Building a Better Revenue Cycle in 2023 and Beyond
We’ve learned a lot from the COVID-19 pandemic. For example, we now know that telehealth increases access to care, reduces costs, and that patients like having the option. We’ve learned that a hybrid workforce can be as productive as onsite employees. We know that work-life balance is essential in retaining skilled staff. And we know patients are carrying increasing amounts of medical debt.
Here we are in 2023 and we must ask ourselves what we want to do with all that we’ve learned. Where do we go from here? Do we want to go back to pre-pandemic norms, or do we want to forge a new path forward using the insights we’ve gleaned over the past three years? In other words, the future of healthcare, including revenue cycle management, is up to us.
We’ve picked three of the most pressing challenges hospital revenue cycle leaders face and offer proven ways to turn each challenge into an opportunity for improvement.
The continued march toward value-based care should change how we view revenue cycle management (RCM). Today, it’s often seen as an end-of-cycle process. But with value-based care, it needs to be front and center with a new emphasis on process quality and efficiency, especially in areas such as coding and claims management—both of which directly impact revenue.
With today’s staffing shortages, however, hospitals are finding it difficult to fill revenue cycle positions and keep them filled. Now that many of these positions are remote, RCM specialists have a nationwide pool of jobs to choose from, which has made the hiring market for seasoned experts more competitive. Higher salaries, sign-on bonuses, and retention efforts have driven labor-related costs sky high.
One way to mitigate the impact of staffing shortages is to implement new technologies like artificial intelligence (AI) to automate manual, error-prone revenue cycle processes.
One way to mitigate the impact of staffing shortages is to implement new technologies like artificial intelligence (AI) to automate manual, error-prone revenue cycle processes. While this trend was on the increase even before the pandemic, hospitals that have yet to get on board should reconsider the urgency to do so.
Research shows that in hospitals where AI has been deployed in the revenue cycle, 40% are using it for claims management, 28% for coding, eligibility verification, or payment posting and reconciliation, 14% for denial management, and 10% for revenue capture/integrity. Improving the quality and efficiency of these processes can help improve cash flow and shorten days in A/R while also preventing denials and write-offs—all without adding new staff.
According to the American Hospital Association, 89% of hospitals and health systems have seen an increase in denied claims. One of the main reasons is that payers are using more sophisticated algorithms and technologies to identify potential claim issues. Another reason is that payers have applied increasingly complex criteria to claim submission and medical necessity requirements.
In 2023, we will see 331 new codes added to the existing library of over 78,000.
What can providers do? First, they need to shore up their mid-cycle processes since this is where up to 17% of denials originate. This makes sense considering the highly manual, error-prone nature of coding. Just keeping up with ICD coding changes is challenging for even experienced coders. In 2023, we will see 331 new codes added to the existing library of over 78,000.
To ensure optimal mid-cycle functions, hospitals might consider leveraging automation technology to eliminate manual tasks and reduce errors. Technology such as RPA (robotic process automation) can help. RPA works by mimicking human behavior via rules-based actions to perform transactions and complete repetitive processes—all without human intervention. RPA is also helpful in chart analysis, clinical documentation improvement, and overall coding quality—all of which can help reduce denials without adding staff.
Increasing federal and state legislation is likely to continue until healthcare spending reaches a more sustainable level. One of the most significant regulatory challenges facing hospitals currently is achieving compliance with the CMS’s price transparency rule. Although it’s been in place for over a year, much of what’s been posted is inconsistent and incomplete. Reasons for noncompliance range from a lack of clarity around regulations to insufficient resources. Some hospitals say they are waiting for their competitors to post first.
The No Surprises Act has also placed a significant burden on hospitals, leading to massive backlogs of payments due to the vast number of claims that have been sent through the dispute resolution process.
The No Surprises Act has also placed a significant burden on hospitals, leading to massive backlogs of payments due to the vast number of claims that have been sent through the dispute resolution process—more than 90,000 between April 15 and September 30 of 2022.
While compliance remains a challenge, hospitals can use this challenge as an opportunity to increase their efforts on revenue cycle initiatives that support price transparency, streamline patient collections, and make it easier for patients to pay.
One of the top opportunities to achieve all three is implementing patient responsibility estimations. This technology gives the hospital and the patient a greater understanding of the total amount owed. This, in turn, enables a more productive financial conversation with patients that allows them to make better-informed decisions about their healthcare. This helps further the goal of improved price transparency while hospitals continue to work toward full compliance.
The adoption of high-deductible health plans as a way to reduce costs for payers and employers has put more of the financial burden on patients. Today, one in five Americans has medical debt in collections, with the total U.S. medical debt estimated at $140 billion. Many now regularly skip needed care due to costs. When patients put off care, it can increase costs through preventable hospitalizations, deteriorating health conditions, and expensive visits to the emergency department.
Now that patients are the third largest payer behind Medicare and Medicaid, hospitals need to do all they can to make it easier for patients to pay for the care they need.
Patient financial responsibility is likely to grow, as is the challenge of collecting. By making it easier to pay, both the patient and the hospital benefit. New patient financial experience (PFE) technology can help. This includes solutions like patient payment portals, electronic statements, text-to-pay, and text message reminders. According to a 2021 report by KLAS, early adopters of these technologies have seen a nearly immediate return on investment.
Offering flexible payment plans customized to a patient’s financial situation can help reduce collection costs and write-offs while helping patients avoid using high-interest loans and credit cards to pay for their care.
Because of the unprecedented challenges hospitals now face, many have turned to revenue cycle experts to help. A recent survey by Kaufman Hall found that close to a third of hospitals use outsourcers, with revenue cycle processes being at the top of the list of functions outsourced. This is a great option for hospitals that lack the resources or capital to invest in new technologies or add staff.
The best vendors are those that have made significant investments in hiring the most experienced talent and implementing the latest technologies to make themselves more productive and deliver greater value to their clients. Hospitals can reap all the benefits of these investments faster and without the heavy lifting. Outsourcing even portions of the revenue cycle can help. For example, hiring a vendor to work down coding, billing, and denial backlogs allows existing staff to focus on more strategic tasks.
The Path Forward
Hospitals have endured a lot over the past three years. The goal now should be to take what we’ve learned to turn challenges into opportunities, and to create a better path forward in 2023 and beyond.