Managing revenue in healthcare today has become a complicated process, requiring providers — and patients — to navigate an endless sea of reimbursement rules and requirements. It seems almost as if no two patients have the same insurance coverage or eligibility, leaving providers to struggle with finding new ways to ensure they collect the payments for services provided. No longer is it acceptable — or smart — to provide service without outlining full cost and patient responsibility up front. Those are just a few of the points made by the healthcare revenue cycle experts I spoke with on the topic of revenue cycle management (RCM).
Edited by Vicki Amendola, Editor, Health IT Outcomes
Healthcare revenue cycle experts share their thoughts on the challenges and requirements of managing and maximizing provider reimbursement.
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Dale Sanders,
CIO |
Lyman Sorenberger,
Executive Director
of RCM |
Nancy Wilkes,
VP of RCM |
Cayman Islands
Healthcare |
Cleveland Clinic |
UCI
Medical Affiliates |
Managing revenue in healthcare today has become a complicated process, requiring providers — and patients — to navigate an endless sea of reimbursement rules and requirements. It seems almost as if no two patients have the same insurance coverage or eligibility, leaving providers to struggle with finding new ways to ensure they collect the payments for services provided. No longer is it acceptable — or smart — to provide service without outlining full cost and patient responsibility up front. Those are just a few of the points made by the healthcare revenue cycle experts I spoke with on the topic of revenue cycle management (RCM).
Q. How would you define revenue cycle management?
Sanders: The common definition is backwardlooking and is focused on how fast can you get a claim out, how do you minimize your denials, how fast can you get your money back in, and how can you maximize the dollar amount collected on that paper claim? This is a very old school way of defining revenue cycle management, and that has to change to keep up with today’s evolving care delivery models, and it will certainly change under these new accountable care organizations.
Sorenberger: Revenue cycle management, as Cleveland Clinic would profess it to be, is no longer a linear process, but it is more of a wheel where the patient is in the middle. There is an interaction that happens between various divisions throughout the health system that are critical to patient care, including clinical and administrative. As you know, you can have the best clinical care in the world, but if you couple that with a poor administrative process you will still lose that patient’s confidence in your overall health system. We definitely describe RCM as preaccess, meaning that the revenue cycle starts as far back as appointment scheduling from an administrative perspective and ends with the claim being either paid or unpaid throughout the continuum.
Q. Are today’s EMR solutions enough to meet a provider’s complete RCM needs?
Sorenberger: If you are defining EMR from a pure medical documentation and record, yes, it meets your need. However, if you step outside of what is in that medical record, reporting on trending, quality, and safety, and you would like to do some extractions from a solid, well-documented record, most EMRs do not do that. I think that is why a lot of organizations use third parties to complement what the EMR may not do. I’d be remiss if I didn’t say that the reason these other companies are out there is to offset what the standard EMR doesn’t deliver.
"Revenue cycle management ... is no longer a linear process but it is more of a wheel where the patient is in the middle."
Sanders: In many cases, an EMR has no built-in tools to leverage the data being collected. For example, every revenue cycle tool in the world should have a web portal that allows patients to pay online. That should be an embedded part of the product. It shouldn’t be something that we all have to bolt on. Also, eligibility verification should be a much tighter, more integrated process than what it is right now. Online scheduling is another thing that should be part of the revenue cycle. There should be an embedded, online scheduling module. This isn’t something providers should have to add on later. As consumers, we have become comfortable with — and have come to expect — emails and text messages from our services providers — such as appointment reminders. These capabilities should be nicely integrated in the product instead of requiring an add-on, often third-party solution.
Q. What aspects of your revenue cycle are you trying to improve or optimize?
Sanders: We are now going into what I call healthcare 2.0 revenue cycle management. Healthcare 2.0 RCM is not about revenue anymore. It is about operating under capitated payments. It is about cost accounting. It is about eligibility verification at the point of care. The phrase that we use all of the time is the “economics of care at the point of care.” We don’t want there to be any mysteries around the billing process anymore for patients. As a minimum, we want the patient to understand what their financial obligations will be before they are treated in any situation other than emergency. We want the patient to have an understanding about what their out-of-pocket expenses will be if they are going to be treated.
The second phase of that is bringing the physician into the economic model. More and more physicians, especially younger physicians, are asking for a greater awareness for the cost of care so that they can tailor the treatment options according to the benefit and the affordability for the patient.
Sorenberger: We have a number of initiatives that we are proud of, but I will start with two changes that are on the very front end of the patient experience. First, we are moving to a centralized call center, which helps us support our second initiative, and that is a mandate that we have set in our system that we will get you an appointment within 24 hours. Both of these processes — our call center and our mandate — are the right thing to do. It is more patient-friendly since we are getting you in within 24 hours, and it is one-stop shopping. You are not calling 50 different departments to make an appointment.
Getting patients in the door is one step in creating revenue, but we have created a number of projects and initiatives beyond scheduling. For example, we have a loan program, and we have a robust financial clearance program that is under way. We also have a cost estimator tool in development. We are trying to respond to the public and their needs, while also trying to adjust to the industry changes that are happening so we can be more transparent with our patients. They don’t want a billing process that is a surprise. They want an opportunity to have a consumer choice. We are moving with that mind-set around our “patient first” mission.
