Price transparency. Interoperability. Patient self-service.
Revenue cycle management trends like these all show much promise, but how practical can they be when providers are fighting for every penny of revenue?
COVID catapulted our hospitals, health systems, and providers into the telehealth and remote care era. The virus also drove many clinicians and administrators away from the field, creating an unprecedented staffing shortage. As a result, provider operating costs are skyrocketing.
Add to these forces the Affordable Care Act with its high deductibles policies and the No Surprises Act mandating good faith estimates. The result? Patients have become healthcare consumers, comparing provider fees and insisting on knowing their financial responsibilities up front.
It takes sophisticated revenue cycle management strategies to tackle these paradigm shifts. Knowing the revenue cycle trends detailed here helps you grasp and succeed in an intense, ever-changing landscape of healthcare.
First, let's explore what providers and their revenue cycle teams are up against.
A precarious future for many healthcare organizations
Today's providers are struggling. Operating costs -- ignited by soaring labor costs -- are decimating provider revenues.
In Becker's white paper, "Top Challenges And How Technology And Automation Are Offsetting Them," Fitch Ratings Senior Director Kevin Holloran estimates that half of hospitals were not profitable in 2022. While hospitals do not account for all healthcare providers, research into their experiences helps us see into what's happening at the physician group and health system levels.
Holloran finds the future of many hospitals (particularly rural) bleak. Some have just one month or less of cash on hand. Holloran explains that in the first half of this year, overall hospital labor costs reached 56% of total revenue. He believes that only hospitals able to keep labor costs at or below 50% or below will be profitable. When operating costs rise above 60%, a healthcare entity cannot survive. Unfortunately, inflating labor and supplies costs are pushing hospitals in that direction.
An affordability crisis for the American consumer
Providers are not the only population at risk.
According to healthcare leaders at management consultant giant McKinsey & Company, soaring healthcare costs are becoming increasingly burdensome to patients. In 2021, the average family paid $8,000 to $12,000 in healthcare expenses. Given that the same family only has $20,000 in savings, healthcare's cut into their liquidity is substantial. Furthermore, 41% of consumers report having medical debt, reflected in the fact that 78% of providers report they struggle to collect even $1,000 from patients within 30 days.
Further burdening families is McKinsey's findings that, as healthcare costs rise, employers plan to pass these increases onto employees in the form of employee cost-sharing and high-deductible health plans.
McKinsey also warns that even the U.S. government may have sufficient funds for its citizens' healthcare. The 2022 Medicare Trustees report predicts the balance of the hospital insurance trust fund will turn negative by 2028.
It's not just finances that are threatened, however. McKinsey shares that financial concerns impede patient care – providers' prime directive. When 34% of patients defer care due to a perceived lack of affordability, and a $10 increase in the appointment cost prompts them to avoid it, not all patients are getting appropriate care. Clearly, providers must make dramatic shifts to protect themselves and their patients.
How will we organize our systems so everyone can afford healthcare? And so providers can afford to provide it? Understanding and executing effective revenue cycle management is part of the answer. Evaluate the following revenue cycle trends so you can determine how you’ll face the challenges ahead.
9 Revenue Cycle Management Trends in 2023
1. The rise in value-based care providers will fuel more ambitious revenue cycle management
Soaring operating costs has reignited the interest in value-based care.
Now, the data is in: value-based care wins better patient outcomes at a lower cost.
Mostly carried out through Accountable Care Organizations (ACOs), value-based care's focus on preventative, patient-centered care has impressed payers, employers, the government, and investors. These ACOs reduced inpatient admissions, ED visits, and post-acute care utilization.
The Medicare Shared Savings Program (MSSP), this country’s largest ACO, managed $1.66 billion in savings in 2021, the fifth consecutive year it’s generated significant savings for Medicare. According to CMS plans, all Medicare beneficiaries and most Medicaid beneficiaries will be under accountable care programs by 2030. While most ACOs now serve mostly Medicare and Medicaid patients, some organizations dependent on commercial payers also operate as ACOs.
