RCM for MSOs: Driving Value Creation with Revenue Cycle Optimization

For many management services organizations (MSOs), revenue cycle operations can easily make or break financial performance. Billing teams are often overwhelmed, payer contracts are overlooked, and patient collections frequently fall behind until it's too late. That’s an expensive way to operate, especially now that investors are watching margins closely and growth through acquisitions has slowed.

Top-performing MSOs are increasingly extracting more value from their existing practices by leveraging revenue cycle technology. While some organizations still rely on spreadsheets and manual billing, forward-thinking groups use automated revenue cycle management (RCM) tools to recover lost revenue, identify payer shortfalls before they require write-offs, and create a more seamless financial experience.

As many MSOs shift their focus from buying new practices to improving what they have, revenue cycle technology is the best tool to help get the job done. With automation, RCM solutions help you quickly see:

• Where you’re losing revenue across your physician groups
• When payers aren’t paying their fair share
• Which patients need more help to pay their bills
• How to improve EBITDA, net revenue, and cash flow

Why MSOs can’t afford to delay revenue cycle automation

The data illustrates why organizations must act quickly. Research suggests that effectively leveraging automation and analytics could eliminate $200 billion to $360 billion in annual healthcare spending across the U.S.

Organizations already using automation are seeing measurable financial and operational gains. Across revenue cycle operations, automation and AI help providers reduce denials, lower administrative costs, accelerate collections, and improve overall reimbursement performance. For MSOs managing multiple physician groups, even modest improvements in clean claim rates, denial recovery, or cost-to-collect can translate into millions of dollars in recovered revenue and significantly stronger EBITDA.

The industry is taking note. A FinThrive report found that 76% of RCM leaders identified automation as their top initiative for 2026, while 56% cited automation and AI as their largest area of investment. These figures reflect a broader shift; many healthcare organizations and MSOs have either begun implementing revenue cycle automation or are actively expanding existing programs to improve operational efficiency.

Despite this momentum, a significant gap remains between current revenue cycle operations and where they need to be. Valerie DeCaro, Vice President of Revenue Cycle at DOCS Dermatology, described the challenge:

"One of the biggest problems in the revenue cycle for MSOs today is the lag in adopting automation and technology. Many workflows remain archaic; we still use fax machines regularly, and some practices even operate on paper systems. We aren't nearly as advanced as other industries." — Valerie DeCaro, VP of Revenue Cycle, DOCS Dermatology

When MSOs acquire new practices, these operational gaps are compounded. Every practice integrated with outdated workflows or lacking a clear contract management process increases the risk of revenue leakage until systems are standardized and modernized.

Most of these issues are difficult to detect manually. Without the right technology in place, MSO leadership teams risk making financial decisions based on incomplete information while earned revenue quietly slips away.

The revenue cycle opportunities most MSOs miss

Below are some of the most overlooked areas where MSOs can create meaningful financial and operational gains through revenue cycle technology.

Pursue payer underpayments

Identifying and recovering payer underpayments represents one of the most significant value-creation opportunities for MSOs. Despite its impact, this area is frequently neglected, as many physician group management teams lack the automated systems required to verify that reimbursements align strictly with contractual terms. And this is a gap that payers often exploit.

Industry data indicates that payers routinely leave 1% to 3% of net revenue uncollected. For an MSO overseeing an extensive portfolio of practices, these incremental shortfalls aggregate into millions of dollars in lost capital.

The AHA’s 2025 Cost of Caring report details the escalating impact of underpayments on health systems nationwide. In 2023, hospitals absorbed $130 billion in Medicare and Medicaid underpayments, with shortfalls increasing by approximately 14% annually since 2019. By 2024, Medicare reimbursed hospitals just 83 cents for every dollar billed, resulting in over $100 billion in underpayments that year alone.

