In this post, we'll break down revenue cycle management (RCM) for healthcare facilities, what it encompasses, why it matters, and what you can do to make cost-effective process improvements for your business office.
In addition, we'll touch on MEDTEAM's history of providing these services and some of the offerings they can deploy to help ensure that revenue cycle demands don't get between healthcare facilities and their mission to provide lifesaving, value-based care to their communities.
In spite of a modest post-pandemic recovery, hospitals continue to grapple with a steep decline in both revenue and admissions—a situation exacerbated in rural healthcare providers. This distressing trend is underscored by recent findings from the University of North Carolina's Cecil G. Sheps Center for Health Services: Since January 2005, approximately 184 rural hospitals have been forced to shut their doors.
Lower patient volumes, coupled with increased costs and staffing shortages, have created a perfect storm for smaller health systems trying to maintain financial viability. These facilities now find themselves in a challenging predicament, attempting to simultaneously curtail overdue accounts, ensure a positive cash flow, retrieve missing payments, and pinpoint errors in medical billing—all while woefully understaff.
Now, more than ever, it’s critical for healthcare leadership to consider outsourcing revenue cycle management to supplement existing staff and improve margins.
The benefits of an RCM partnership include an immediate and sustained impact on the quality of patient care and the resilience of your bottom line.
According to one study published in the Journal of Healthcare Management, organizations that implement RCM process improvements can achieve significant financial advantages, such as a reduction in the percentage of denied claims and an increase in the rate of clean claims submitted on the first attempt.
Other benefits of effective RCM include:
Increased Efficiency
RCM partnerships and software can help to offload many of the manual and time-consuming tasks of your facility's back office, freeing up staff to focus on other critical tasks.
Improved Accuracy
RCM can help to eliminate errors and improve data accuracy, reducing the risk of denied claims and improving reimbursement rates.
Increased Cash Flow
By streamlining the revenue cycle and reducing the time it takes to receive payments, RCM can improve cash flow for healthcare providers.
Better Patient Experience
RCM can help patients receive accurate and transparent information about their financial responsibility, improving their overall experience.
The healthcare revenue cycle is a complex process that involves several stages, from patient registration and insurance verification to claims submission and reimbursement. Below, we will summarize the revenue cycle process and explore some of the procedures that can help healthcare organizations achieve better financial outcomes.
Assessing Revenue Cycle Management
All too often, hospitals and vendors want to accelerate the implementation of new revenue cycle practices, hoping to capitalize on the latest technology and practices. However, a rushed overhaul of business office services can quickly work against a facility by disrupting operations.
To mitigate the chances that outsourcing will cause disruptions to care and operations, a reputable RCM vendor will go the extra mile to cultivate an intimate understanding of organizational needs, especially in a community-based setting. A pivotal aspect of their approach will involve engaging in meaningful discussions with their clients and fine-tuning methodologies to effectively tackle unique challenges.
Accurate Billing
The next step is to ensure timely charge capture along with consistent and accurate coding.
Diagnosis codes are continually evolving. This can make it difficult to achieve accurate billing, which results in lost revenue, denials, underpayments and creates additional work for hospital staff.
As insurance payment methodologies continue to change, it becomes necessary for hospitals to enhance their clinician documentation tools and introduce more comprehensive solutions to ensure accurate billing.
Denial Management
Once an accurate billing procedure is in place, it’s important to identify where money is being left on the table.
Denials occur when a payor rejects an insurance claim for payment for services rendered. Among healthcare leaders, a lack of compensation related to denied claims remains a significant source of concern and reduction in accounts receivable (AR) collections.
Denial management is the process of identifying root causes, resolving, and preventing denied or rejected insurance claims to ensure that providers receive appropriate reimbursement for their services.
Denials can occur for various reasons, such as coding errors, missing or incomplete information, or when pre-authorization requirements are not satisfied. To prevent denials, healthcare organizations need access to experienced AR resources and know-how that can help them curb operating costs, navigate payor negotiations, and better manage payor rejections.
