Published: Feb 07, 2024
Revenue Cycle Management

Revenue Cycle Management Technology: Promises & Pitfalls to Consider Before Investing

Suzanne Delzio
Suzanne Delzio
8 minute read
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Are you still hesitating to implement or improve your revenue cycle management technology? 

While RCM solutions entice with promises of improved revenue capture, healthcare publications also contain stories of organizations that invested heavily in RCM software and other technology only to fail to achieve their goals or a positive ROI. 

Reasons behind these failures vary. Sometimes, the organization lacks sufficient staff or bandwidth to unleash the technology’s powerful features. In other cases, an organization acquires a system that addresses a downstream issue, ignoring the root cause upstream. From time to time, a RCM vendor’s system just doesn’t perform as promised. 

It’s no wonder revenue cycle managers and CFOs are cautious. 

Here, we apprise you of everything RCM technology – the majority of which is software – can and cannot achieve. 

What is revenue cycle management technology?

Revenue cycle management technology is the range of software and other tools that facilitate and execute the financial processes of healthcare organizations. AI- and automation-driven software solutions span from patient registration and eligibility through charge capture to final payment collection. RCM vendors have developed software solutions for billing, coding, claims processing, payment posting, and reporting. 

While software comprises a large portion of this technology, other devices like hardware also play a role. Today’s healthcare organizations can use automated kiosks for patient check-in and electronic payment systems, automated interactive voice response to streamline patient communication and chatbots for patient engagement. All components work together to optimize the revenue cycle, improve operations, and organize the patient financial experience.  

Revenue cycle management technology: the promise

Does revenue cycle management technology really improve provider profits and margins? Or are vendors over-promising? 

Consider one orthopedic system that upgraded to their patient eligibility and contract management workflows. 

When this 120+ physician practice with 30 locations and two ambulatory surgery centers faced a surge in patient volume, they knew they would need help managing their contracts and patient benefits. Data indicated that they were not collecting optimal payments from either patients or payers, and their contracts were an outdated mess. They didn’t want to go into this next, potentially lucrative phase of their expansion with inefficient revenue capture. 

After some analysis, they acknowledged that their shortfalls originated with poor front- and back-end processes. Time-consuming manual eligibility verifications drained administrative and revenue cycle staff. Overburdened team members made errors with prior authorizations leading to coverage-related denials. With no workflows for collecting upfront patient payments, their collections cycles had become long and costly. 

On the back-end, they had no contract management system, leaving them vulnerable to unfavorable contract terms and underpayments from payers. 

This orthopedics group initiated a search for a unified, automated system to conduct upfront patient benefits eligibility verification and deliver precise cost estimates to patients. They also wanted to achieve better transparency into their contracts and the underpayments that robbed them of revenue. 

This group began using a patient eligibility solution on the front end which delivered efficiencies that freed staff for more high-value, patient-centric work. Their contract management solution detected whenever a payer payment did not meet the contracted rate. Finding the trends in these underpayments saved the group $10 million dollars in the first year. Automation reduced the need to hire more staff and improved existing staff morale. 

Case studies touting robust revenue gains like these appear on most RCM software vendors’ websites. 

RCM technology: the pitfalls

While the adoption of AI- and automation-driven solutions have benefitted many healthcare providers, sometimes this technology falls short in getting the necessary jobs done. 

One 600+ bed health center with 26 locations in 25 Southwest counties decided to modernize and improve revenue by accepting all payments via online bill pay. This organization had a particular challenge, however – much of its patient population was made up of seniors. The online bill pay move did not increase patient satisfaction across the board. Instead, just 45 percent of patients responded favorably to using a digital portal, while 55 percent objected. They requested a live person to walk them through their financial responsibilities and their payment options. 

While the organization kept the portal, they also needed to hire outside services to provide this customer service. The cost savings weren’t as robust as they had hoped.  Overcoming challenges like these takes a multifaceted approach that includes regular assessment of RCM processes, continuous training for staff, and a strategic approach to technology integration and utilization.

Keep in mind, too, that to be successful RCM software should offer more than just claim processing. It should provide comprehensive monitoring of the process from pre-service to zero balance, allow for root cause analysis of denials, and enable the setting of specific goals to improve practice performance.

Technology, while instrumental, does not always solve the inherent problems within healthcare organizations' RCM processes.

