Three views on revenue cycle management

March 11, 2015

Whether it’s popular to admit or not, healthcare is, first and foremost, a business. Like any other business, invoices and bills need to be calculated, distributed, received and processed in a timely and efficient fashion. This set of vital tasks is further complicated by seemingly constant technology changes, strict regulatory requirements, myriad insurance options and an ever-demanding consumer base. Without a comprehensive revenue cycle management (RCM) program in place, the life of a healthcare facility is doomed to be rather short.

Health Management Technology asked three healthcare leaders for their insights regarding the concept, complications and rewards of revenue cycle management.

Who is impacted by the functions of revenue cycle management (RCM) within a healthcare organization?

John Dragovits,
Senior Vice President,

The revenue cycle touches all of the key stakeholders involved in a patient’s care: the patients themselves, clinicians, providers and payors. The typical revenue cycle for a provider starts at the first point of contact with the patient. This may be through an emergency room visit, when an elective procedure is scheduled, when a patient contacts a provider’s office to set up an appointment or visits their online patient portal. Whatever the initial interaction is, it is important to collect accurate data from the beginning – such as the patient’s name, phone number, insurance information and other data. At the same time as the initiation of the revenue cycle, the care management process kicks in.

The good news is that change is driving innovation within the revenue cycle, but be aware that not every system is as open and simple to use as it may seem. Implementing a system that is flexible and can adhere to providers’ needs may sound easy in theory, but maintaining a well-functioning RCM system has proven to be a challenge for many providers. There are four key areas where organizations need to align their systems to ensure smooth processes:

  1. Access to clinical data. The more open and interoperable a provider’s clinical data system is, the easier it will be for the RCM to quickly and seamlessly pull the right information for the right party.
  2. Flexibility. Invest in a system that is flexible enough to adjust to the flow of data across all stakeholders’ systems, without disrupting process or workflows.
  3. Consumer friendliness. RCMs are no longer a “finance problem.” As more clinicians and patients interact with the cycle, intuitive, user-friendly programs will be the most successful to manage.
  4. Automation. Give up the manual entries, and bring it all online. An effective RCM program can automatically operate across departments and external resources, enhancing efficiency and reducing operational costs.

What features are critical for an effective RCM system?

The short answer is automated software that can streamline processes. While there are many aspects of software automation in a great RCM solution, it is imperative to be on the lookout for a few specific features:

  • Web services: Making RCM systems a Web-based service seems like a no-brainer in the age of the Internet, but it has been a slow evolution to patient-centered, Web-based management of healthcare accounts. Consumers are increasingly demanding Web-based services from their healthcare providers. Providers need to offer patients Web-based services to meet consumer demands and improve clerical, customer service, and billing and payment processes.
  • Real-time insurance verification: RCM solutions should have a verification function that can immediately inform staff and patients as to what procedures and services insurance plans cover. Insurance verification is critical in real time – reducing risk, saving time and improving patient relations by ensuring better patient-provider communications.
  • Rules engines: With an RCM system, rules engines limit input of incorrect data, eliminating errors and reducing the time needed to correct mistakes and resolve complaints. An RCM can double-check if a patient owes a co-payment at registration or can compare claims against contractual terms to identify errors. Rules engines limit variance, which is essential to operational excellence and efficient operations. This is an efficient, immediate and intelligent way to improve accuracy in data entry.

The move from fee-for-service to bundled payments places tighter expectations within narrower metrics on the RCM staff. Knowing this, how do you effectively lead your teams to deliver more timely and complete charge capture in an enterprise or multi-specialty environment?

Karen England, Revenue Cycle Consultant, Ingenious Med

A number of approaches should remain top of mind, including providing real-time feedback regarding patterns in documentation for care providers, empowering coders to proactively communicate among specialties regarding current, pending or missing charges and allowing for ongoing access to analysis of data. One option to achieve these goals is to create cross-functional teams for like specialties. For example, cardiothoracic (CT) surgery could include representatives from surgery, cardiology, lab, X-ray and anesthesia, while gastrointestinal (GI) lab could include reps from GI, pathology, anesthesia and an ambulatory service center (ASC). Lastly, it’s important to provide ongoing educational opportunities for staff and physicians in specialties outside their own to explain the critical components of complete and timely charge capture regarding bundled payment plans.