Currently, California leads the charge in value-based care. The California Department of Managed Health Care data reveals that 90% of Southern California’s commercial and Medicare patients are enrolled in value-based plans. Nearly half of its Medicaid patients are.
McKinsey & Company projects that value-based care organizations across the United States could roughly double in the next five years, growing approximately 15% yearly.
Value-based care and RCM
Given that one tenet of value-based care is aggressive cost savings, as more providers switch to an ACO model, they will be adopting more aspects of revenue cycle management. Providers tend to start with their most dire issue, often insurance eligibility or patient cost estimates. Once they’ve achieved success in these initial endeavors, they realize they can also save money by tackling contract management, charge capture, or claims management.
To qualify and maintain status as an ACO, a provider must demonstrate that they are pursuing cost savings via as many channels as possible. Their revenue cycle solution provider makes it easy to track and document all efforts for containing costs.
As Richard Zane, MD., Chief Innovation Officer at Colorado’s UCHealth explains in the Becker’s white paper mentioned above, “what we are most excited about … is to actualize our enormous investment in technology to go further and deeper into value-based care with the goal of improving outcomes and significantly reducing the overall cost of care.”
2. Patient-centric care
Value-based care has refocused providers on serving individual patient needs. While medical needs take precedence, more organizations recognize that financial constraints weigh heavily on patients.
Medical care itself has always been highly personalized. The financial side of care, on the other hand, has not been patient-centric. At all.
Smart providers who want to retain their client base and earn optimal revenue now see guiding patients gently and positively through the financial aspects of their care can give them a competitive advantage. As quoted in the Becker’s white paper, Ally Deale, director of patient access operations at Maryland’s Luminis Health, plans on:
“enhancing our front-end patient processes to improve point of service collections by redefining patient access roles and incorporating innovative technology. Too many patients don’t have a clear understanding of what their responsibility may be or what options are available to help them. So, they either don’t continue care or hide from attempts to get them aid. We want our front end to be patient advocates and educators when it comes to collections. That way, they will be more prepared to work with our financial counselors or lending partners and more focused on their clinical outcomes rather than the financial impact of their care.”
As out-of-pocket costs for patients rise, patients become more focused on the value they can get for their money.
To provide patient-centric-care, forward-thinking providers are now offering:
Patient cost estimates
Given the potential financial load of medical care, patients are insisting on knowing exactly what they will pay ahead of services – also known as payment “transparency.” This transparency arrives via the patient cost estimate or good faith estimate.
The No Surprises Act mandates that providers create good faith estimates for self-pay and uninsured patients, but patients covered by private insurance could start receiving these estimates in the future as well. Patients can also request them. Going forward, more revenue cycle teams will handle increased demand for automated patient cost estimates.
By analyzing uploaded payer contracts, some patient cost estimate software generate estimates for patients that include deductibles, copays, and coinsurance. The resulting letters automatically go to patients via text, phone, or email. Some contain information about payment plans or financial counseling and links to an online portal where patients can make secure deposits on their healthcare bills.
To the surprise of some, upfront knowledge of financial responsibility improves patient satisfaction. It also reduces bad debt for providers. Revenue cycle teams are increasingly utilizing pre-service patient estimates to satisfy their customers and reduce aging accounts and even bad debt.
Patient-centric payment solutions
Providers looking to retain clients are also making the payment process more patient-centric. Rather than applying the same payment rules to all patients, providers are now coming up with personalized payment solutions. They’re also adding convenience by setting up systems that accept payment via email and text.
It’s not just the Millennials who prefer to pay via their device. A YouGov survey found that 70% of people 55 and older are comfortable paying bills online, typically via email. Given that 42% of patients 18 - 34 prefer to pay via text, however, this method is slated to eventually overtake even email payments.
Revenue cycle solutions that analyze patient payment history and determine which patients may need custom plans also help providers retain their patients. With this information, an agent can reach out to the patient before the patient decides to forego care altogether because of cost. Providers will be leaning on this analytical side of their revenue cycle technology to keep patients in their system and capture the most revenue.