Providers also incur significant costs simply attempting to collect owed revenue. In recent years, healthcare organizations spent nearly $18 billion to appeal denied claims. The American Hospital Association estimates that hospitals overall spent approximately $43 billion to recover payments that insurers should have disbursed initially.

Without automated, contract-level reconciliation, most revenue leakage is categorized as a routine adjustment and remains uninvestigated.

Conversely, organizations that proactively address underpayments are securing significant recoveries:

• In August 2025, a federal judge approved a $2.8 billion settlement requiring Blue Cross Blue Shield to compensate providers for historical underpayments and reform future claims practices.
• An arbitration panel ordered UnitedHealthcare to pay $91.2 million to Envision Healthcare for reimbursement agreement violations.
• Radiology Imaging Associates identified $1.1 million in validated underpayments from a single payer shortly after deploying underpayment detection software.

Many MSOs remain hesitant to address underpayments due to the complexity of manual management. Auditing reimbursements against payer contracts line-by-line is labor-intensive. Without automated tracking, recurring denial patterns and systemic underpayment trends remain obscured within remittance data.

Take a quick, self-guided tour through a powerful underpayments recovery tool:

Barriers to underpayment collection

The biggest challenge is scale. Manually pursuing underpayments requires staff to locate specific payer contracts, review procedure-level fee schedules, and compare reimbursements against claims for thousands of patient encounters every day.

Given the manual effort required, it is unsurprising that 17% of organizations never review their payer contracts, while another 16% conduct reviews only every two to three years.

Denial management faces similar hurdles. Without automated tracking categorized by payer, denial code, and CPT code, systemic reimbursement issues often remain hidden within complex remittance data.

As detailed in our underpayment collection guide, common root causes include misinterpretation of payer contracts, reliance on outdated fee schedules, and incorrect bundling of services. Regardless of the cause, the path to resolution is consistent: detect the error, recover the revenue, and optimize the underlying process to prevent recurrence.

Making underpayment recovery more efficient

Manual underpayment review simply doesn’t scale for modern MSOs. Even when practice management systems include underpayment modules, those tools often require dedicated contract specialists to maintain and still struggle to accurately identify meaningful net revenue opportunities.

Automated platforms solve that problem by centralizing payer contract data and continuously comparing reimbursements against contract terms.

A platform like MD Clarity brings those capabilities together in one system:

• RevFind automates underpayment and denial detection by comparing actual reimbursements against payer contracts and flagging discrepancies automatically.
• PayerMonitor centralizes payer contracts and tracks payer performance across the portfolio, ensuring leadership always has visibility into compliance and reimbursement trends.
• Payer Benchmarking provides market intelligence to support stronger contract negotiations and reimbursement analysis.

Together, these tools create a connected workflow, removing the need for teams to manage separate systems or spreadsheets.

The platform integrates with existing EMRs, billing systems, and practice management software, allowing MSOs to consolidate data across physician groups into a single operational view.

The best implementations are designed to be as low-touch as possible for staff while still giving leadership real-time visibility into reimbursement performance.

Update chargemasters

When MSOs acquire new practices, priorities like credentialing, scheduling, and operational consolidation usually push chargemaster reviews to the bottom of the list. By the time leadership finally addresses them, they often find that the inherited physician groups haven’t updated their chargemasters in years.

This delay creates substantial financial risk. Outdated chargemasters lead to direct revenue loss due to "lesser of" clauses in payer contracts. These clauses stipulate that payers will reimburse whichever amount is lower: the contracted fee schedule or the chargemaster rate.

For example, if a payer contract allows $200 for a procedure but the chargemaster lists it at $150, the payer is only legally obligated to reimburse $150. When 20% to 25% of chargemaster rates fall below Medicare benchmarks, it is a clear indication that a physician group has gone too long without a formal review.

Barriers to chargemaster optimization

The AMA updates ICD and CPT codes every year, introducing new codes, deleting outdated ones, and revising existing definitions. Keeping chargemasters accurate takes consistent maintenance, and errors build quickly when updates aren’t applied regularly.

