The healthcare revenue cycle is just beginning to feel the effects of consumerism as employers, providers and patients focus on containing healthcare costs.
Today's growing financial pressures on healthcare organizations will continue to increase as consumers bear greater financial responsibility for footing tomorrow's healthcare bills. As reimbursement methodologies change and calls for transparency increase, the desire to move revenue efficiently remains the heart of healthcare.
From market forecasts, to RAC audits, to the top ranked RCM vendor, here are 25 things for healthcare professionals to know about the revenue cycle market:
1. Soaring market growth. The revenue cycle management market, valued at nearly $18.3 billion in 2014, is expected to soar to $32.2 billion by 2019, according to a MicroMarketMonitor report.
2. Reimbursement ranked the number one concern. Healthcare decision makers reported reimbursement is the biggest problem facing health systems today, followed by the high costs of supplies, according to a poll administered by Cardinal Health.
3. Health system pharmacies are increasingly seen as a revenue and margin generator. Health system leaders increasingly look to the pharmacy as a means to grow revenue by focusing on incremental revenue opportunities such as ambulatory, specialty and mail-order pharmacy services. Cleveland Clinic — which opened a specialty pharmacy a year ago — estimates it will break even on its upfront investment with the pharmacy's profits within 16 months of opening, according to the Advisory Board.
4. Four key performance indicators to watch during an EHR transition: Service-to-payment velocity, days not final billed, charge trends and denial rates are the most telling indicators of revenue cycle health during EHR migration, according to Carmen Sessoms, associate vice president of product management at RelayHealth Financial.
5. Unsure of consumer-driven strategies. Only 15 percent of healthcare system executives reported they were confident their organization has a strategy for becoming more consumer-focused, according to a survey by Kaufman, Hall & Associates.
6. The rising cost of collections services. The overall cost to collect patient bills increased across all performance quartiles, according to a study by McKesson. From 2011 to 2013, the full cost to collect payments increased from 1.9 percent to 2.6 percent for hospitals with the highest-performing revenue cycles, 2.3 percent to 3 percent for the median quartile, and 2.8 percent to 4.2 percent for the low-performance quartile.
7. Hospitals and revenue service providers strengthen strategic partnerships. Recently the revenue cycle industry witnessed strategic relationships solidify between healthcare systems and leading RCM providers. Driven by the need to reduce operating costs and cope with trickling reimbursement rates, healthcare systems are investing in strategic partnerships to stretch resources. In December, Chicago-based Accretive Health and Ascension Health of St. Louis signed a 10-year contract to expand their services agreement, and Flagstaff-based Northern Arizona Healthcare expanded its contract with Cerner to include RCM services.
8. Comprehensive RCM outsourcing may be the most popular option. Seventy-two percent of hospital CFOs consider end-to-end RCM outsourcing to be the best option until value-based payment models are better established, according to a Black Book RCM vendor client experience poll.
9. Increased competition among RCM vendors. Shrinking margins, higher claim disbursement and increasing provider competition have forced healthcare organizations to look to third parties for improved revenue performance. The market is expected to surge as more software and solution companies continue to innovate claims, collections, coding and technology systems. For a list of 85 RCM companies to know, please click here.
10. The rise of niche market vendors. Many RCM companies have become industry or niche-centric. Rockville, Md.-based Collect Rx specializes in providing revenue cycle services for out-of-network billing claims. Dallas, Texas-based Medigain, Grover, Mo.-based National Medical Billing Services and Overland Park, Kan.-based in2itive offer billing, collection and coding services for the ASC sector. Zotec Partners of Carmel, Ind. focuses on hospital-based specialties such as ER, physician, radiology and anesthesia billings. Its also worth noting that many of the largest firms in the world such as PWC, KPMG, Alvarez and Marsal among others manage departments devoted to revenue cycle management.
11. Integrated RCM platforms. Many companies, such as Watertown, Mass.-based athenahealth, are offering hybrid RCM-EHR-IT solutions. Other vendors, such as ZirMed, offer combined revenue cycle and population health management services. As the desire for more integrated and streamlined operations systems increases among care providers, one can expect to see more companies offering hybrid systems solutions.
