In 2008, the Affordable Care Act launched a series of sweeping system-wide reforms that have had a major impact on the healthcare industry. One major development has been the progressive shift from a fee-for-service system to a value-based care system. With the previous fee-for-service orientation, hospital revenue depended on the number of services offered to patients. In the new value-based services approach, medical professionals are reimbursed according to improvements in patients’ conditions. The rationale behind this transformation is to compel doctors and hospitals to cut back on unnecessary tests. These cutbacks are intended to decrease the costs that patients have to pay and simultaneously enhance the quality of the care that they receive.
Healthcare workers, it is believed, will be more motivated to upgrade the standard of care that they provide if their incomes are contingent upon improvements in their patients’ health.
The term “revenue cycle” refers to all of the administrative and clinical processes that facilitate the capture and collection of patient revenue. The cycle encompasses all of the functions that must be completed in order for a healthcare organization to be paid. This cycle begins when a patient arrives for treatment. It keeps going until the balance of the patient’s account is whittled down to zero.
There can be many steps from start to finish. One of these steps is verifying the eligibility of the patient’s insurance to confirm that the insurance company will pay for the medical services provided. Other steps include translating medical services into billable fees, coding diagnoses, and procedures, calculating patient balances, and submitting claims for billable fees. Then the private or governmental payer reimburses the healthcare organization. Claims must be tracked carefully throughout their entire life-cycle in order to prevent errors from occurring. If an error does occur, then it must be quickly corrected.
Even with the careful following of procedures, sometimes claims get denied or rejected. While these denials are being managed, the cycle is prolonged. After you add up all of the different steps, the process required to get paid can take a long time. Meanwhile, resources of a hospital totaling in the thousands and sometimes even millions of dollars are tied up until claims are authorized and payments are received. Medical professionals must also wait until claims are approved before they can be paid.
In transitioning to value-based-care systems, it is easy for revenue cycle systems to become bogged down. This is because it is often extremely difficult to equate the quality of improvements in a patient’s health with doctor fees. There is not a one-to-one correlation, and the conversion is not as easily measured as it was when payments were based upon the services or procedures which had been provided. An inefficient revenue cycle increases delays in payment. It even has the potential of decreasing the overall amount of payment that can be collected.
Hospitals and healthcare staff may not be paid in a timely fashion. They also may not be fully reimbursed for the amounts that they are owed by payers, and if healthcare organizations are unable to pay their bills, they may not be able to offer the services required to meet patients’ needs. Ultimately, therefore, many hospitals may have to shut down because they cannot afford to keep their doors open.
Since healthcare is constantly in flux, it can be quite challenging for healthcare organizations to maintain financial stability. This makes the management of revenue cycle systems critically important. This is especially crucial in terms of value-based care in order to keep healthcare organizations functioning smoothly.
Proper management is integral to ensuring that hospitals are able to collect what they are due as quickly as possible. Then, hospitals can keep their lights on and continue offering necessary services to help their patients. An accurate, high-performing system streamlines the revenue cycle and improves accuracy. It does this by identifying issues and errors swiftly, thus cutting down on the total amount of time that elapses between a service being performed and when payment is received.
Embracing technology is key to improving revenue cycle management. Outsourcing and integrating analytics to track data are two ways that doctors and hospitals can maintain an efficient revenue cycle. Outsourcing is increasing in popularity because hospitals do not want to revamp their cycles to transition from fee-for-service programs to value-based systems. Rather than transforming their whole revenue cycles, healthcare providers are increasingly opting to outsource the process to an external business.
Integrating advanced analytics to track voluminous data gives decision makers a more nuanced view of their patient population. This allows them to stay current on trends, as well as to systematize and make predictions about the lifespan of the revenue cycle with respect to future claims. Through outsourcing as a way to increase efficiency, administrators can set goals better and formulate realistic plans for reaching them. They can also better see where their systems are being run most efficiently and take the necessary steps to continually improve their processes.