Let data tell the RCM technology story

Case studies tend to be anecdotal. Of course software vendors broadcast their big successes on their websites. The data from competent studies tells a more accurate story. The saying, “In God we trust. All others must bring data.” persists for a reason.

The data is telling us that modernization via automation and AI is having a powerful and mostly positive impact on healthcare organization revenue, costs and operations across the United States. 

Consider these findings: 

  • In 2022, the National Association of Healthcare Revenue Integrity shared its State of the Revenue Integrity Industry Survey. In it, 85 percent of respondents report that the automation involved in RCM technology has positively impacted their previous 12 months’ revenue.  
  • After surveying 1,302 healthcare professionals, Black Book reported that those using revenue cycle automation software achieved an average 27 percent decrease in cost-to-collect and six percent increase in net patient revenue. 
  • Consulting firm McKinsey & Co. asserts that US healthcare overall could cut $200 to $360 billion in (mostly) administrative costs by using technologies such as automation, AI, and analytics. 

Statistics like these have spurred many healthcare organizations to implement or expand their revenue cycle technology investment. According to Fortune Business Insights, the global revenue cycle management market size is projected to more than double in just seven years, surging from $135.92 billion in 2023 to $282.12 billion by 2030, a compound annual growth rate of 11 percent. This growth reflects the enthusiasm healthcare organizations have for investing in RCM technology going forward. 

Where revenue cycle management technology adoption stands today

In just 10 short years, adoption of AI- and automation- driven RCM solutions has surged from 0 to 98% for some aspects of the revenue cycle. Much technological or automation progress has occurred over the past five years, and the CAQH Index stays on top of it all. 

Today, given widespread adoption, the CAQH Index estimates that RCM technology has saved the medical and dental industries  $193 billion in RCM administrative costs. The use of software technology for eligibility determination and claims makes up the bulk of these savings. The adoption of technology for prior authorizations, patient payment or good faith estimate generation, charge capture, contract management, and RCM analytics, however, still lags. 

Healthcare currently embraces these RCM technologies

Eligibility and benefits checks

Probably because most EHRs contain eligibility and benefit verification, 98 percent of all providers have adopted this workflow. When the full electronic adoption of eligibility processes save medical providers 16 minutes per transaction, it’s no wonder they’ve embraced it.

Source: 2023 CAQH Index

Cost savings should full adoption occur across medical industry: 9.3 billion

Time savings per transaction: 16 minutes

Electronic Claims Submission

One of the first areas RCM software engineers tackled was claims submissions. Today 98 percent of providers use fully electronic claims submission processes. 

Source: 2023 CAQH Index

Cost savings should full adoption occur across medical industry: 2.1 billion

Time savings per transaction: 5 minutes

Prior Authorization

Given that software engineers have only unleashed their code capabilities on the prior authorization task in the past five years, it’s not surprising that healthcare adoption of this technology stands at just 31 percent. 

It’s been taking some time for vendors to educate providers about the advantages of automating prior authorizations. Due to the time involved in checking current benefits via payer portals, however, manual prior authorizations create huge bottlenecks in the healthcare revenue cycle. As the healthcare industry receives more marketing and education about how AI and automation can get prior authorizations done faster and with more accuracy, adoption will increase. Currently, there are several legislative initiatives that promote the adoption of prior authorization automation. The AMA is also behind prior authorization automation. 

Source: CAQH Index

Cost savings should full adoption occur across medical industry: $494 million for medical industry

Time savings per transaction: 11 minutes

Automation opportunity measurements the CAQH Index leaves out

We’ll repeat that RCM technology is still a relatively new phenomenon, as reflected in the fact that many aspects of the revenue cycle in most healthcare organizations are still conducted manually. Currently, no studies exist reflecting the adoption rate of RCM technology for the following tasks, but healthcare leaders are exhorting organizations to access the cost savings they provide. 

Patient payment estimates / good faith estimates

2022’s No Surprises Act mandates that providers give self-pay and uninsured patients a good faith estimate that delineates their financial responsibilities. Given that the Centers for Medicare and Medicaid (CMS) see completing an estimate taking a staff member 1.3 hours to complete manually, an automated patient payment estimate solution is imperative. 

A proven patient payment estimate vendor will share that their solutions can complete the process in real time while also including eligibility verifications and automated text- or email-sending features. Providers can trigger these estimates to send upon scheduling or another event. Finally, when the estimates include a link to a payment portal, patients can send in a deposit or prepay the entire estimated bill. 

