounded by the fact that vision care providers generally have to be fluent with two different claim submission procedures. If you specialize in ophthalmology, you may have less experience navigating managed vision care claims systems. If you perform mostly optometry services, you might be less familiar with medical coding.

Best practices for Phase 3 include:

Know who to bill for what.

Many patients may have multiple forms of coverage that will cooperate to cover the cost of a procedure. In these scenarios, it’s important to correctly determine which payer to bill first (a practice known as coordination of benefits).

For instance, if the primary reason for a visit was medical, you should bill health insurance first and have the patient’s vision insurance pick up the remainder of the tab. Not only is this your legal responsibility, but getting it wrong may mean you get paid considerably less — medical insurance often reimburses at 2-3 times the rates you'd see from an MVC company.

Submit claims immediately.

The longer you wait to file, the less likely you are to receive reimbursement. Some vision insurance companies won’t accept claims more than 60 days from the date of service. And if you delay too long, another practice might wind up using the benefit you were counting on.

If you have a two-door practice, a delay of even an hour could mean you lose out. Your patient might go to your practice for glasses, then to the LensCrafters next door for contacts. If their vision benefits only cover one or the other, whoever files first will receive the reimbursement.

Phase 4: Managing Rejections and Denials

Despite your best efforts in the previous phases, at least a few of your vision insurance claims will probably be rejected or denied on the first submission. Correcting and resubmitting them quickly is an essential piece of revenue cycle management.

Keep in mind that although denials and rejections are often mentioned in the same breath, they represent very different types of errors. We discuss this in more depth in our post on improving your claims approval rates, but the short version is that a rejected claim is one that the insurance company never logged as submitted. This is usually due to data entry mistakes or procedural errors.

Denials are claims that have been sent back for more substantial reasons, such as a mismatch between diagnosis and procedure codes. They’re seen more often in ophthalmology than optometry, since medical coding is considerably more convoluted.

Best practices for Phase 4 include:

Review aging claims regularly.

It’s easy to lose track of claims that were submitted weeks or months prior. But if you make a point of working them regularly, you’ll find that many of them were rejected or denied for simple mistakes that can be quickly corrected and resubmitted. Letting these potential payments slip past the filing deadline hurts your practice’s bottom line. Set aside at least an hour or two a week for your staff to go over aging claims.

Sort rejected and denied according to submission deadlines.

When working claims that have been sent back by payers, always prioritize those that are closest to aging out. Group them based on how much time has passed since the patient visit, then subdivide them according to their timely filing deadlines. This helps ensure you don’t miss a claim that’s nearing the end of its lifespan.

‍Staff education can have a huge impact here. Your billers should be intimately familiar with the deadlines for the various coverage providers they work with.

Pay attention to the reasons for denials.

The most common cause for denied vision claims is duplicate submissions. This usually means that someone on your billing staff tried to correct and resubmit a claim, but didn’t reference the initial denial using the ID number given on the remit. To the insurance company, this looks like you’re submitting the same claim twice.

You should also be carefully reviewing the rejection and denial reports generated by your clearinghouse software. This will clue you into the kinds of errors your staff are making most frequently, revealing where there’s room for improvement.

Phase 5: Reconciliation

You might think the vision insurance revenue cycle ends once a claim has been fully processed by the insurance company. Actually, there are still two indispensable tasks you have to perform.

First, successfully reimbursed claims must be logged and closed out in your AR system. Failure to do this is how you end up in the situation I described up top: with a wildly inflated idea of how much income is outstanding.

Phase 5 is also when you’ll correct any errors from Phase 2 — cases where you submitted an insurance claim for something that should have been the patient’s responsibility. Don’t just write those off as a loss if you can avoid it. It’s often worth at least attempting to collect from the patient.

Best practices for Phase 5 include:

Reconcile newly processed payments on a daily basis.

Making a daily accounting of any new payments that have cleared is the best way to avoid a backlog. You should have someone on your staff (or an outside AR service, if necessary) whose standard duties include reconciling new remits.

