3 Evolving Revenue Cycle Trends: Leveraging Them to Improve Financial Viability

Celeste DayeFrom the Hayes Healthcare Leaders Blog Series (@HayesManagement)

By Celeste Daye, Senior Director Patient Financial Services, Dana Farber Cancer Institute (@danafarber)

Healthcare finance executives from leading healthcare organizations like the Mayo Clinic, Kaiser Permanente, and the Cleveland Clinic have dubbed 2016 the “year of integration” for revenue cycle. They see consolidating complex revenue systems as the best way to reduce waste, increase efficiency, and improve the patient experience. One of the key aspects of such integration is involving the patient more in the financial aspects of their care¹.

At Dana Farber Cancer Institute, the shift to value-based care, the evolving consumer mentality in healthcare, and a greater focus on clinical care plans are key changes impacting our revenue cycle. We not only recognize these fundamental changes, but are working to leverage them to benefit the organization.

Shift to value-based care
Healthcare reform and the changes in payment methodologies are driving many of the challenges of the revenue cycle today. New models include pay for performance programs, global fee structures when organizations provide pre-determined pricing for specific services, and risk based models that cover defined populations for a period of time for a fixed fee. The common denominator is that it’s less about what you’re doing and more about the results of patient care. A shift to any of these models requires a new level of understanding regarding payables and reimbursements.

These new methodologies affect the revenue cycle in multiple ways. In many places where pay for performance models are being used, the primary source of insurance company data is through claims. So although these providers are ahead of the game in terms of finding the best ways to reward providers through reimbursements, their systems are not necessarily set up to support the programs. That means a huge operational effort from hospitals and providers to figure out how to provide non-standard, results-based clinical information that is difficult to obtain.

We want to be supportive from a billing perspective, but that sometimes jeopardizes the conventional payment process. Billing based on clinical information sometimes prevents insurers from processing standard reimbursement claims because pay for performance is usually above and beyond what you’re paying on a claim. Mixing the two models often negatively impacts proper adjudication of a standard claim. This can delay reimbursement and bog down the revenue cycle. Finding a way to merge the conventional and value-based billing models is a continuing struggle.

Evolving consumer mentality in healthcare
The evolution in payment and reimbursement models is also fundamentally changing the way patients look at healthcare. Patients are no longer satisfied to know they’re insured but are now demanding to understand what the coverage specifics are. Patients are increasingly evaluating where to go for care based on which services are provided, the cost of these services, and the out of pocket expense. When it comes to high costs areas like imaging services, patients are now making decisions strictly on cost since they understand that competing organizations may be using the same equipment so the service will be the equivalent.

Not only is there now a cost component to consider, but patients are also evaluating the customer service aspects of the offering. To attract patients to have services performed at your facility, providing a positive patient experience is now more important than ever.

Greater focus on clinical care plans
Being responsible for patient accounting, coding and revenue integrity gives me a broad view of how all three areas are impacted by these transformative changes. From a third party insurance perspective the changes are driven by clinical demands. There is now a greater need to explain medical necessity, obtain authorizations and referrals, and provide more peer-to-peer reviews. There is a great deal more discussion around suggested treatment and care plans, obtaining consensus from payers to reach agreement with the approach from a clinical perspective.

As a result, there is more clinical appeal activity than we’ve seen in the past. Although this can delay payments and extend payables, we much prefer to hold discussions that address treatment decisions from the insurance companies rather than administrative denials. Clinical appeals means there is more focus being put on the patient care rather than on paperwork technicalities.

There is also now more focus on high cost prescription drugs that patients are using on a regular basis. This is an area where we are seeing a huge influx of medical necessity discussions. Since drugs are not approved beforehand, there is an increase in after the fact denials and appeals that slow down payments. There is also an increased administrative burden on providers caused by insurers who request medical records for every instance of a recurring drug administered to the same patient.

Leveraging trends to benefit your organization
There are definitely some measures you can take to leverage these evolving trends to the benefit of your organization.

Better educate insurers and patients
To get providers and payers on the same page, there needs to be a commitment to educate the insurance industry on the clinical aspects of patient care. Partnering with insurers to help them better understand provider needs benefits both parties. It can help relieve the administrative burden from providers as well as free up resources on the insurers’ end by eliminating redundant review and approvals.

It’s important to know the insurer you’re working with and get a solid commitment on what the expected end result should be in order to make it beneficial. Working with insurers on their policies and procedures to help them align with the new healthcare landscape is a worthwhile undertaking.

Patients also need help better understanding the new and evolving healthcare landscape. Devoting resources to patient guidance and education can help accelerate payment by helping them navigate the complex, new environment in which we are all working.

This new patient view of healthcare can be beneficial, but is also challenging to revenue cycle management. The newly enlightened patient needs help working through the complex information needed to make informed decisions. More hospitals now have people in advocacy and financial counseling roles in their organization to help guide patients. Investing in these resources up front can pay off in the end because it accelerates collections. Providing the up-front counseling means you and your patient have made all the decisions ahead of time – eliminating surprise and frustration by bills after the fact that often lead to withheld payments. Without those advisory resources, your collection costs will increase and negatively impact the patient experience.

Increase collaboration
Meeting these new revenue cycle challenges requires that all our departments work more collaboratively than in the past. There is a need to build bridges between the clinical and administrative sides of the organizations to address the issues that now cross over on a regular basis. Responsibilities are no longer siloed and isolated. Physicians, case management, access and registration management, scheduling, contracting, and finance all have to work closely together to address revenue cycle issues. Until you have that type of cooperation, you may find that you can’t have truly successful end-to-end processes that eliminate revenue cycle problems at every stage.

Revenue cycle leadership roles have also evolved to help facilitate collaboration throughout the organization. New roles such as VP of Revenue Cycle Performance responsible for functions that cut across all department lines have recently emerged. Organizations are restructuring across all disciplines to meet the new requirements for cross department cooperation.

Utilize Big Data
Collecting, consolidating, and analyzing relevant data is the ultimate goal. But there has to be an investment and willingness from the providers and insurance companies to use that data to improve processes on both sides. The data exists within your systems, but the challenge is having an organizational strategy to extract and report it in an impactful way.

Meeting the new value-based landscape requires good data that can inform the clinician and provide value to patient care. For example, ICD-10 now provides us with more detailed information than we ever had before. The key is using the new data to help physicians understand what payers are looking for and to help drive the pay for performance initiatives. The goal is that the provider, payer and patient benefit from better information, quality care and recognition through reimbursement of the care.

Big data information gathering can be instrumental in addressing the non-standard information requests needed to support pay for performance programs. Instead of trying to provide the information through claims, you should strive to use analytics to glean the right data to better drive insurer decisions. Combining clinical and financial data while ensuring data integrity and governance is the key to getting you the necessary information.

Be flexible
If there’s one thing we’ve learned throughout this transition is that we have to stay flexible. To leverage the changing revenue cycle trends to best benefit your organization, you need to be open to changes when it comes to traditional roles and responsibilities. Thinking about things in new and different ways is critical. The healthcare landscape is changing and will continue to evolve in significant ways. It’s important for us to lead the way in adapting if we hope to take advantage of these changes to enhance our revenue cycles and improve the financial viability of our organizations.

¹Completing the cycle: Healthcare finance execs see 2016 as the year of integration for revenue cycle, by Susan Morse, Healthcare Finance, November 9, 2015.

This article was originally published on Hayes Management Consulting and is republished here with permission.