Timely Claim Submission
When a claim is rejected via clearinghouse edits, the insurance payor has identified a problem with the claim that needs to be resolved prior to submission for payment. It is not uncommon for facilities to have a backlog of unbilled claims.
Maintaining a backlog of unbilled claims increases administrative costs, causes patient dissatisfaction, and delays reimbursement. Furthermore, when claims are processed slowly, it is difficult to calculate a complete picture of accounts receivable and estimated revenue; therefore, it is imperative for hospitals to identify and address unbilled claims promptly.
Insurance Follow-Up
Without knowledgeable and experienced business office experts scrutinizing claims, hospitals are often forced to rely on health insurance companies for accurate reimbursement. As an extension of the hospital's existing team, an RCM partner can help maximize payments by timely follow-up of unpaid claims.
Contract Management
Insurance payors routinely underpay hospitals, resulting in revenue leakage.
Comprised of patient financial and health information management professionals, an RCM partner can supplement business office staff by providing the expertise necessary to assist in identifying the root cause of underpayments and denials. A dedicated team of revenue cycle management experts can ensure your facility is reimbursed accurately based on contract terms that are built and maintained with current rates, terms, and fee schedules.
Charge Master
Another challenge that many healthcare providers struggle with is the complexities surrounding the management of an integrated charge master.
The chargemaster is a list of billable items and services the hospital provides. Providers should compare charges, reprice, and model price changes to optimize net revenue and strategically position themselves in their healthcare market. The pricing strategy also factors into the hospital's pricing transparency model and provides patients with accurate cost estimates online and at point of service. It's in the best interest of the hospital to negotiate and maintain payor agreements to maximize their revenue and reduce any billing errors and denials.
Understanding the expectations of payors, knowing when and where to come to the table over these contracts, and managing the financial benefits and risks of chargemaster increases, requires years of revenue integrity and contract management experience and may be difficult for smaller hospitals that lack the RCM staff of larger IDNs.
Data Analytics
Although performance monitoring toolsets may seem like a luxury for facilities operating on already thin margins, they are, in fact, essential to making informed decisions that can ensure a healthy bottom line.
Working with an RCM partner can give your healthcare organization access to industry KPI standards for performance monitoring, benchmarking for improvement, and beneficial metrics that can assist the healthcare leadership team in making strategic financial decisions.
It’s also important that reporting is transparent and actionable. When selecting a data analytics tool and/or service, the healthcare organization needs to ensure that any reporting service includes the following standards:
Granularity
Empower hospitals with a more granular view of their business by providing critical visibility into clinical, financial, and revenue cycle metrics.
Expertise
Reporting services should be comprised of highly specialized professionals utilizing an application-rich system to design, write, and provide an optimal product.
Dashboard Reporting
Your vendor should leverage pre-packaged and customized SEQUEL dashboards that calculate and present KPIs in an easy-to-view format for executive-level insights into your performance.
Payment Statement Processing
Patient collections, a key component of RCM, involves collecting patient payments for services rendered and managing outstanding AR balances. Effective collections can help providers improve their financial performance and reduce patient bad debt.
Your RCM vendor should utilize actionable data to generate targeted messaging that helps patients choose delivery options that work for them, such as paper or electronic notifications. These services should include an easy-to-understand communication approach, a collection tracking and monitoring system, and an integrated archival system.
Also, it is key that statements or materials should be co-branded for your healthcare organization to improve marketing and financial impact.
Online Bill Pay
Patient collections can be improved by implementing an online bill pay method on the healthcare organization's website. The online bill pay link should be visible and easy to access from a computer or mobile device.
Give your patients the tools they need to manage their healthcare financial commitments by providing payment options based on their account balance information. The patient should be able to choose from several payment options, including quick pay, partial payments, and payment plans.