In addition to this everyday reconciliation, it’s a good idea to perform regular audits of your outstanding AR to make sure nothing’s been missed. Once a month is a good baseline, though if you can manage to do it biweekly, you’ll be able to tighten up even more.

‍Send patient statements ASAP.

When you discover that you need to collect from a patient for a procedure you thought would be covered by insurance, time is of the essence. Every day that passes reduces the odds that you’ll receive payment. Besides, prompt and clear communications make it less likely that they’ll feel blindsided when they finally receive a bill.

In the best-case scenario, you’d be sending out a statement as soon as you receive an insurance remit and determine the patient has an outstanding balance. Digital solutions like revBot can help guarantee that there’s no time lag in this process. Manually downloading reimbursement records and punching them into your PM system will never be as efficient as a program that can push that data through automatically.

KPIs and Metrics to Watch

Any serious effort to level up your reimbursement procedures must include some way to determine whether it’s working. You can track the health of your revenue cycle with the following metrics.

Big-picture KPIs

Look to these performance indicators to assess the overall strength of your RCM efforts.

• Net collection rate (NCR): The amount of revenue you’ve received over a given period, divided by the total amount of your allowable charges. This is one of the most direct measurements of how effective you are at obtaining reimbursement for services rendered. You should aim to keep this at 97% or higher.
• Bad debt rate: You can think of this as the inverse of your net collections. It represents the percentage of your allowable charges that you had to write off because you weren’t able to collect on them. If you can keep it to 3% or lower, you’re doing something right — but it’s not uncommon to see rates above 9%.
• Cost to collect: How much do you spend to capture the revenue you’re taking in? Cost to collect represents your spending on RCM as a percentage of your practice’s income, accounting for costs like staffing, software, and overhead. Most healthcare practices consider 2-4% of net revenue a good target, though this can vary based on the scale of your operation.
• Revenue per encounter: This metric tells you how much your practice brings in for each patient visit. Your target depends a lot on your business strategy — some organizations focus on smaller numbers of high-value patients, while others emphasize volume. Either way, you need to know this number.

Whenever you’re calculating numbers like NCR, make sure you’re looking at your allowable charges, accounting for contractual fee adjustments for particular services. This helps ensure you’ll have an accurate picture of your expected revenue. I’d recommend reviewing the fee schedules for each payer at least once per quarter, updating them in your practice management system when necessary.

Claim Processing Metrics

The big-picture numbers above can serve as red flags to let you know when there’s a problem with your practice’s revenue cycle. The following KPIs help you drill down on what exactly is going wrong.

• Time to initial claim submission: On average, how long does it take after a patient visit to bill their insurance provider? As we noted earlier, your goal should be consistent same-day submission. If your staff are taking too long to submit, they might be stretched too thin.
• Time to successful submission: This is the average time it takes for an insurance company to accept a claim for processing following a patient visit — including any delays due to claims being rejected for errors like an incorrect date of birth or policyholder. 2-4 days is a reasonable benchmark.
• Days in AR: This number represents how much time, on average, passes between claim submission and reimbursement. Just over a month is ideal. If it’s longer, you may need to look into ways to speed up your process.
• Proportions of claims at different ages: Take a look at what fraction of your outstanding claims fall into each age category — 30, 60, 90, or 120 days. Under normal circumstances, around 80% should be 60 days old or less.

Don’t just treat these numbers as a snapshot of your team’s performance. You should be tracking them continuously, referring back to them on a monthly or quarterly basis. Any upward or downward trends can help you spot opportunities for improvement or show you when the solutions you’ve implemented are working.

Closing Thoughts

Hopefully, you can now see a little more clearly how every piece of the vision insurance revenue cycle affects all the others. Collecting accurate patient information in Phase 1 helps you avoid rejections in Phase 3. Staying on top of reconciliations in Phase 5 also lets you spot claims that are lingering too long in Phase 4. And minimizing errors every step of the way keeps patients coming back to your practice and keeping the wheel turning.

Coordinating all of these competing schedules and priorities might seem like a daunting task. However, if you implement the best practices laid out above — and take advantage of technological tools to improve your speed and consistency — you can often achieve dramatic improvements in your revenue cycle performance.