Updated, self-service communication methods
Becoming more patient-centric means communicating with patients in the manner they prefer. Many providers are making it possible for patients to interact through texting and mobile apps. Patient self-scheduling, too, has been met with enthusiasm as it gives patients agency over their appointments. The providers that make communication fast, simple, and in real-time come out ahead when competing for medical dollars.
Overall, providers who reduce the friction involved in the patient experience and make it easier to do business with them have better chances of filling schedules, reducing no-show rates, minimizing care gaps, and increasing patient satisfaction and ultimately revenue.
3. Technology Adoption
Mostly because of patient security concerns, healthcare is 10 years behind most other industries in adopting new technology. This lag has also been fueled by consumer concerns, clinician reluctance, stakeholder concerns, complex regulations, and market fragmentation.
The days of technology deficiency are over for the healthcare industry, however.
Research Nester projects the revenue cycle management market to grow worldwide from $46 billion today to $215 billion in 2035, a five-fold increase stemming from a compound annual growth rate of 13.6%.
With taming cost inflation and improving revenue the two most critical tasks providers must undertake today, more and more are replacing human capital with technology. Technology like AI, machine learning, and automation is stepping in to help solve the staffing crisis. In fact, healthcare leaders are urging providers to use these technologies to speed patient access, cut waste from their operations, and lower costs.
And providers are listening. Of 205 IT executives at U.S.-based healthcare organizations surveyed by Tech advisory firm IDC and Redox just last month, 88% stated they will increase third-party tech spending in 2023 and 2024.
These IT executives are reading the research. According to a Black Book survey of 1,302 hospital financial team members, participants who integrated revenue cycle software platforms since 2020 achieved a 27% decrease in the cost of collecting and increased net patient revenue by 6%. The potential financial benefits of implementing RCM solutions has been established.
As Vice President of Revenue Cycle at Cone Health Jason Nelms tells Becker’s in the white paper mentioned above, that his organization is:
“looking for ways to roll out technology to make our teams more efficient. We want to leverage our team’s skills to work on more complex cases while leaning on technology like RPA/machine learning/AI to handle the more repetitive functions of the revenue cycle.”
AI-driven automation pinpoints revenue leakage has proven powerful in:
- handling the menial, repetitive tasks that burden skeletal staff.
- improving patient satisfaction by speeding patient intake and cost estimates.
- analyzing contracts so that providers can negotiate for better terms.
- predicting potential loss of revenue, and more.
As the healthcare staffing crisis, inflation, and heightened consumer demands persist, technology will play an increasingly important role in maximizing revenue potential and decreasing the cost of delivering care.
4. Healthcare technology will leverage big data
The aphorism, "In god we trust. All others must bring data" has finally hit home in healthcare and in revenue cycle management in particular.
Individual opinions are out. Data is in.
As more providers commit to creating data-driven organizations, they will use data to justify decisions and actions. Activities that the data shows do not improve patient care, clinician experience, or revenue will be eliminated.
Access to comprehensive patient data allows healthcare providers to understand their patient population better. By analyzing demographic information, medical histories, and patterns of care, providers can identify high-value patient segments and tailor their services accordingly. This targeted approach helps optimize revenue by focusing efforts on services and departments with the greatest potential for profitability.
Where once patient and procedure data existed in multiple spreadsheets, its sheer volume today makes it nearly impossible for one person to cross-reference these spreadsheets and derive actionable insights from them.
Data analytics helps healthcare providers identify inefficiencies and streamline their operations. By tracking patient flow, resource utilization, and operational costs, providers can identify bottlenecks and implement changes to improve efficiency. For example, data-driven insights may reveal opportunities to reduce wait times or minimize costly errors. These improvements not only enhance patient satisfaction but also lead to increased revenue through improved throughput and reduced expenses.
