Revenue Cycle Management in the Value-Based Era: It’s a Whole New Ball Game
Late last year, the Tampa-based Black Book Market Research released the results of a survey of patient care organization leaders. Black Book found that a full 26 percent of hospitals still lack a viable revenue cycle management solution, compared to 35 percent that lacked such a solution in 2012. And that is at a time that, of the 1,600 “RCM modernization-delinquent hospitals,” as Black Book referred to those lacking a viable RCM solution, 82 percent anticipate making value-based reimbursement decisions in 2019 without an advanced software implementation or outsourced partner. If forced, Black Book reported, “85 percent indicate they would turn to an RCM consultancy/advisory for short-term direction.”
Further, as a Frost & Sullivan report on the subject published in October 2018 and entitled, “New Approaches to Denials Management: Perspectives from the Frontline,” noted, “Revenue Cycle Management is receiving unprecedented attention as healthcare providers adopt new approaches and strategies designed to maximize revenue collection and prevent unnecessary leakage. For many providers, RCM reinvention has become a core business necessity in the face of an almost non-stop wave of economic, regulatory and competitive market change that has increased financial risks across the board.”
As the Frost & Sullivan whitepaper noted, “Reimbursement has never been easy, but for many providers, it’s getting harder. Reasons for this include the shift from fee-for-service to value-based care and alternative payment models, the rise of high-deductible health plans (HDHP) that place greater financial responsibility on patients, and utilization management policies like prior authorization and medical necessity verification that are driven by payers’ concerns about escalating medical costs and potential over-billing. Consequently, providers have to navigate a growing array of health plans with deep contractual and network complexities and almost constantly changing rules and requirements. This dynamic has created an urgent need to address RCM shortfalls—to re-engineer RCM workflows and processes and adopt new technology solutions to drive efficiencies and improve revenue capture.”
And the whitepaper quoted Michael Borge, senior director of revenue cycle at Banner Health in Phoenix, as stating that “It’s really about bringing total coordination between all the teams and communication with each different team whether its back end or front end. One of the biggest needs/opportunities for improvement is to get information back to people who actually work in a particular environment. [We need to] take the information to the people that are doing the work,” Borge told Frost & Sullivan.
New levels of collaboration now needed, experts agree
Industry experts agree: the entire landscape around revenue cycle management is actively changing now, as U.S. healthcare reimbursement begins its inevitable shift into value-based payment. “Traditionally, revenue cycle organizations have focused on charge capture and revenue maximization,” says James Akimchuk, a vice president at the Naperville, Ill.-based Impact Advisors consulting firm. “That shifted into including expenses as well,” says the Lexington, Mass.-based Akimchuk. “But with the introduction of value-based contracting, it brings into focus a different way of looking at revenue cycle. It forces you to work in tandem with other parts of your organization. While clinical optimization and revenue cycle optimization are both important, now you have to combine efforts in an integrated fashion.”
What’s more, while, historically, it was seen in patient care organizations as something of a “nice thing” for physicians to document correctly and well in the record, there’s an urgency to the issue now that didn’t exist in the past. “Clinicians have always viewed the need to document correctly in the clinical record as essential to appropriate patient care,” says Akimchuk. “What’s changed is that historical documentation in the record has not required a level of precision in terms of what’s included and not. Historically, if I’m a physician, I’m recording in the record; but now, I need to record differently or at a level I might not have done. And that comes at the same time that more and more resolution has to be moved into the revenue cycle. Denials management and coding edits are now being pushed forward, related to the idea that the closer to the point of origin you can address things, the better. But that forces more towards the front end of practice. So the challenge becomes not only the ability to record at a higher level, but the fact that you’re now putting more burden on the front line.”
One of the challenges embedded in this shifting landscape is around what medical coders are doing and need to do now. “Coders have always abstracted and provided code based on documentation,” says Impact Advisors’ Akimchuk. “What’s changing is where in the process that happens, and who’s actually doing the primary coding. Primary coding took place in the coding departments; more and more, the documentation comes as a direct result of what the provider does, and that changes where you go to get clarification.” So the interaction between physicians and coders “is a bi-directional conversation now, requiring more of a back-and-forth.”
UPMC’s leading-edge RCM strategy proves its results
At the vast, 40-plus-hospital UPMC health system, based in Pittsburgh, huge strides have already been made to optimize revenue cycle management operations in the emerging value-based environment. Jeffrey Porter, chief revenue cycle management officer at UPMC, oversees a staff of over 2,600 FTEs, in an organization with annual revenues of $20 billion—half of those revenues coming from the provider side of the organization, and half from the UPMC Health Plan, which is fully integrated with the provider component of the system.
“We’ve been addressing revenue cycle complexities for a while now with our health plan, so it’s something we’re used to,” Porter explains. “In fact, we’ve partnered together to even align some of the revenue cycle functions together, to function as an IDFS—an integrated delivery and financing system—to show that we’re aligned around the patient. So we’ve looked not only to better serve our patients and members, but to be as efficient as possible. We’ve even integrated some of our care management functions together. For example, a patient comes into the ED—usually, there’s a lot of back-and-forth between and among clinicians, their care managers, and the health plan’s care managers. For our patients who are also care plan members, we’ve integrated those functions to make them more streamlined and more efficient.”