An online bill pay interface will increase accuracy and make the process of posting payments more efficient.
While larger organizations might have access to bullpens of sourcing experts, teams of industry-savvy negotiators, and custom-tailored contract management software, it may come down to two or three individuals working to provide the same value and quality of patient care on a shoestring budget in the back offices of smaller, community hospitals.
Outsourcing might be the best solution if managing the revenue cycle process is proving challenging for your facility.
Here are some benefits of utilizing an outsourced workflow:
Access to Dedicated and Experienced RCM Specialists
A focused RCM partner can ensure that everything is accurately recorded and in place (such as contract management, eligibility, patient info, claims follow-ups, etc.) to guarantee you receive what's owed on time and with minimal hassle.
Greater Visibility
While a dependable revenue cycle management partner must operate within the hospital's existing structure, they are also responsible for keeping leadership and stakeholders informed and up-to-date, allowing complete visibility into claims, accounts, and reimbursement.
Optimization of the RCM Process
Revenue cycle management success is one-part human resources and one-part technology. By bringing in an RCM specialist to help ensure systems are properly set up and people are using them the way they are supposed to, hospitals can avoid medical coding and charge errors that lead to denials.
Streamlining the revenue cycle to meet the demands of today's business environment can be a daunting task. Regulations, inflation, rapidly evolving markets, and stubborn workforce challenges only complicate attempts to improve business operations. But by teaming up with a dedicated revenue cycle management partner, your business office can access the tools and expertise they need to fix leaks and get revenue flowing again.
Here are some key factors to consider when selecting an RCM partner:
Experience
Look for a partner with a proven track record of RCM success in the healthcare industry. Consider their experience with hospitals of a similar size and complexity as yours, as well as their expertise in your particular area of healthcare. For instance, if you are a rural or community hospital, RCM partners who are more accustomed to working with larger IDNs may not be a good fit.
Role-based expertise, tenured experience, and a willingness to work within governance structures and alongside staff are crucial to ensuring a strong and mutually beneficial relationship.
Technology
You will want to work with an organization that uses advanced technology to streamline revenue cycle processes and medical services.
Compliance
Ensure that your partner thoroughly understands healthcare regulations and compliance requirements, including HIPAA and HITECH. They should have policies and procedures to ensure compliance with all applicable laws and regulations now and in the future.
Transparency
Cross-training, hiring existing staff, and regular touchpoints are a must. This partnership should strengthen and better equip your staff and processes.
Look for a partner that provides transparency into their processes and results, including regular reporting and analytics. This will help you to monitor your financial performance and make informed decisions about your revenue cycle.
We equip hospitals with the collective power of subject matter experts and industry-leading technology. Built on a foundation of over 40 years of creating innovative technology tools for hospitals and health systems, we build service offerings that meet the specific needs of your hospital’s clinical and financial operations with the degree of precision you would expect from an industry leader.
Optimize your operations with the following customer-focused services:
Revenue Cycle Management
Take charge of your facility's financial health with a comprehensive suite designed to help minimize delays, achieve better reimbursements, improve cash flow, and avoid disruptions due to staffing shortages.
Application Management
Get the most out of your HIT system applications and enhance your end-user experience by collaborating with a skilled partner.
Information Security Services
Gain invaluable expertise from security leaders who can help identify and develop risk-reduction practices to improve your system safeguards.
Managed Integration Services
Minimize costs associated with establishing and maintaining complex interfaces by employing fully managed cloud-based services, including support for independent data exchange and interface needs.
Managed IT Services
Entrust your IT management to experienced professionals and avoid unnecessary outages while ensuring seamless operations.
Do you want to learn more about how MEDTEAM can help your facility accelerate the revenue cycle? Please reach out to your Customer Success Executive or inquiry@medteam.com.
“When we call MEDTEAM, it is great that they are always on board working to help us, whatever the need is.” - Chief Nursing Officer
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