There is no doubt that healthcare reform has affected how hospitals and health systems do business. The Medicaid expansion and federal healthcare exchange programs, for instance, have increased eligibility, and, at the same time, the industry has experienced payment cuts, a shift to value-based care, and larger out-of-pocket patient liabilities. There are also emerging movements to understand, such as risk corridors, bundled payments, and population health management.
Amid this tsunami of change, many forward-thinking healthcare leaders are trying to figure out what the future of the revenue cycle will be. Will quality-based care completely replace fee for service? Will payment reform drastically alter revenue cycle operations? Which key performance indicators (KPIs) will be most important to observe? Should certain revenue cycle functions be outsourced? How can providers best engage patients so they meet their financial obligations?
This action brief, sponsored by Cerner, outlines several strategies that organizations can take now to prepare for healthcare payment reform—ensuring their revenue cycles are primed for the future. Within this report, top revenue cycle leaders share their recommendations for how to ready the revenue cycle while continuing to sustain high levels of current performance.
Integrate and analyze data
When moving toward risk-based programs, organizations need to continually monitor metrics and analyze data so they can proactively identify weaknesses and make adjustments as necessary along the way. Unlike fee for service, the value-based environment does not allow providers to wait six months after the end of the year to learn how they performed for the previous year’s contracts. “Providers should use current claims data when overseeing performance,” says Kemal Erkan, CEO of United Medical LLC in Bear, Del. “Otherwise, they might not know until the following year how they’ve done, and then it’s too late, and the loss can be significant.”
To effectively track performance, organizations must integrate data from both the clinical and financial sides of the house and regularly review that information. Clinicians, the revenue cycle, and data analytics are all starting to come together, and organizations must acknowledge how each area contributes to success.
Historically, organizations have been able to monitor several KPIs, which often tie to specific patient accounts and reflect what happens in areas such as patient access, coding, and billing. In a value-based world, quality outcomes data and risk analysis around cost and payments will be essential. “Providers are going to be looking at different data sets that are not necessarily tied to a particular account but rather an aggregation of accounts and services based on a value-based payment model that is in effect for that patient population,” says Sandra J. Wolfskill, director of healthcare finance policy, revenue cycle MAP for the Healthcare Financial Management Association (HFMA). “Our prediction is that there will be a new generation of KPIs that will integrate revenue cycle data with other areas, including clinical, finance, managed care contracts, and possibly others.”
For those new to analytics and data integration, the role of technology is mission critical to maintain a continuously integrated information flow. Without it, you don’t have a way to populate your data warehouse and data mine what’s happening in terms of outcomes and volumes. Healthcare organizations shouldn’t be afraid to seek assistance from other experts in the field who can point to strategies and best practices in this area.
In addition to strong analytics, providers have to be tightly aligned with payers. “The relationship should be collaborative rather than adversarial,” says Todd Craghead, vice president of revenue cycle for Intermountain Healthcare, a fully integrated delivery plan and healthcare system covering about 800,000 lives in Utah. “Otherwise, the patient can get caught in the middle and end up being responsible for payment just because something wasn’t documented or reported correctly. What defines a collaborative payer-provider relationship will be different for every organization. That said, a first step can be reaching out to payers and discussing how best to work together.”
Closely manage contracts
The ultimate goal of value-based programs is to provide cost-effective, high-quality care. For this value proposition to work, however, providers first need to understand their outcomes-based contracts. They should know what information to document and which quality metrics to report for every contract. Because each public and commercial insurer has its own “language”—with unique criteria and processes—healthcare organizations must adapt to each one.
Providers should also have a consistent and reliable process for identifying which patients are involved in value-based payment coverage situations, which requires the right technology and talent to make that determination in a timely manner. This is particularly important for patient scheduling and patient access staff, who must have a thorough understanding of both technology and process so they don’t inadvertently miss someone who should be included in a value-based program—or include someone who shouldn’t be. If these patients aren’t properly identified, clinicians might not realize the patient is part of an outcomes-based initiative and thus not take the appropriate action, which could jeopardize reimbursement, as well as clinical outcomes.
“Creating and capturing a complete medical record that documents all services provided is also critical to stay on top of value-based contracts,” Craghead says. “In a value-based model, quality metrics are used to measure outcomes and determine payment. Payers require a complete view of the patient’s visit to fully and appropriately evaluate the account.”
A single, integrated platform can help in managing contracts. “Because we are a multi-specialty network and accountable care organization (ACO) that encompasses more than 27 specialties and 135 practices, we are always looking for the optimal method for managing our increasing number of value-based contracts,” Erkan says. “We have found it beneficial to move toward a single technology platform that gives one uniform way of managing contracts and looking at data. We strongly believe that having a single platform will be beneficial for us in terms of efficiency and accuracy.”