And while Porter oversees a staff of more than 500 coders altogether, a key element of his team’s success in RCM overall has been the placement of 30 specialists on the organization’s clinical documentation improvement (CDI) team. The organization has interfaced its core coding application with its electronic health record (EHR), and, Porter says, “Our providers document into the EHR, and then all that information feeds into the coding platform. That platform has two functionalities” relevant to optimization: “one is computer-guided coding software that can help assist with DRGs and code sets, but also runs through a series of queries that looks through a series of conditions that potentially lack appropriate documentation. This identifies opportunities for improvement in coding and documentation; those alerts reach the CDI team, who then query the doctor,” to obtain specificity on the documentation, in order to achieve optimal reimbursement, notes Porter.
The results of this program speak for themselves: in 2018 alone, Porter estimates, his CDI team’s work led to the capture of $30 million in additional revenue.
Pricing transparency: a new policy-regulatory set of challenges for revenue cycle leaders?
While the shift towards value-based contracting is causing revenue cycle executives and managers in hospitals and health systems major concerns, an even more immediate challenge, some say, is the new federal rule around hospital pricing transparency, which is setting off alarm bells across the country.
Deborah Vancleave, vice president of revenue cycle at the St. Joseph, Missouri-based Mosaic Health System, a two-hospital system in southwest Missouri, is deeply concerned by the executive order signed June 24 by President Trump that directs the Department of Health and Human Services (HHS) to develop rules requiring hospitals to publish prices “that reflect what people actually pay for services in a way that’s clear, straightforward and accessible to all.” That order followed up on a rule finalized in January 2018 requiring hospitals to post their stated charges online. The June 24 order should also “require healthcare providers and insurers to provide patients with information about the out-of-pocket costs they’ll face before they receive healthcare services,” HHS Secretary Alex Azar said before the order was signed, according to NPR.
That order was followed by an announcement on the part of the Centers for Medicare and Medicaid Services (CMS), to wit: The federal CMS on July 29 announced a proposed rule on price and quality transparency that would affect how hospitals communicate charges to patients and to payers. In a press release published to its website, the agency stated that “CMS is proposing historic changes as a result of President Trump’s recent Executive Order on price and quality transparency that lays the foundation for a patient-driven healthcare system. The proposed rule proposes price transparency requirements that will increase competition among all hospitals by requiring them to make pricing information publicly available. As a result, patients would be able to shop for health care that meets their needs and budgets.”
“Currently, the biggest challenge for us is pricing transparency, and how that relates to our overall goal of patient financial experience,” Vancleave says. “I came to Mosaic about three years ago, and I had a goal to drastically improve the patient financial experience; and I believe that we’ve taken some pretty sophisticated steps to do that, and I’m comfortable with our success so far in that area. However, with the recent mandates and the executive order, I feel that it’s going to complicate our progress with the patient financial experience.”
In fact, Vancleave continues, “Because it’s been our goal from day one to improve the patient financial experience, part of that is pricing transparency. We sought to implement an online tool so that patients could search shoppable items and create out-of-pocket cost estimates for themselves, based on their insurance. But with the new executive order, that may hinder our progress, because they’re combining quality and payer contracting into the pricing transparency effort, and putting the onus on the providers to provide estimates to patients. I believe the onus should be put on the payers to work directly with their members to discuss potential out-of-pocket costs,” she adds.
Meanwhile, when it comes to the emerging value-based payment system, Vancleave notes that, “As a rural facility, we don’t yet have such contracts, but that’s the wave of the future, so we’re preparing for that. And we’re looking into the future, per AI [artificial intelligence], hoping to automate processes. And we do provider-based billing, in which we combine multiple services into one encounter, and that’s a very manually based process. So we’re looking to automate in many processes. We started our five-year plan in fiscal year 2017, and so we’re about three years into that plan. A lot of software support has been very helpful; we’ve brought eligibility and quality assurance programs at the point of registration, and we have decreased our final write-offs on denied claims, by half, in the last three years. And we’ve brought in some other tools to identify presumptive charity; and we’ve decreased out bad debt by 57 percent since fiscal year 2017.”
All of those interviewed for this article agree: the future is here—or, at least for some organizations—coming very, very soon. As Impact Advisors’ Akimchuk puts it, “This isn’t rocket science. The paradigm shift in the industry has taken place over the past five to seven years. And the further in that we get, the clearer it gets that this has to be an operationally driven initiative. So,” he advises, “start the conversations early, have them often, and make sure that the objective is an operationally driven solution. The industry has morphed over the past five years, that it truly has become a joint conversation.”
Looking forward into the next five years, Akimchuk says, “From an integrated revenue cycle perspective, clearly, most of the large academics, and many mid-sized organizations are stepping into that space now (integrated operations). Over the next five years, many smaller organizations will go through a window where their applications no longer support them or provide them with the tools they need to do their job. Many organizations have been on solution platforms that also provided ERP [enterprise resource planning] solutions as well as RCM. So it becomes a multi-faceted conversation.”