The problem gets worse when chargemasters live across disconnected spreadsheets managed by different departments. Over time, ownership becomes unclear, updates fall behind, and inaccurate pricing quietly affects reimbursement.

Many teams still treat chargemaster maintenance like a basic administrative task. It isn’t. When reimbursement depends on accurate pricing data, chargemaster management becomes a direct revenue integrity issue.

Making chargemaster optimization more efficient

Healthcare leaders consistently point to chargemaster accuracy as a foundational part of clean operations. The most effective organizations typically:

• Involve finance, patient financial services, IT, and specialty departments in oversight
• Assign clear ownership for ongoing updates
• Conduct annual internal reviews and periodic outside audits
• Use automation to identify discrepancies and outdated rates

Automation makes this process far more manageable. RevFind, for example, reads payer contracts and flags chargemaster discrepancies automatically, helping reduce billing errors, compliance risks, and reimbursement shortfalls.

Aim for accurate net revenue forecasting

Recovering revenue is important, but forecasting future revenue accurately is just as critical.

MSOs rely on these forecasts to guide capital allocation, manage debt obligations, and provide reliable reports to lenders and private equity sponsors. When forecasts miss the mark, operational planning becomes way more challenging.

Why historical data alone creates problems

Historical trend-based forecasting made reasonable sense when reimbursement was largely payer-driven and payment behavior was relatively stable. That environment no longer exists, and the complexity MSOs face today extends well beyond any single variable.

Net revenue is influenced by several variables that historical averages systematically fail to capture:

• Payer contract complexity and renegotiations: Rate changes, fee schedule updates, and carve-outs shift reimbursement across service lines in ways that historical blends often obscure.
• Denial rates and underpayment patterns: Claim adjudication behavior varies by payer, code, and market. Aggregate history masks directional shifts in denial and underpayment trends that can meaningfully erode collections.
• Value-based and capitated arrangements: As more MSOs adopt risk-bearing contracts, revenue recognition becomes decoupled from visit volume in ways that traditional fee-for-service models cannot accommodate.
• Patient financial responsibility: Out-of-pocket spending is rising structurally. According to KPMG, patient costs are projected to grow from $471.5 billion in 2022 to $781.9 billion by 2033. Unlike payer reimbursements, patient collections are inherently variable; some pay immediately, many require payment plans, and a portion remains uncollected entirely. Historical collection rates averaged across this heterogeneity produce projections with compounding error margins.
• Multi-site and multi-specialty consolidation: As MSOs grow through acquisition, blending disparate payer mixes, credentialing timelines, and revenue cycle maturity levels into a single forecast model introduces structural inaccuracies that compound with each new addition.

Transitioning to dynamic, real-time net revenue calculation

Accurate forecasting at the MSO level requires moving from backward-looking averages to models built on current operational data. That means calculating expected net revenue from the ground up - starting with today's visit activity, not last year's collections.

Sophisticated forecasting models incorporate:

• Current visit volume and procedure mix across sites
• Payer contract terms applied at the service line and code level
• Patient financial responsibility estimates segmented by coverage type and plan design
• Historical collection rates stratified by payer, patient population, and geography
• Denial and underpayment adjustments informed by recent claim adjudication trends
• Recognition timing assumptions calibrated to each revenue stream's collection velocity

By aligning forecasts with real-time visit data and payer-specific logic, MSOs can obtain a significantly more accurate projection of future collections and overall financial performance.

Improve upfront collections

While most MSOs prioritize improving upfront collections, many struggle to operationalize the process consistently. Securing revenue before it ages is one of the most effective ways to accelerate cash flow and minimize bad debt.

As patient responsibility represents a growing share of healthcare revenue, recovery rates drop significantly once balances shift into long-term accounts receivable (A/R). Research indicates that once a bill ages beyond 120 days in A/R, physician groups typically recover only about ten cents on the dollar.