12. Many RCM providers have roots in healthcare systems. It is interesting to note several leading revenue cycle solution providers grew out of healthcare providers. For example, Conifer Health Solutions developed initially to serve Dallas-based Tenet Healthcare before securing a contract with Catholic Health Initiatives, Nashville-based Hospital Corporation of America launched Parrallon Business Solutions to serve as the HCA's revenue cycle arm and Wallington, Con.-based SourceMed originally provided IT solutions to the predecessor to Surgical Care Affiliates, Health South.
13. Providers pay for RCM vendors in a myriad of ways. Some vendors charge providers a flat-fee for each active account per month, others vendors derive payment from a set percentage of net collections. Physician's Practice created an illustrative guide of payment methods for various RCM service vendors.
14. Hospitals appealed 47 percent of all RAC claim denials in the third quarter, according to the American Hospital Association's RACTrac survey.
15. About 60 percent of claims reviewed by RAC appeals judges were found not to have an overpayment, according to the RACTrac survey.
16. Cooperative Exchange declares ICD-10 implementation a non-event. The organization representing the healthcare clearinghouse industry declared sufficient planning, education, testing and industry collaboration resulted in a smooth transition for most healthcare providers nationwide.
17. Humor amidst the ICD-10 anxiety. In a playful jab at ICD-10s overwhelming specificity, New Yorker reporter Alastair Gee suggested a better title for the coding book could be, "A Series of Unfortunate Events."
18. The fragmentary nature of coding departments. Of healthcare systems that outsource a portion of their coding needs, 50 percent reported working with one or two vendors and 45 percent reported working with seven or more vendors, according to an himagine survey.
19. Underreporting of medical conditions harms providers' revenue cycle. A study from Baltimore-based Johns Hopkins University School of Medicine found underreporting and under-coding of obesity, alcohol use and tobacco use in Nationwide Inpatient Sample data can have devastating effects on hospitals' economic health and reimbursement rates.
20. Increasing call for price transparency. As consumers shoulder greater portions of their medical costs, consumers and lawmakers alike have demanded action against surprise medical bills through increased price transparency and policy change.
21. The need to assess propensity to pay. The Trends in Healthcare Payments Fifth Annual Report found that in 2014, 39 percent of providers did not know the amount of consumer responsibility during the consumer visit, and 72 percent said that it took more than one month to collect from a consumer.
22. Wait to bill until a patient's deductible is met. Co-founder of PayorLogic Jordan Levitt argued against traditional logic at the heart of the provider billing process. Physicians, providers and payers often overwhelm patients with bills immediately following care services, making it difficult for patients to understand what to pay and when to pay it. By waiting to bill a patient until their deductible is met, Mr. Levitt believes providers can improve their chance of reimbursement.
23. Medicare HOPD spending jumped more than $14 billion from 2007 to 2013. Higher reimbursement rates for hospital outpatient department services may be driving more physicians to charge Medicare for patient visits as HOPD services instead of traditional visits. The Government Accountability Office requested Congress consider directing HHS to equalize payment rates between evaluation and management office settings and return the associated savings to the Medicare program.
24. 340B program to move against duplicate discounts. The OIG's Work Plan for fiscal year 2016 ranks duplicate discount prevention as a high-priority issue. In its work plan, the OIG points out existing tools and processes to prevent duplicate discounts in fee-for-service Medicaid may not be sufficient to prevent duplicate discounts for drugs. The OIG plans to publish the risk assessment in 2016.
25. Duplicate medical records pose a significant threat to a provider's revenue cycle. The Healthcare Financial Management Association wrote, "Lowering the duplicated patient record rate increases revenue cycle efficiency by improving the accuracy of information used to submit claims, collect payments and provide care."
More on revenue cycle managment:
This week's 5 must-reads for hospital CFOs
CMS unveils new way to explore prescription drug spending
Northern Arizona Healthcare switches to Cerner for RCM services