Whether they’re a single physician practice or a large health system, organizations need the right talent and technology to sustain performance. For some, outsourcing specific revenue cycle functions or services to third-party vendors may help the organization leverage resources it might not otherwise be able to access. Here are some possible areas that could make sense for outsourcing, given the shift to value-based care.
Data analytics. With the growing use of electronic health records and revenue cycle management tools, the healthcare industry is amassing huge amounts of data. This opens opportunities for organizations, allowing them to use data to inform clinical decision-making and improve patient outcomes, measure quality and other metrics, predict costs, and manage patient populations, among other functions. However, not all providers are able to analyze their data in house because they lack the appropriate staffing and/or automated solutions. Instead, these organizations may want to outsource services to vendor partners who have the expertise and resources to perform analytics—identifying trends and even learning and making predictions as new data are entered.
Contract management. Payer-provider contracts can be quite complex, especially when they are managed care or risk-based. “There is an entire discipline and skill set required to understand and interpret these contracts,” says HFMA’s Wolfskill. “For this reason, some providers outsource their contract management to a third party or opt to participate in networks that offer these services.”
For example, United Medical functions as the central business office for practices in its network, providing contract-management services to its members. “Small practices frequently don’t have the resources to hire staff for contract management,” Erkan says. “Our dedicated team of care coordinators helps them track quality metrics and deliver reports for specific contracts. When working on ACO agreements, we aim to help clients maximize their returns.”
Coding and denials management. Coding quality, particularly in a value-based context, is crucial to ensure reimbursement is timely and accurate. Without it, organizations increase their risk for denials, which are complex to manage, often requiring manual interventions to prevent and appeal even when innovative technology and solutions are implemented.
Organizations that do not have the capacity to code accurately or manage denials and appeals in house might consider outsourcing one or both of these functions. Doing so can increase quality, prevent denials, and/or improve the organization’s success rate for appeals.
Provide ongoing education and training
Whether an organization operates in a fee-for-service or quality-based payment structure, accurate and complete data are critical to the revenue cycle. If information is omitted or errors are entered into a system, it could put reimbursement in jeopardy. Because of this, business office staff, as well as clinical providers, must recognize the importance of their roles and what those entail. This will require organizations to regularly educate staff about changing criteria, policies, and processes.
For instance, patient-access staff need to know how to collect and comprehensively document patient information for value-based contracts. They also have to be effective at engaging patients, collecting out-of-pocket expenses, and helping patients navigate the financial aspects of care.
“One of the challenges with patient access, however, is that this department often has higher turnover rates than other parts of the revenue cycle, and many organizations view these positions as entry level—which is a mistake,” says HFMA’s Wolfskill. “Patient access is where the patient is first identified and where insurance information is collected and verified. If the patient is not correctly identified as being part of a population health initiative or another value-based contract, for instance, organizations open up opportunities for errors and may end up following the wrong set of protocols when the patient gets to the clinical side.” Because contract criteria and other documentation requirements change, education must be provided on a regular basis.
Physicians and other clinicians also should be educated and trained regularly to ensure clinical information is collected and documented appropriately. “Chart preparation is still a key step in this process, but sometimes it is neglected,” says United Medical’s Erkan. “Quality has to come first, and physicians must be aware of what quality documentation entails.” Through education, healthcare organizations can share best practices and shift fee-for-service behaviors to more value-based mind-sets.
“When we educate physicians, we take them through the basics while also teaching them the elements of the contracts and what a difference comprehensive documentation can make,” Erkan says. “We also are rolling out an incentive structure for medical staff and non-providers to further engage them. When we work with these professionals, their attitudes change, and they view us as a partner.”
Revenue cycle staff also require education so they can interpret KPI reports and other metrics that are essential to value-based contracts. “If revenue cycle staff follow only the fee-for-service model, they’re going to lose in the long term,” Erkan says. “Organizations must get this under control, especially with the imminent MACRA transition. Focusing solely on tried-and-true KPIs, such as days in accounts receivable, age of accounts, and speed of charge entry, isn’t going to work in a value-based world.”
Healthcare organizations can use a number of methods to educate staff, including classroom and hands-on training. United Medical uses monthly “lunch and learns” to ensure office staff and providers grasp the importance of getting quality metrics right. “Office administrators and managers have started attending both meetings so they have a better understanding and can re-teach their staff,” Erkan says.