Contract management and underpayment detection software

When was the last time you fully reviewed your payer contracts? If it’s been a while, you’re not alone. Research from MGMA shows that 17 percent of providers never review contracts, and 16 percent only review every two to three years or more. We’ve met physician groups and practice leaders who haven’t reviewed contracts for over five years. Fifty-eight percent do review yearly, but many of these never challenge the terms the payer includes.

While there’s no research on the adoption of automated contract management, anecdotal evidence tells us that it’s mostly the largest hospitals and healthcare systems that use it. 

There are many barriers to efficient contract management and negotiation, including insufficient staff and staff training, poor payer communication, and confusing contract language. These barriers fuel the widespread, revenue-sapping existence of payer underpayments. A study published in Becker’s Hospital Review found providers lose one to three percent of their net revenue annually due to commercial payer underpayments. Other researchers believe the figure could be as high as 11 percent. We regularly encounter healthcare organizations with underpayments of five to seven percent of net revenue. 

And payers are underpaying by hefty amounts in some cases.

Recently, TeamHealth CEO Leif Murphy made the case that Molina's reimbursement practices are "abusive." He explains that,

  "like many insurance companies across the United States...[Molina] refused to negotiate fair reimbursement with emergency medicine physicians, coercively underpaid physicians, and exposed its members to its underpaid balances." 

Murphy’s frustration stems from the fact that, according to a Florida three-judge arbitration panel, UnitedHealthcare paid ER group TeamHealth clinicians just 30 percent of fair compensation for care provided. The payment of $10.8 million brought the group’s total recovery from UnitedHealthcare to nearly $500 million. 

Murphy echoes the sentiments of many providers struggling to win full payments from payers. Frustration with payer underpayments is just one challenge management services organizations face when trying to standardize physician groups. Physician owners appreciate learning that their MSO has a plan and technology for pursuing underpayments.  You can read more about how to address payer underpayments here.

RCM analytics

As with the revenue tasks above, finding current research on RCM analytics adoption rate remains elusive. 

One Plutus Health study found that organizations that implemented predictive analytics for denial prevention achieved a 42 percent reduction in denial write-offs and a 63 percent improvement in denial overturn rates. According to the  Vice President of Revenue Cycle at Tennessee’s RCCH Healthcare Partners, predictive analytics create a claim denials management strategy that reduces denials significantly.

Of course, predictive analytics is only one of the types of analytics that help healthcare organizations improve net revenue and reduce costs. This article explains how providers are also benefiting from:

  • contract and payer analytics
  • prescriptive analytics
  • descriptive analytics
  • diagnostic analytics
  • real-time analytics
  • comparative analytics

These forms of technology draw from many types of data (patient, denial, patient performance, billing, operational, revenue, and contract management) to pinpoint areas of net revenue leakage. With root causes surfaced by analytics technology, organization leaders can create workflows to improve operations, revenue, and costs. 

Benefits of RCM software

Cost reduction

Reduced costs and improved net revenue are the primary drivers of RCM software adoption. Once again we turn to the 2023 CAQH Index for the best insights on the amount saved with AI- and automation-driven technology. 

Source: 2023 CAQH Index

The chart above reveals the cost per manual transaction for medical providers is $7.19. The cost per electronic transaction (labor plus software subscription and other costs) is less than half that at $3.45 per transaction. 

Research reveals that the advantages of investing in modern RCM software extend beyond cost-cutting, however. These additional benefits include:

Staff productivity increase

RCM software automates tasks such as insurance verification, reducing manual workload and allowing staff to concentrate on more patient-centric and engaging duties.

Staff satisfaction increase

With support and guidance from AI- and automation-driven RCM software, staff achieves higher accuracy levels which imparts confidence. It also frees staff from menial, repetitive tasks, an aspect of the job that drives burnout and attrition. Staff prefers to interact on higher-value tasks with patients. 

Reduction in accounts receivable days

When you automate billing and claims management, payment collection accelerates, lowering AR days.

Up-front collections improvements

Reliable RCM solution vendors offer real-time insurance eligibility checks and patient financial responsibility estimates. These estimates, which come complete with a link to a payment portal, trigger better upfront payments.

Bad debt reduction

Predictive analytics assesses patient payment risks. With knowledge of which patients may lag in payments, you can offer payment plans, financial counseling, and information about healthcare financing options. Get your patients the care they need while capturing the revenue you’ve earned. 

