From payers to patients, understanding revenue cycle solutions

April 25, 2018
Kevin Lathrop
President, TriZetto Provider Solutions

Understanding the revenue cycle—from eligibility to claims and from patient financials to denials—is critical to the long-term success of a provider’s practice and business. However, providers who concentrate only on the payer side of the equation may have issues in the future. The other player is the healthcare consumer, who is exerting more influence on, and subtly changing, the revenue cycle each day.

Providers who use an advanced, electronic-based solution to manage the revenue cycle have the opportunity to improve workflow as it applies to both groups:

  • Employ a revenue cycle management (RCM) workflow to help providers submit clean claims, resubmit denials and stay abreast of changes in payer contracts.
  • Implement an end-to-end RCM solution to benefit providers and their patients through payment transparency, faster access to services, and timely payment.

Improving the payer process

RCM solutions built to work with payers is common within all provider offices. Unfortunately, providers often use a combination of software and services that, typically, fail to communicate. Utilizing an integrated system can increase productivity and lessen the number of headaches experienced by office staff. In addition, the RCM workflow often breaks down when providers depend too much on paper. Today, paper may seem convenient, but it’s an extremely problematic and unreliable way to communicate with payers when the ultimate goal is securing payment.

Utilizing an always-on electronic RCM solution allows providers to submit hundreds of claims for payment in a matter of seconds, not hours.

Payments shift to healthcare consumers

As more and more healthcare payments shift to patients, a highly-evolved revenue cycle management solution becomes critical to a provider’s long-term success.

Out-of-pocket spending, which doesn’t include health insurance premiums, co-pays or deductibles, reached almost $850 per person in 2016, an increase of approximately three points to 12% compared to 2015, according to a 2018 Health Care Cost Institute report. In addition to this out-of-pocket spending, many people participate in high-deductible health plans, which shift more cost from payers to healthcare consumers. A 2015 report from the Kaiser Family Foundation defined high deductibles at $2,500 and $5,000 a year for a single person and families, respectively. That, of course, doesn’t include the cost of monthly premiums or co-pays.

As health insurance payments continue to grow and swing toward patients, healthcare providers must be wondering how and if they will receive payment. No matter how healthcare providers decide to address RCM in the future, it could be millennials who become the motivation to make a change sooner than later.

The millennial malady

Millennials have become the largest generation in the U.S. today with 75.4 million living throughout the country. Providers must understand from the outset that this group expects an entirely different patient experience than past generations. They expect their patient/provider experience to be congruent with the online retail experience.

Millennials are fast becoming a significant issue for healthcare providers. Unlike their baby boomer and Gen X predecessors, millennials are less likely to pay medical bills. A full 74% of millennials failed to pay medical bills in 2016, according to TransUnion Healthcare. That compares to 68% and 60% for Gen X and baby boomers, respectively.

Many in healthcare want to understand why and at least part of the answer lies in technology. In this case, providers’ general lack of technology usage and continued reliance on paper-based billing. “Bills paid via mail declines with each younger generation—down to 15% for millennials, while online bills as a percentage of total bills increases with younger generations: Millennials at 61% …,” according to ACI Worldwide. In addition, the research found a majority of millennials (78%) go directly to a company website to pay, such as paying for Amazon purchases on the Amazon website.

But it’s not all bad news for healthcare providers. While millennials may fail to pay medical bills after receiving treatment and leaving the office, they do expect to pay at the time they receive a service or product. Using Amazon as an example again, millennials pay immediately for a chosen item when they select it while shopping and place it into an online shopping cart—not after they receive it. This makes it imperative for providers to offer several types of immediate payment options in the office that can be used by millennials, and all other patients, when they receive treatment. This could include an app-based mobile payment option or an in-office kiosk where they can pay the provider directly before leaving.

For the future

When looking toward the future of RCM, providers have much to consider. Cost, of course, is always a consideration. However, deciding when, not if, to convert to a completely digital solution should be first on the list. Can healthcare providers afford to make the switch today? Can they afford not to?

How will healthcare payers adjust their payment schedules? The changes could be dramatic or insignificant. There is a chance that more private payers will shift to value-based reimbursement, which may significantly change the provider’s cash flow.

Understanding how to interact with all patients—from the oldest to the youngest—is an important consideration, as well. How fast will different populations transition through your practice as new patients enter and older patients leave?

Many variables play into the revenue cycle workflow, however, the most important is understanding how it impacts your practice in business terms. If the current RCM solution—automated or manual—causes revenue loss, it’s time to make a change.

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