Engage patients financially
Historically, insured patients represented a small portion of the patient service cash most organizations collected, but that has changed in recent years. In 2015, for example, total patient out-of-pocket expenses reached more than $338 billion and accounted for 11 percent of the nation’s total health expenditures. 1 These outlays are expected to grow between 4.4 and 5.2 percent each year through 2025. 2 It is easy to see how this substantial shift in reimbursement responsibility will directly affect many organizations’ revenue cycles. In most cases, if a provider fails to engage patients financially, it will likely lose revenue.
To respond to the swing in payment responsibilities, healthcare organizations should be striving to be more transparent with patients regarding their financial obligations. In addition, they should be proactive about collecting out-of-pocket expenses, such as deductibles and co-pays, and make it easier for patients to pay their bills and apply for financial assistance when necessary. Overall, providers must begin operating in a way that is more mindful of the consumer. “Don’t tell your patients what they need,” says Intermountain’s Craghead. “Ask them what they want. Coach them.”
When restructuring a patient-payment approach, it can be helpful to look to other industries, such as e-commerce, whose online retailers provide many payment options that enhance the consumer’s experience and earn trust and loyalty. “Down the road, providers may even be able to leverage payers to be more active in bill-paying,” Craghead says. “Insurers can serve in a similar capacity to banks that offer ‘bill-pay’ services. Rather than patients receiving individual bills from different providers, payers can act like brokers and distribute out-of-pocket payments for patients.”
Intermountain Healthcare has introduced new methods and technology to help collect and manage patients’ growing out-of-pocket expenses. “We’ve implemented strategies, including price-estimation tools, to be more transparent and identify what the patient’s financial obligation will be,” Craghead says. “In addition, we’re using online tools and portals to help patients ‘self-service’ their payments in a time and place that is convenient for them.” Intermountain Healthcare’s portal allows patients to make payments, view claims, and even interact with providers. In less than a year, the organization has seen widespread adoption of the online tool for payments, adding 70 to 100 new users per day.
“We’re trying to integrate our digital footprint around the health plan, provider, and consumer in a way that will influence behaviors, promoting payment as well as helping patients select what types of services they receive,” Craghead says.
No one knows for sure what the future of the revenue cycle will hold, but organizations large and small will need to create a sound footing and remain nimble as the industry continues to evolve. Whether it’s a large health system or part of a network of practices, a healthcare provider that leverages the abovementioned best practices, including outsourcing, can sustain healthy performance levels while laying the groundwork for the future.
Our Sponsor Speaks
Jeff Hurst, senior vice president of revenue cycle management and president of Cerner RevWorks, discusses the importance of revenue cycle technology and outsourcing.
Q: What role will technology play in the future revenue cycle?
As we move toward value-based care, payment will no longer simply tie to services provided. Rather, it will relate to the accuracy and completeness of the documentation for those services. However, if an organization has disjointed technology systems in place, it can be challenging to collect all the necessary clinical information to appropriately document care for reimbursement. That is why more healthcare organizations are uniting their clinical, financial, and operational data within a single integrated platform across acute and ambulatory settings.
An integrated platform also comes with the benefit of analytics, and the ability to pull and derive meaning from data is becoming increasingly important. Ultimately, what gets measured gets managed, and having insight into even the most granular data can influence the decision-making process and refine workflows. By leveraging analytics through an integrated platform, organizations can achieve better clinical and financial outcomes across the enterprise.
Q: What value does outsourcing bring?
The era of value-based payments and population health management will introduce new complexities to the revenue cycle function. As such, many financial leaders are considering outsourcing some or all of their revenue cycle management services to leverage third-party expertise, free up labor resources, and allow internal staff to focus more on consumer-facing tasks. Nearly 50 percent of hospital CFOs acknowledge that outsourcing revenue cycle management has become a more viable alternative to insourcing. Not only can it allow for better utilization of revenue cycle resources, but it can also lessen costs and improve the overall customer experience.
Cerner’s health information technologies connect people, information, and systems at more than 25,000 provider facilities worldwide. Recognized for innovation, Cerner solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company also offers an integrated clinical and financial system to help healthcare organizations manage revenue, as well as a wide range of services to support clients’ clinical, financial, and operational needs. Cerner’s mission is to contribute to the systemic improvement of healthcare delivery and the health of communities. Nasdaq: CERN. For more information about Cerner, visit cerner.com, read our blog at blogs.cerner.com, connect with us on Twitter at twitter.com/cerner and on Facebook at facebook.com/cerner.
1 National Health Expenditures 2015 Highlights. Centers for Medicare & Medicaid Services. Accessed July 10, 2017.
2 National Health Expenditure Projections 2016–2025: Forecast summary. Centers for Medicare & Medicaid Services. Accessed July 10, 2017.