Data also plays a vital role in enhancing the accuracy of coding and billing processes. With electronic health records (EHRs) and advanced coding systems now standard, providers can leverage data-driven tools to ensure accurate documentation and coding. Accurate coding triggers appropriate reimbursement and reduces the risk of audits and penalties. By harnessing data-driven coding technologies, healthcare providers can optimize revenue by maximizing reimbursements while reducing compliance risks.
Moreover, data-driven insights enable healthcare providers to identify potential revenue leakage points. Providers can pinpoint areas where revenue is being lost due to coding errors, underutilization of services, or incomplete documentation. Armed with this knowledge, providers can implement strategies to plug these leaks and capture the full revenue potential of their services.
In 2009, the HITECH Act mandated providers use electronic medical records to track patient data and care via electronic health records. By 2021, nearly four in five office-based physicians had a certified EHR in place. The advent of revenue cycle management solutions starting after 2010, however, complicated data exchange. The 21st Century Cures Act and the Trusted Exchange Framework and Common Agreement (TEFCA) are working to establish clear directives for the electronic sharing of health information with trusted parties by 2023.
Given the hundreds of EHR and revenue cycle management solution providers, however, getting all systems talking to each other has been a challenge.
Seeing this problem, the Healthcare Information and Management Systems Society (HIMSS), an American not-for-profit organization dedicated to improving healthcare through information technology and management systems, stepped in to help standardize systems so they can work together.
Despite their efforts, health data exchange hasn’t been perfected yet. Concerns about patient privacy and potential regulatory burdens have slowed progress.
Still, the mandates from the Office of the National Coordinator for Health Information Technology (ONC) and the accompanying incentives from the Centers for Medicare and Medicaid Services (CMS) indicate that enabling a secure, nationwide health information exchange is inevitable. Stay tuned to see how your organization can benefit from the optimal transparency health data exchange promises.
6. Digital, remote healthcare and revenue cycle management will intersect
Remote healthcare, also known as telehealth or telemedicine, allows patients to access medical attention from homes, eliminating commutes to healthcare facilities. Virtual home care programs emerging across the United States are increasing revenue by growing high-margin services and digital-only healthcare solutions.
In addition to the convenience these programs offer patients, they are proving to help cut provider operating costs. For instance, they enable earlier discharge and reduction of readmissions of some patients.
On the revenue side, telehealth services reach more patients, particularly those in rural areas, filling providers’ schedules.
With the rise of remote healthcare, the implementation of effective RCM strategies becomes even more crucial.
Here's how remote healthcare and revenue cycle management intersect:
- Appointment scheduling: Remote healthcare platforms often integrate with electronic health record (EHR) systems to streamline appointment scheduling. RCM plays a crucial role in ensuring the accuracy of patient information, insurance details, and available time slots. By efficiently managing the scheduling process, RCM helps healthcare providers optimize their remote consultations and maintain a steady flow of patients.
- Insurance verification: Verifying insurance coverage is an essential step in revenue cycle management. In a remote healthcare setting, RCM teams or self-service solutions work closely with patients to gather necessary insurance information and confirm coverage before the telehealth appointment. This step ensures that healthcare providers can bill the appropriate insurance carriers and minimize claim rejections or denials.
- Billing and coding: Remote healthcare encounters require the same accurate coding and billing to ensure proper reimbursement that in-person appointments do. An RCM solution reads the telehealth appointment and assists the revenue cycle team as they document services accurately, assign appropriate codes, and generate detailed invoices for patients or insurance companies.
- Claims submission and follow-up: As with billing, an RCM solution helps staff follow up on claims, track progress, and address any denials or rejections whether the appointment was remote or in-office. RCM solutions that provide coding assistance help furnish the codes appropriate for telehealth so the claim doesn’t end up in denials.
- Patient billing and collections: Again, the RCM solution can help staff accurately document and bill a telehealth appointment.
7. Patients and providers becoming more comfortable with cloud-based administration
As more patient care is located outside of physicians' offices, patients are accepting that their payments, EHR, and revenue cycle management systems are transacted via the cloud. Patients want ease and simplicity and the cloud offers that.