Better payer negotiations and improved contract terms

Contract management software tracks payment trends and discrepancies. It can also help you compare the terms different payers offer. Armed with knowledge and competitive intelligence, you’re in a better position to negotiate for more favorable payer terms. Contract management software also detects and flags payer underpayments so you can spot trends and rectify these issues with your payers. 

Improved patient experience

Patient payment estimate software prevents surprise bills by providing accurate cost estimates upfront, enhancing patient satisfaction and loyalty. It’s now federal law that all uninsured and self-paying patients receive these patient cost or “good faith” estimates. 

Staff training and supply costs reductions

Automating processes and up-to-date regulatory compliance monitoring reduce the need for extensive staff training and the physical supplies involved.

Efficient record keeping

Comprehensive financial tracking and real-time reporting improves decision-making and compliance with privacy laws.

Workflow breakdown root cause detection

By providing insights into operational performance, RCM analytics identifies areas for operational improvement. 

All of these benefits collectively lead to more efficient operations, improved financial health, and a better patient care experience. RCM software has revolutionized these steps in the revenue cycle, offering solutions that automate and streamline operations from patient registration through payment collection.

RCM technology: Where did it come from? Where is it going?

 An 11-year evolution

It may seem like RCM technology is everywhere these days, but it’s a relatively modern development. 

Prior to healthcare’s RCM modernization via software, all patient data, billing information, and payment processing were manually entered into paper records or basic computer systems. This manual process was time-consuming and prone to human error, leading to issues like claim denials and delayed payments. Further, communication between healthcare providers, billing departments, and insurance companies was largely conducted through phone calls, faxes, and mail. Any answers obtained were prone to getting lost on little slips of paper, making it difficult to track the status of claims or resolve issues efficiently. 

Worse, without data analytics tools, healthcare organizations had limited ability to analyze financial performance or identify areas for improvement. That meant healthcare leaders made decisions based on anecdotal evidence, limited experience, or preference. 

2009 HITECH Act sets the stage for AI- and automation-driven RCM technology

RCM technology can trace its roots to the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 which mandated providers use electronic health records (EHRs). This move shifted healthcare organizations away from manual paper processes to electronic platforms. 

More impactful, it facilitated the capture of patient data in a more structured and accessible format. With data from patients, payers, and government entities available with a few keystrokes, enterprising software engineers began to experiment with automating many revenue cycle tasks. Today, there are nearly 300 revenue cycle management companies that automate these processes. 

EHRs have also facilitated the integration of various healthcare IT systems, including practice management systems and RCM software. Today, information flows across different departments, improving coordination and efficiency in the revenue cycle.

Which RCM software is better for you: end-to-end, EHR-affiliated, or point solutions?

While investigating the landscape of revenue cycle management (RCM) technology, you’ve probably run across three options: end-to-end, EHR-affiliated, and point solutions. 

End-to-End RCM software

“End-to-end” RCM service providers (e.g. Experian, R1 RCM) assert that consolidating all revenue cycle processes under a single vendor can enhance efficiency, increase net revenue, and boost both staff and patient satisfaction. A comprehensive solution handles all operations tasks from booking appointments, determining eligibility, coding, billing, and claims processing and accounts collection. For some healthcare organizations, end-to-end solutions are the right call. 

EHR-affiliated RCM software 

More recently, large EHR systems like EPIC and Cerner are expanding past their typical records management areas into solutions that tackle revenue cycle management. They now offer features that automate, track, and manage prior authorizations, patient pay estimates, charge capture, coding, A/R follow-up, and more. Along with Experian and others, they now bill themselves as “end-to-end” revenue cycle solutions. 

Point RCM solutions

Point or “bolt-on” RCM solutions, which focus on specific aspects of the revenue cycle, serve as powerful and focused tools designed to address distinct challenges effectively. These solutions are built to work seamlessly with other specialized tools, as well as Electronic Health Record (EHR) and Practice Management (PM) systems. These vendors bank on the precision and power in their solutions to distinguish themselves from end-to-end, less specialized solutions. 

Indeed, concerns about flexibility and dependency stop many providers from committing all RCM tasks to just one solution. Should the solution have a price increase, the provider is exposed to a large increase across the whole revenue cycle.

More importantly, RCM point solutions tend to capture better net revenue in their specific areas. With a narrow focus and feature set, point solutions vendors are more willing to customize your products. It takes a custom system to achieve optimal net revenue recovery. 