In addition to changing payment platforms, self-pay receivables present new challenges due to the increased instances of higher out-of-pocket expenses. What resources do you have to educate patients, care teams, patient access teams and RCM teams before service is provided?

If there isn’t a model already in place, it is helpful to develop easy-to-read guides to help patients better understand their out-of-pocket expenses. Building on that idea, it is necessary to make tools available to staff that will help them better understand payor-specific rules about out-of-pocket expenses. It is crucial to understand how coding and billing can impact increased out-of-pocket spending by developing policies that address self-pay balances, items that can be negotiated, items that can be forgiven and when it may not be appropriate to change coding to reduce the patient responsibility. If necessary, involve your central business office (CBO) and compliance personnel to ensure that customer service, call centers and front desk/intake staff are able to discuss financial responsibility with patients.

Some say ICD-10 implementation will reduce the productivity of an organization’s RCM team, as well as increase turnaround time of claims adjudication. While we all hope the delays will not be as severe as previously estimated, organizations may see a slowdown in revenues. Assuming your coders and physicians are ready for the transition, how can your AR team be prepared to handle claims follow-up in a post ICD-10 environment?

The first step in preparing your team is to acquire tools that provide an ICD-9/10 crosswalk for the most commonly used diagnoses. Reviewing payor websites for ICD-10 changes to clinical guidelines and medical necessity will be a major headache saver and help avoid conflicts that can result in denials. It’s important to consider reassigning teams by payor to help develop a culture of regular meetings and calls with payor representatives to discuss issues and trends. Also, you should not forget to review your data daily.

Some questions you should ask yourself include: Are charges being captured and processed as expected? Are payments coming in and being posted as expected? Use the answers to these questions to develop contingency plans for when forecasted problems arise, as well as to identify indicators for any possible escalation.

Finally, developing and reviewing high-level reports on a weekly and monthly basis will help to underscore patterns and outliers in your processes. However, it is also important to analyze denials in order to spot trends and quickly address any areas for improvement that present themselves. Ensure your ICD-10 transition plan includes specific points for your AR management, and keep it available during the first few months of the changeover for all areas of the practice. This will help you remain vigilant and avoid falling into a false sense of security.

RCM leadership must increase their exposure, knowledge base and reporting capabilities across the enterprise. With this in mind, how do you effectively manage constantly changing priorities and metrics while keeping employees engaged?

Ongoing communication is crucial, and routine huddles will help to alleviate the unnecessary fear and anxiety staff often experience with changes of this type. Openly sharing information about performance metrics and expectations will help to keep communication lines open, but will also improve staff engagement and mitigate the feeling of being lost in the bigger organization. Working with staff and physicians to achieve a basic knowledge of how the enterprise operates will allow for a holistic grasp of the undertaking. While the industrialized model of doing the job in front of you has its merits in efficiency, working in a vacuum can damage morale and, as a result, performance as a whole, especially when faced with the complexities of a reorganization of this magnitude.

Make it customary to watch for changes in tax ID and provider enrollments and be sure to update records to reflect changes in ownership or payment addresses. Reviewing the current reports library with various members of the team will ensure adequate resources are available when needed. It is also important to review performance metrics and job responsibilities while keeping an eye out for changes in key areas such as physician productivity, safety and quality. With changes being made by the creation of more cross-functional teams and more time in meetings, efficiency and time management will become even more important to stay afloat.

It’s undeniable that there’s much to consider in the upcoming year, and, realistically, 2016 will be just as complex. However, a lot of work can already be done by following three basic ideas addressed above. First, it’s important to note that data isn’t just the aggregation of what’s happened within your organization. Be sure to dig deeper into your analysis to also discover why certain trends in your data occur. Second, staying informed and adaptable is key. As we continue to plunge into times of uncertainty, educate yourself by talking to doctors, billing staff, executives and patients to better understand their perspectives. Finally, implement policies that empower your staff by allowing them to leverage their unique expertise. You never know what vital knowledge someone might be able to contribute to your organization’s overarching strategy.

When considering a replacement for a legacy RCM solution, it’s essential to ensure a new application suite can meet the industry’s ever-changing regulatory requirements, such as coding for ICD-10.  However, what other important factors should one consider when deciding to change your organization’s RCM solution?

