Healthcare revenue cycle leaders, it’s your move
COVID-19 has decimated fee-for-service (FFS) revenue. To stay in the game, healthcare providers can use a chess-inspired strategy to rebuild the revenue cycle while preparing for value-based care.
The COVID-19 pandemic has triggered major financial losses for hospitals, health systems and medical groups. Healthcare organizations now face the double challenge of rebuilding FFS revenue while continuing to transition toward value-based payment.
The resources at hand are fewer than ever. So revenue cycle leaders need to make every move count. What better model than the game of chess?
Chess is the art of turning a limited number of possibilities into a winning strategy. You may or may not know much about chess — no matter. The key point for revenue cycle leaders is to use their available resources to generate cash, improve margin performance and build a strong platform for success with value-based payment.
1. Develop your pieces quickly
In chess, it is important to establish an early advantage by quickly moving out your most powerful pieces. Similarly, revenue cycle leaders today should make rapid moves to shore up cash.
Recommendation: Make decisive steps to cut denials. Revenue cycle leaders should start by performing a root-cause analysis to identify the issues. In many organizations, top denials are driven by front-end problems with the registration process. Recently, the fast adoption of telehealth services has created many new registration problems and redesigning these processes in a remote environment has posed challenges. These issues can be resolved by exploring automation to ensure insurance information is updated, eligibility and benefits are confirmed and financial transactions are addressed for every patient.
Bolstering the precertification process will not only generate timely cash, but also reduce the resources required to work denied claims. Additionally, capturing complete and accurate data on the front end supports FFS revenue as well as value-based payment activities, such as patient attribution for quality measure reporting.
2. Don’t move the same piece twice in a row
The best chess players never waste moves by zigzagging pieces back and forth. Likewise, the best revenue cycle management organizations minimize handoffs and rework.
Recommendation: Streamline revenue cycle processes, roles and responsibilities. One opportunity is to use the rules engines and pre-claim edits built into electronic health records (EHRs) and practice management systems. For example, if a specific procedure requires a specific diagnosis, an alert can notify the provider about the requirement during coding. This notification increases the chance of submitting a correct claim on the first pass, which creates efficiencies and minimizes handoffs. Leading organizations also use artificial intelligence to uncover hidden revenue opportunities and optimize team resources.
Streamlining processes will contribute to two important success factors under value-based payment: increased revenue and reduced administrative costs. It also will allow provider organizations to allocate more resources to analytics or care management activities.
3. Protect your king
Even non-chess players know that when the king is in checkmate, the game is over. The lesson for healthcare finance leaders is equally clear: Protecting revenue is a “non-negotiable.”
Recommendation: Shift more resources to managing the outpatient/ambulatory revenue cycle. The COVID pandemic (coupled with the high cost of inpatient care) has moved healthcare delivery to the ambulatory and telemedicine environments, including ambulatory surgery centers, urgent care centers and specialty groups. Under value-based payment, the goal is to keep patients within the organized network to ensure better care can be delivered at a reduced cost. As revenue continues to shift from inpatient to outpatient care, revenue cycle leaders should pay attention to the patient experience in both settings, with the goal of keeping patients, and revenue, in-network.
4. Control the center of the board
Experienced chess players try to establish key pieces in the center of board early in the game. Controlling the center creates more options later on. The same idea applies to the healthcare revenue cycle. The best strategic moves will not only rebuild current revenue, but also set the stage for success with value-based payment in the years to come.
Recommendation: Focus on the following two areas that are important now and will become critical later.
Telehealth. Take steps to identify the full range of telehealth revenue opportunities. Investing in training also will be important to ensure providers comply with documentation requirements and billing staff use the correct service codes for full payment.
Risk identification. Accurate hierarchical condition categories (HCCs) are the key to optimizing value-based payment revenue for patients in different risk groups. Finance leaders, therefore, need to emphasize the importance of accurate ICD-10 coding. Doing so also paves the ways for accurate analytics that identify high-risk and rising-risk populations for care management. Many providers are missing revenue by not billing care management or transition services appropriately.
5. If you must lose a piece, get something in exchange
Losing pieces is inevitable. However, a good chess player can usually blunt a loss by turning it into an exchange. How does this apply to healthcare finance? In 2020, most provider organizations lost major revenue. At the same time, most payers booked record profits. Payers know this imbalance is unsustainable, so now is the time to approach them about renegotiating contracts.
Recommendation: Focus negotiations on three areas:
- Securing permanent payment equity for telehealth
- Recouping lost revenue from canceled elective surgeries
- Negotiating additional (or in advance) quality incentive opportunities
6. Build up a set of small advantages
In spite of the common myth, very few chess players “think seven moves ahead.” Most players focus on steadily accumulated small advantages until an opportunity opens up. Similarly, no single strategy will lead to revenue cycle success. Finance leaders need to make incremental improvements across the revenue cycle while they carefully assemble the pieces of an effective value-based payment program.
Recommendation: Develop revenue cycle dashboards that provide a full-spectrum view of current operations and emerging opportunities. These dashboards should include traditional revenue cycle key performance indicators (KPIs) such as AR days, AR aging and collection rates. They also should incorporate the standard KPIs of FFS reimbursement, including measures of productivity, profitability and payment.
Finally, a selection of new KPIs should be added that are important under value-based care. These metrics will help finance leaders manage cost, quality, patient satisfaction and access, and other factors critical to maximizing value-based payment revenue.
Revenue cycle leaders who embrace all these recommendations will find themselves well on the way to becoming revenue cycle grand masters.