Revenue Cycle Optimisation Guide for Healthcare Practices

Revenue Cycle Optimisation Guide

Billing leakage is one of the most common and least visible financial problems in Australian healthcare practices. Revenue that should be captured is lost at multiple points across the billing cycle — from patient registration through to payment reconciliation. This guide provides a structured approach to identifying where your practice is losing revenue and practical steps to recover it.

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Understanding the Revenue Cycle

The healthcare revenue cycle encompasses every step from the moment a patient books an appointment to the point where full payment for that service is received and reconciled. In Australian general practice and allied health settings, the cycle typically includes:

1. **Patient scheduling and registration** 2. **Service delivery and clinical documentation** 3. **Item number selection and coding** 4. **Claim submission** (Medicare, DVA, WorkCover, private health fund, or patient invoice) 5. **Payment receipt and posting** 6. **Rejection and denial management** 7. **Patient billing and debt recovery** 8. **Reconciliation and reporting**

Revenue leakage can occur at any point in this cycle. The challenge is that most leakage is invisible in standard practice reporting — it appears as revenue that was never billed rather than revenue that was billed and lost.

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Step 1: Conduct a Billing Baseline Assessment

Before you can improve revenue performance, you need to understand your current state. A billing baseline assessment involves:

### MBS Item Number Utilisation Analysis

- Extract your MBS claiming data for the past 12 months by clinician and item number - Compare your utilisation rates against the Services Australia MBS utilisation data for comparable practices in your geography and speciality - Identify item categories where your practice is significantly below benchmark (common areas include chronic disease management items, health assessment items, mental health treatment plans, and procedural items)

### Revenue Per Consultation Benchmarking

- Calculate your average net revenue per consultation by clinician - Compare against industry benchmarks for your practice type and billing model (bulk billing, mixed billing, or private billing) - Identify clinicians with the greatest variance from the benchmark — this often highlights training or awareness gaps

### Claim Rejection Rate Analysis

- Calculate your overall claim rejection rate and rejection rate by payer type - Analyse rejection reasons — common causes include incorrect item numbers, patient eligibility issues, duplicate claims, and exceeding scheme-specific limits - Quantify the dollar value of rejected claims and the proportion that are successfully resubmitted versus written off

### Aged Receivables Review

- Generate an aged receivables report segmented by payer type (Medicare, DVA, WorkCover, private health fund, patient co-payment) - Identify the total value of receivables aged beyond 60 and 90 days - Assess whether overdue receivables are being actively pursued or passively accumulating

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Step 2: Identify Your Leakage Points

Based on the baseline assessment, categorise your leakage into the following common areas:

### Under-Coding and Under-Billing

This is consistently the largest source of revenue leakage in healthcare practices. Common examples include:

- **Consultation level under-coding**: GPs defaulting to Level B (item 23) for consultations that meet the criteria for Level C or Level D items based on duration and clinical content - **Missed chronic disease management billing**: Eligible patients with chronic conditions who do not have a current GP Management Plan (item 721), Team Care Arrangement (item 723), or review (item 732) - **Under-utilised health assessments**: Eligible patients not being offered health assessments (items 701, 703, 705, 707, 715) despite meeting age and risk criteria - **Mental health items**: Mental health consultations billed as standard consultations rather than the higher-value mental health treatment plan items (item 2715) or mental health consultation items - **Procedural items**: Procedures performed but not separately billed, or billed at lower-value item numbers than clinically appropriate

### Claim Rejection Leakage

Claims that are rejected and not resubmitted represent direct revenue loss. Common contributors include:

- No structured workflow for identifying and following up rejected claims - Rejection follow-up deferred to batch processing (weekly or monthly) rather than addressed daily - Rejections written off without investigation when the cause is unclear - Insufficient documentation to support resubmission

### Fee Schedule and Co-Payment Leakage

- Fee schedules not reviewed or updated annually in line with the AMA recommended fee schedule or relevant scheme fee schedule updates - Inconsistent application of bulk billing criteria, resulting in bulk billing of patients who could be privately billed - Co-payments not collected at the time of service, leading to aged patient receivables and write-offs - Gap fees not applied for services that attract a gap (e.g., some WorkCover or private health fund services)