Steve Kilguss, Vice President, Enterprise Information Solutions, McKesson

There are three primary areas of concern an organization should consider when making an RCM change:

      1. Patient engagement. First, a revenue cycle solution must support the needs and demands of the most important constituent in the healthcare setting:  the patient. However, since patients often need treatment from several care settings in your health network, such as their physician’s office, an imaging center, outpatient surgery center or physical therapy practice, tracking medical records and bills for each of these locations can be daunting. Therefore, it’s now essential for revenue cycle solutions to provide intuitive, easy-to-use, patient portals with one-stop shopping for the entire healthcare organization.

2. Data liquidity. Not only do patients require one-stop shopping, but providers also need access to their patients’ entire health records to coordinate patient care and to prevent ordering redundant tests and procedures. Going forward, revenue cycle solutions must support data liquidity and interoperability to help ensure the right data is available to the appropriate personnel at the time it is most needed.

3.  Financial clearance. Another factor growing in importance to the revenue cycle is assisting patients with financial clearance. Prior to service, it’s helpful for patients to understand their financial liability in pursuing treatment. Providing price estimates, determining insurance eligibility and obtaining authorizations are all traditional functions that most revenue cycle solutions can provide. However, in the post-Accountable Care Act era, revenue cycle solutions should be able to identify patients’ propensity to pay so financial counselors can help direct patients down the appropriate avenue for assistance. In some instances, assistance may be in the form of helping patients secure coverage from insurance exchanges or identifying any available charity care.

What areas must a new RCM solution meet within the changing dynamics of healthcare reimbursement?

Healthcare reform/payment models. The dominance of the traditional fee-for-service payment model is waning. Currently, various forms of payment reform experiments are underway throughout the country; however, which model(s) will emerge victorious remains to be seen. Nonetheless, replacement revenue cycle solutions must be flexible to adapt to the new methods of value-based reimbursement, such as bundled payments. Some organizations are already beginning to assume risk by accepting payment in exchange for managing the health of a population. These providers will need robust revenue cycle tools to help them assess risk, support population health and control costs by managing care for patients with chronic conditions.

Consolidation. Across the United States today, a large volume of healthcare organization consolidation is occurring. Smaller hospitals are being acquired by larger ones, and private practices are being bought by health networks. Depending on the organization’s perspective on billing, there may be revenue cycle system dependencies.

For organizations that prefer to handle their own revenue cycle, billing for multiple care settings necessitates that the revenue cycle solution be able to support a consolidated business office (CBO). Alternately, instead of managing all of the billing needs internally, some organizations may choose to offload their billing functions to third-party organizations. In this case, their revenue cycle solution must have the ability to either be worked remotely or to have all of the necessary billing data easily extracted. A sort of hybrid mix between a CBO and an outsourced business office is supplementing the existing bill resources with personnel from the revenue cycle vendor. All of these choices resulting from consolidation within the healthcare industry introduce revenue cycle software considerations. 

How can my organization afford the technology for a new RCM solution?

An important factor to consider in the purchase of any software solution revolves around the price tag. In the case of a revenue cycle solution, the asking price alone does not provide enough information about overall affordability to drive an educated purchasing decision. To get a full picture of total cost of ownership, factor into the calculation the costs associated to purchase, maintain and expand the revenue cycle solution as changing business needs emerge.

Technology. A key element of affordability is tied to the underlying technology of the software. Upfront costs, like hardware, software license fees and implementation services, are only the tip of the iceberg.
Personnel. Once an organization has purchased software, it needs technical expertise behind the scenes to help ensure the solution operates effectively and at top efficiency. Whether the IT team is comprised of the organization’s own personnel or outsourced to another party, resources for software built on old and/or proprietary technology can carry a hefty price tag.

Open database. All of the tasks performed by these technical gurus can be unexpectedly pricey too, particularly if the solution operates on a closed, proprietary database. Closed databases can be challenging for data extracts used in custom report writing and may require extra staff hours. Additionally, solutions that are not open can be costly to interface to other solutions, such as document management and the clinical information systems. Ultimately, when considering a replacement revenue cycle solution, it’s critical to select open, contemporary technology that is affordable in the long run.

At the end of the day, all revenue cycles must perform the basics when it comes to billing employers, insurance companies and patients. However, next-generation revenue cycle solutions use technology as a tool to better serve customers.

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