Ultimately, every dollar collected upfront is a dollar that avoids the high cost and low yield of the collection cycle.

The persistent challenges of upfront collections

The main obstacle to effective upfront collection is the difficulty of generating accurate estimates.

Generating estimates manually requires staff to review payer contracts and patient benefits individually for every encounter, a process that can take anywhere from 10 minutes to an hour per patient. That simply doesn’t scale across large physician networks.

Operational workflows also present a significant barrier. Front-desk teams accustomed to traditional billing models often require specialized training to gain the confidence and skills needed to discuss financial responsibility with patients prior to providing care.

Furthermore, patients may resist this shift if they are accustomed to the delayed billing cycles of the past. Providing clear communication and highly accurate estimates is essential to mitigating this friction and establishing a new standard for the patient's financial experience.

Make upfront collections part of standard workflow

Standardizing upfront collections is much easier with the right workflows and supporting technology.

Leading organizations are:

• Sending payment expectations before appointments through text or email
• Verifying eligibility before visits
• Training front desk teams to explain deductibles, copays, and coinsurance clearly
• Making payment collection part of the normal patient intake process

As one senior revenue cycle executive shared during an interview with MD Clarity:

“We rolled out upfront collections to practices, one-by-one. We started with smaller locations to refine the process before expanding. Once we showed the CFO the revenue improvements and reductions in bad debt, we got buy-in across the organization.”

Starting small allows MSOs to refine workflows, prove results, and scale more confidently across the portfolio.

Automate patient estimates to make upfront collections stick

Many MSOs are now automating eligibility verification and patient estimate generation using platforms like Clarity Flow to:

• Automate eligibility verification
• Generate accurate patient estimates
• Deliver estimates before appointments via text or email
• Calculate coinsurance obligations automatically

The operational impact of solving this challenge is substantial. Research and case studies on healthcare price transparency initiatives consistently demonstrate that accurate pre-service estimates improve patient trust, reduce billing disputes, and increase upfront collections by helping patients understand and prepare for their financial responsibility prior to their visit.

A foundation of efficiency fuels perpetual growth

In the current market, many MSOs are finding that operational improvements deliver stronger returns than aggressive acquisition strategies alone.

As a VP of Finance and Accounting for an ophthalmology MSO shared:

"Back in 2018, 2019, we were growing quickly. It wasn't a free-for-all, but we would reach out everywhere and say come join us. Unfortunately those practices, particularly the smaller ones, just don't have the same return that they used to. The slowdown did allow us to focus on some of those synergies that we were probably not getting to previously. For instance, we had kept some practices on their old systems. We've taken the extended time to analyze all the data from our practices, which will be helpful going forward."

MSOs across the industry are adopting automation, AI, and machine learning to reduce administrative burdens, recover lost revenue, and maintain efficient operations despite persistent staffing shortages.

While organizational change often involves friction, the advantages are within reach. MD Clarity's solutions deliver value to MSOs rapidly, without lengthy implementation cycles or significant internal overhead. PayerMonitor centralizes payer contracts across your portfolio and tracks contract changes continuously, ensuring your team stays on top of contractual obligations. RevFind automates underpayment and denial detection, surfacing revenue discrepancies that standard payment posting often misses. PayerBenchmarking equips your team with market intelligence to negotiate from a position of data-driven knowledge rather than guesswork. Finally, Clarity Flow streamlines insurance eligibility verification, generates accurate pre-service patient estimates, and calculates coinsurance amounts so patients have a transparent view of their financial responsibility.

Get a sneak peek into our AI-native contract management solution through this interactive demo.

Together, these solutions give MSOs a single operational view across the entire portfolio, helping leadership identify revenue opportunities, reduce inefficiencies, and make better financial decisions from one centralized platform.

Request a demo to see how MD Clarity's AI-driven automation tools can support your MSO at any stage of growth.