Cloud-based technologies offer healthcare organizations several advantages, too. First, with unlimited data storage, the cloud facilitates scalability. Cloud-based solutions have enhanced security significantly over the past five years, and real-time data access helps providers make quick decisions.
8. Outsourcing revenue cycle tasks becomes the new normal
To reduce administrative burdens and focus on patient care, healthcare providers will likely turn to outsourcing and partnerships for their revenue cycle management tasks. According to a HFMA survey, 61% of providers plan to outsource revenue cycle management tasks in the future.
Revenue cycle managers cite these benefits for choosing to outsource:
- Cost savings: Outsourcing revenue cycle management tasks can reduce costs for healthcare organizations. Managing an in-house team requires expenses related to hiring, training, salaries, benefits, and infrastructure. By outsourcing, organizations can leverage the expertise of external service providers at a lower cost, allowing them to allocate resources more effectively.
- Expertise and efficiency: Revenue cycle management is a complex and specialized field, requiring deep knowledge of billing procedures, coding, compliance, and payer regulations. Outsourcing tasks to experienced professionals who specialize in revenue cycle management ensures that the processes are handled efficiently and accurately. These experts keep up with industry changes and best practices, resulting in improved billing accuracy and faster reimbursements.
- Focus on core competencies: By outsourcing revenue cycle management tasks, staff can prioritize essential patient-focused tasks, leading to improved patient satisfaction and outcomes.
- Scalability and flexibility: An outside vendor often has the labor and structural capacity to absorb additional demand. Further, healthcare organizations experience fluctuations in workload due to seasonal variations or changes in patient volume. Outsourcing enables them to quickly adjust staffing levels, ensuring optimal efficiency.
- Reduced administrative burden: Revenue cycle management involves multiple administrative tasks, including billing, claims processing, denials management, and collections. Outsourcing these tasks alleviates the administrative burden on healthcare organizations, enabling them to focus on strategic initiatives and streamlining internal processes.
- Access to technology and innovation: Outsourcing partners often have access to advanced technology platforms and tools specifically designed for revenue cycle management. These technologies can automate processes, enhance data analytics, improve claims management, and increase revenue capture. By leveraging these innovations, healthcare organizations can stay ahead of industry trends and improve overall financial performance.
Overall, the potential to optimize resources and improve revenues is fueling the trend of outsourcing revenue cycle management tasks. By partnering with experienced service providers, organizations can capitalize on the benefits of outsourcing and focus on delivering high-quality patient care.
9. Contract accountability empowering providers
Healthcare organizations have had it with the underpayments stemming from payers' missed annual escalators promised, accidentally combined accounts, bundling, and inappropriate carve-outs. They know that their inability to review contracts and advocate for better contract terms saps revenue significantly. After all, the AMA found that payers make processing errors in 19.3% of claims reimbursements, and most of these errors end up as provider underpayments.
Still, with insufficient staff to tackle this important task, 17% of providers let contracts languish for years, according to an MGMA poll out this month. Another 16% review contracts every 2 to 3 years or more. Just 58% review them yearly.
To regain their power in recovering underpayments and get better terms in the first place, more providers are turning to payer contract management software.
A contract management solution ingests, digitizes, and consolidates contracts into a single location. It performs a thorough comparison of every payment to contract terms and promptly alerts staff to any discrepancies. In addition to providing proactive contract insights, it aids in the recovery process and identifies the root cause, all to prevent future underpayments. It also simplifies benchmarking of reimbursements against national standards, such as Medicare.
Leverage the most promising revenue cycle trends with MD Clarity
Revenue cycle optimization is constantly evolving, and revenue cycle specialists and managers must stay up-to-date on the latest trends to maximize revenue and minimize inefficiencies. By understanding these trends and integrating them into your processes, you can create a more streamlined and efficient revenue cycle management process, ultimately leading to improved patient experiences, increased revenue, and reduced costs. Do you struggle most to verify eligibility, create accurate patient estimates, or stay on top of payment variances? We have robust products to remedy these challenges and more. Get a demo to see them in action.