Further, companies specializing in RCM point solutions are known for their deep expertise in specific tasks. Typically more compact than their comprehensive counterparts, these companies are frequently equipped to tackle wider challenges that may involve other solutions or your EHR system. On the other hand, end-to-end service providers offer broad support but might not possess the specialized knowledge necessary to resolve particular issues unique to a specific point solution. Inefficiencies in the system can lead to a direct impact on net revenue loss. Finally, with point solutions, should one of your vendors disappoint, you can compare customer service, fees, and more within your tech stack. If one of your solution providers performs at a higher level, you can more easily switch to the better performer. 

Revenue cycle management technology that’s not software

Exploring revenue cycle management  beyond software leads us to innovative technology solutions such as:

Cloud-based platforms

These platforms offer healthcare organizations the ability to access their RCM systems from anywhere, at any time, fostering a more flexible work environment. Free to scale,  organizations can adjust resources based on demand without the need for physical infrastructure upgrades.

Blockchain technology 

By leveraging a decentralized and immutable ledger, blockchain technology introduces a new level of security and transparency to financial transactions and patient data management. This technology ensures that every transaction and data exchange is securely recorded, verifiable, and protected against hackers..

Automated Interactive Voice Response (IVR) systems

Automated IVR systems enhance patient communication by providing a self-service option for billing inquiries, appointment scheduling, and other routine tasks. This automation reduces the workload on staff, speeds up response times for patients, and improves overall satisfaction by offering 24/7 service without any wait.

Chatbots for patient engagement

Using natural language processing, chatbots offer a conversational interface for patients to interact with their healthcare providers. They can assist with common inquiries, facilitate payment processes, and improve engagement by offering personalized responses at any time.

Mobile payment solutions

 With the increasing use of smartphones, mobile payment solutions give patients a convenient and secure way to make payments anytime and from anywhere. Flexibility improves the payment experience for patients and can lead to quicker payment settlements, reducing the time and effort required for collections.

In-office kiosks

Self-service kiosks situated within healthcare facilities offer a different convenience from home payments, providing more freedom and privacy than standing at an agent’s counter, but less than via a portal accessed from home. These kiosks, which may be tablet-based or desktop systems, are integrated with the patient portal, allowing healthcare providers to alleviate administrative burdens on their staff. At these kiosks, patients review their billing details, fostering a better understanding of their financial responsibilities without feeling rushed.

Autonomous payment stations are becoming commonplace across various healthcare settings, including hospital outpatient departments, medical clinics, specialty care practices, dental offices, and pharmacies. As technological advancements continue, the healthcare industry should see an expanded deployment of them. 

These technologies enhance the efficiency and effectiveness of RCM processes, offering alternatives and complements to traditional software solutions.

A wide range of revenue cycle management technology solutions means thorough research on your part

Leveraging AI and automation, RCM technology developers have developed incredible  tools to support staff, speed workflows, and improve net revenue and cost containment. Some of these tools also have the power to quickly identify where workflows are faulty and leaking revenue – saving the overburdened revenue cycle manager or CFO significant time and attention.  

Healthcare organizations have achieved game-changing net revenue improvements by automating patient eligibility and estimates through MD Clarity’s Clarity Flow. This solution not only streamlines patient eligibility verification, but it also creates precise cost estimates, and notifies patients of their financial obligations via text or email. The estimates include embedded links that direct patients to your existing payment portal, facilitating the process for them to either make a partial deposit or pay the full amount upfront. Clarity Flow provides a detailed breakdown of deductibles, copays, and coinsurance, offering the level of payment transparency that patients value. The ability to make payments directly from the estimate simplifies the experience, reducing potential confusion.

Another common revenue cycle leakage point is contract management. Neglected payer contracts can lead healthcare organizations to accept underpayments, agree to disadvantageous contract terms, and settle for fees below the industry norm. In some cases, providers' fees are even found to be lower than Medicare rates. MD Clarity’s RevFind tool takes in, digitizes, and examines contracts, organizing them in one central place for easy accessibility. It checks each payment against the terms of payer contracts and notifies staff of any inconsistencies. Actively addressing underpayments can significantly increase cash flow and enhance profit margins.

Are you interested in rectifying your patient estimate and contract management processes? Implementing these improvements can lighten the load on your staff, diminish confusion, and most importantly, boost your revenue. Our team is ready to show off our software solutions. Schedule your demo with us today!

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