Wilkes: We are working to improve charge capture because we don’t have an EMR, and I do think an EMR would solve a lot of these issues. Now it is too easy for a procedure or service, such as an injection or medication administration, to be missed because the doctor is just writing down notes and somebody had to code off that. Since the coder wasn’t in the room with the doctor, they might be struggling to decipher the doctor’s writing, or the doctor may not have jotted that note down. We do review our charts the next day, and we do find miscodes. The problem with that is that you have to hold your claims so that you can get missed charges entered, which nobody likes to do. Or, if you choose to file the claim immediately and you have missed charges, you will have to file corrective claims. It is a lot more expensive to file a correction claim, and often if the reimbursement is not enough, you end up losing money because of the administration overhead.
Q. What are the top factors driving providers to expand or update RCM solutions?
Sanders: We are seeing some progress with innovative thinking and online payments and billing estimates before treatment. However, we want the patients to be informed about their coverage before they are treated. Quite often a physician will prescribe a medication, procedure, or test only to find out later that it is not covered. The patient gets stuck with the bill which may exceed his or her benefits coverage. We are making good progress with predetermination procedures, so the patient can at least have the opportunity to intervene. Healthcare is looking more and more like a retail transaction, estimating costs before treatment and engaging the patient in managing their expenses and out-of-pocket costs.
"Healthcare is looking more and more like a retail transaction, estimating costs before treatment and engaging the patient in managing their expenses and out-of-pocket costs."
The next step in this is getting that exposed to the physicians at the point of care. Physicians have no clue what a lab test costs or radiology or medication costs. The best that we can do right now is we have an internal website, and our physicians can access our charge master and do a search to see what a procedure or treatment actually costs.
One of the other things I see happening is a movement for more providers to take on direct contracting and take on their own risk management, circumventing the traditional insurance companies. We are starting to look more like an integrated delivery system — like the Kaisers and the Geisingers. Sometimes this happens through mergers and acquisitions and sometimes through development of direct contracts with employers.
Wilkes: Most providers are out there looking for any solution that can help them increase their collections. They aren’t sure exactly how we are going to be affected by healthcare reform. In the past, I think providers thought that a certain amount of bad debt from the patient side and a certain amount of your claims lagging in AR (accounts receivable) wasn’t that important. Now providers are looking to get their money as quickly as possible before the rules change, and they are trying to get every dime because they feel like they are getting things taken away from them every time that they turn around. I don’t know if any provider really feels like it is going to ease up or that it is going to be easier to collect on healthcare expenses on medical bills in the future.
Managing patient responsibility is also huge right now. If you think back to when our grandparents had a doctor who came and visited them at home and maybe they traded a chicken for the doctor’s services or gave him a dinner that night, he might have charged them ten bucks. Now you go on to the next generation and they were just billed for services, and they paid when they could. They don’t expect to pay at the time of service. They are used to getting billed for it and then paying when they feel like they can. My analogy has always been that it doesn’t matter how hungry you are, Walmart will not let you put a chicken on layaway but eat it right then. It is much more difficult to collect at the time of service, so you need an RCM solution that enables you to very easily identify what the patient’s financial responsibility will be at the time of service. Some systems are very good with that, and others don’t even have that functionality.
Q. Have you identified persistent challenges to RCM in the healthcare industry?
Sorenberger: I don’t think it would be a surprise to anyone that our biggest struggle is the unknown and the constant change in keeping the pace with the demand and minimizing the risk of that change.
For me personally on any given day I am revisiting my priorities. It is not an easy road map that says I have these 50 projects. Every day a new project comes up, and I have to weigh that against that other 50 in the context of resources available and in the context of return on investment. There is also a challenge in balancing return on investment against a patientcentric philosophy. Some ROIs are soft no matter how you look at it, but if the new program or change is patient-friendly, then it just becomes a gut feeling of how patient-friendly it is to use as a measure of return.
Wilkes: Eligibility is still a big challenge, and it goes right back to my thinking that we are way behind the lessons to be learned from the banking industry. You can go to any ATM machine, it doesn’t matter what bank your account is in to check your balance. But in healthcare, when you go to perform an eligibility check or to look at a payer’s website to check on claim status, everybody reports things differently. It is not easy for providers to learn how to communicate with each individual payer because the payers don’t communicate in the same way. Similarly, when they respond to claims and you are posting payment within your system, not all payers respond the same way. Even though we have standardized transactions, they have their own codes, and some handle bundling differently than other payers handle it. In other words, it is not standard responses to standardized transactions.
“You need an RCM solution that enables you to very easily identify what the patient’s financial responsibility will be at the time of service.”
Sanders: One of the biggest challenges that I see when looking at revenue cycle is managing all of the different contracts and reimbursement rules with all of the different payers. It is amazing to me that it works at all. Somehow for some reason, we have just allowed these reimbursement rules — driven by insurance providers — to grow and grow over time. We just keep adding more people to the insurance arm and to the billing arm inside of the organization to try to keep up with these incredibly complicated adjudication rules.
To me that is the overwhelming, glaring problem in revenue cycle that is persistent. Almost everything that is dysfunctional about the revenue cycle in healthcare stems from the crazy complicated adjudication rules that these insurance companies offer. That is why you have 31% overhead in healthcare associated with the administration of claims.