### Workflow and Process Leakage

- Appointments not correctly categorised at booking, leading to incorrect billing templates being applied - Clinical documentation insufficient to support the item number claimed - Delays between service delivery and claim submission, increasing the risk of errors and reducing cash flow - Lack of end-of-day reconciliation to verify all services rendered have been billed

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Step 3: Implement Targeted Interventions

Address the highest-value leakage points first. The following interventions are listed in order of typical impact:

### Intervention 1 — Clinician Billing Education

Provide targeted education to clinicians on correct item number selection, with worked examples relevant to their patient mix. Focus on:

- Consultation level selection criteria (time and clinical content thresholds for Level B, C, and D) - Chronic disease management workflow and eligibility criteria - Health assessment eligibility by patient demographics - Mental health item number criteria and documentation requirements

This is not about billing more — it is about billing correctly for the services already being provided.

### Intervention 2 — Billing Workflow Redesign

Redesign the billing workflow to reduce errors and capture missed revenue:

- Implement real-time billing at the point of service rather than end-of-day or batch billing - Configure decision-support prompts in your practice management software to guide correct item number selection - Establish a daily unbilled appointment check — every appointment should generate a claim or documented reason for no charge - Implement same-day claim lodgement targets

### Intervention 3 — Rejection Management Process

Establish a structured rejection management workflow:

- Designate a responsible staff member for rejection follow-up - Set a 48-hour follow-up target for all claim rejections - Document rejection reasons and track trends to identify systemic issues - Escalate persistent rejection causes to the practice manager or clinician for root cause resolution

### Intervention 4 — Fee Schedule Review and Standardisation

- Review and update your fee schedule annually - Establish clear, documented criteria for bulk billing versus private billing - Ensure all staff are trained on fee communication with patients - Implement point-of-service co-payment collection processes

### Intervention 5 — Reporting and Monitoring

Establish regular reporting to maintain visibility of revenue cycle performance:

- Weekly billing performance report by clinician (consultations, average revenue per consultation, item mix) - Monthly rejection rate report with trend analysis - Monthly aged receivables report with follow-up status - Quarterly benchmarking against MBS utilisation data

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Step 4: Sustain Improvements

Revenue cycle optimisation is not a one-off project. Practices that achieve and maintain strong revenue performance do so through ongoing discipline:

- **Quarterly billing audits**: Sample-based audits of billing accuracy by clinician to identify emerging leakage patterns - **Annual fee schedule reviews**: Ensure fees remain aligned with current AMA and scheme fee schedules - **Ongoing staff training**: Include billing accuracy in staff induction programs and annual refresher training - **Performance visibility**: Maintain dashboards and reporting so that billing performance remains visible to practice leadership - **External review**: Consider an independent billing audit every one to two years to identify blind spots

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Common Metrics to Track

| Metric | What It Measures | Typical Benchmark | |--------|-----------------|-------------------| | Average revenue per consultation | Overall billing effectiveness | Varies by practice type and billing model | | Item number mix (% Level C/D) | Consultation coding accuracy | Review against MBS utilisation data | | Claim rejection rate | Billing accuracy and compliance | Below 5% is a reasonable target | | Rejection recovery rate | Effectiveness of follow-up process | Above 80% of rejected value recovered | | Aged receivables (>60 days) | Collection effectiveness | Below 10% of total receivables | | CDM plan coverage | Chronic disease billing capture | Review against chronic disease patient base |

*Note: Benchmarks are illustrative and vary by practice type, location, and billing model. Use your own baseline as the primary point of comparison.*

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Getting Started

If you are unsure where to begin, start with the billing baseline assessment in Step 1. Even a basic analysis of your MBS utilisation data and rejection rates will quickly highlight the areas with the greatest opportunity.

For practices that want an independent, expert assessment, Complete Health Partners provides comprehensive revenue cycle audits that quantify leakage, prioritise interventions, and deliver actionable recommendations.

Download the Full Guide

Register below to download the complete Revenue Cycle Optimisation Guide as a printable PDF, including worksheets, audit templates, and benchmarking tools.

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*This guide provides general revenue cycle management guidance for Australian healthcare practices. Specific billing rules vary by jurisdiction and payer. Practices should consult Services Australia, relevant state authorities, and their professional associations for current billing requirements.*