Winter 2025 Issue

Revenue Cycle Management: Staking Their Claim
By Susan Chapman, MA, MFA, PGYT
For The Record
Vol. 37 No. 1 P. 8

Managing the revenue cycle in ambulatory surgical centers (ASCs) presents challenges, from complex payer contracts to fluctuating patient volumes. Director of revenue consulting with SYNERGEN Health Patricia Smith, MBA, has more than 20 years of leading revenue cycle management operations and ASCs. Smith offers practical insights and strategies for ASC administrators to maximize revenue, minimize denials, and ensure compliance.

ASCs are health care facilities offering same-day surgical care, including diagnostic, acute, and preventive procedures. These facilities do not require an overnight stay and are specifically designed to provide cost-effective, efficient alternatives to hospital-based outpatient surgeries, while maintaining the same high standards of safety and care.

Over the years, the health care industry has seen a shift from the hospital setting to the ASC setting driven by a number of factors. “One factor is the payers because it is more cost-effective to use an ASC,” Smith says. “It costs about one-third the price to perform a procedure in an ASC compared to one performed in a hospital, allowing payers to benefit financially by transitioning appropriate cases out of hospitals. “We bill under ‘global,’ which means you are billed for just a procedure; you’re not going to get billed for the Band-Aids and all the supplies that go into your case.” Smith also notes that ASCs operate with much smaller overhead costs than hospitals, meaning they do not need to offset those costs to remain profitable. She emphasizes, “The ASC can address a case and still be financially viable.”

Claims Challenges
A common assumption is that ASCs generate a great deal of revenue, in reality, their earnings are relatively small. Smith explains, “The financial pressures on these facilities are significant, requiring them to assess the profitability of cases beforehand. Once supply and staffing costs are added, the ASCs must ensure the procedures remain profitable. Any delay in payment reduces the funds available for their functions.” Smith provides an example of how recent data breaches at clearinghouses caused a ripple effect across providers. “We saw cash flow come to a stop for many ASCs, impacting payroll, rent, and vendor payments, leading to a snowball effect,” she says.

Increased accounts receivable pose another challenge. “The older claims are, the less likely they are to get paid,” Smith notes. She adds that ASCs generally expect claims to be paid and adjudicated within 30 days of surgery. However, once claims age to 120 or 180 days, they enter “the danger zone,” and facilities may not be able to collect payment.
Smith describes the first 90 days after surgery as the “low-hanging fruit” for claim collection. “Beyond that point, collecting payment becomes much more difficult and requires additional resources,” she says.

Operational challenges often stem from such financial strains. According to Smith, when ASCs lack cash reserves, they cannot make additional investments, such as purchasing new equipment or funding capital expenditures to improve services. This financial strain can also affect staff morale. “If staff are working hard and not seeing payment for the claims they process, it can be demoralizing,” she observes.

One reason for a claim being denied or payment delayed has to do with the anticipated procedure, if the procedure requires preauthorization. If something unexpected happens during the procedure itself, that can affect how the claim is processed. “You could have a preauthorization for a particular CPT code. Once the surgeon gets into the operating room, though, the procedure is just slightly different,” Smith points out. “Maybe they had to go to a different layer of tissue, or they thought it was going to be endoscopic, which is just a little incision, and instead it becomes open. There is a difference between what we thought was going to happen and what actually happened. During that process, the physician dictates an operative report, which is where the coding comes from. It’s what actually happened in the room. Now, we have to go back and state that we were using one code but now doing this different procedure.”

Another reason for denial or delay has to do with payers that hold all an ASC’s claims for a particular period to ensure the facility is following all of their rules. “It really seems like it would be straightforward, but it’s really not always that clear cut,” Smith says. “We’re dealing with human physicians and the human body. Therefore, what we anticipate could happen could ultimately end up not being exactly what we think.”

To address payment challenges, some ASCs outsource portions of their revenue cycle, such as older claims, to third parties. However, Smith cautions, “While this helps manage workloads and allows the ACS to focus on current operations, it’s imperative to choose a partner who adheres to strict regulatory requirements and has robust data protection and cybersecurity measures in place, such as HITRUST and SOC 3.”

Maximizing Revenue
Smith also highlights automation as a critical tool for maximizing revenue and minimizing denials. “There is a misconception that adding more people will lead to better outcomes in revenue cycles, but that’s not always true,” she states. “Instead, automation can streamline processes like verification of benefits and coding. For instance, automation ensures that claims are accurate before submission, reducing errors and denials. If you’re preparing for a cataract procedure, for example, automation can ensure the correct intraocular lens implant is included in the claim,” she explains. “Personnel cost is always the single biggest line item on an ASC’s profit and loss statement, so anything that they can do to reduce those costs is going to be beneficial to their bottom line. Still, we would never want to replace people with robots. Patients still want to see a human face when they come in. They want to speak with their doctors. But if we can provide them better care because we’re saving money on the back end by using these technologies, it’s a win-win for everybody.”

Smith emphasizes the importance of denial management and predictive analytics in helping to keep an ASC profitable. “For instance, machine learning can help address denials more efficiently and with fewer errors,” she says. “This technology allows ASCs to streamline processes and focus on delivering quality patient care. Systems can be trained to read denial letters and extract specific data points, minimizing human intervention. Additionally, by analyzing past denials, ASCs can identify patterns and address potential issues before claims are submitted. This proactive approach helps reduce denial rates and ensures smoother financial operations.” Smith also notes that automation can identify discrepancies before claim submission, ensuring that potential revenue mistakes are caught early.

Data Security
Security challenges in the health care sector, particularly concerning data protection, also impact ASCs. Smith pointed out that the increasing integration of systems across multiple vendors has created a web of potential vulnerabilities. “We can no longer protect data at a single point,” she says. “Every vendor and individual with access to patient data must adhere to strict compliance standards because one weak link can compromise the entire system.” With regard to security, Smith also addresses the prevalence of ransomware attacks and data breaches. “These attacks are not just targeting small offices but also major institutions handling vast amounts of data. Both small and large providers must ensure robust security measures,” she explains. Smith maintains that protecting patient data requires a combination of physical safeguards, such as locked storage, and less tangible measures, including stringent digital security protocols.

The need for compliance in the face of increasing scrutiny in the health care sector is of special emphasis for Smith. “Today, audits and surveys are more rigorous than ever,” she says. “ASC operators must ensure that all data access points, whether internal or external, meet the highest security standards. If everyone involved is committed to compliance and security, ASCs can thrive while continuing to deliver excellent patient care.”

— Susan Chapman, MA, MFA, PGYT, is a Los Angeles–based freelance writer and editor.