Reengineering the Revenue Cycle

As the healthcare industry grapples with rising patient bad debt, a rethinking of revenue cycle management (RCM) is clearly in order - as would be the case for any business segment experiencing a chronic collection problem. In the case of healthcare, the issue lies in the fact that RCM hasn't kept pace with the rapid shift toward consumerism which is, for lack of a better term, turning patients into payers.

Recognizing that "We are now at the point where tune-ups and incremental bolt-on solutions are no longer sufficient," the HIMSS Revenue Cycle Improvement Task Force is preparing to make recommendations for rethinking revenue cycle management. It will be interesting to see what those recommendations include. They will almost certainly focus on RCM reengineering around patient needs, a step that providers can and should begin taking today.

Why traditional RCM fails with consumer payments The "bolt-on solutions" that are proving to be insufficient for patient RCM are primarily tools that inform patients with pre-care patient responsibility estimates. These tools are in fact highly effective at setting expectations for the bill to come, which meets perhaps 80 to 90% of the patient collection challenge. While the pre-care estimate is foundational, we shouldn't stop there. From the patient's perspective, the pre-care estimate is just the beginning. Surprises often lie ahead. Confusion nearly always does.

After care is received and the insurance claim goes through the payer part of the revenue cycle, the patient is given their bill, which is more often than not higher than what they expected. It may be that the provider originally underestimated. Perhaps care involved procedures and/or tests that weren't anticipated at the onset. Either way, the presentation almost invariably is full of terms that are alien to consumers - causing resistance even when the final bill does agree with the pre-care estimate. Consumers, by their very nature, are more inclined to pay amounts when they can understand the bill; confusing or hard to follow bills often complicate collections and contribute to bad debt accrual.

Start with clearly written consumer communication The language in patient statements reflects the fact that providers are more adept at communicating dollars and cents with insurers than they are with patients. Final patient statements typically are built around copays and deductibles - concepts not common in everyday life - with medical-speak for items being billed. The patient would have a much firmer understanding of their obligation if the patient statement said clearly, in plain terms, "Here is what we estimated you would have to pay, here is what's actually due and here is why."

It would be even better if providers had that kind of conversation and framed the reality of the patient revenue cycle from the beginning of the patient encounter, with an initial written estimate saying clearly, "Here is what we believe we'll be providing, and here's what it costs. Here's what your insurance will pay, which is why you will be billed for these anticipated services." Very importantly, that estimate should include a clear and consumer-friendly notice that additional procedures or tests may be needed as we proceed, and that the patient will be apprised of the additional costs as they are encountered - with follow-up as promised throughout the episode of care.

Staff communications can pull it all together In addition to changes in written communications, advancing RCM practices to better account for consumer needs is largely a matter of empowering and training front-office staff, who may not understand today the impact of rising consumerism. They are also not typically accustomed to explaining pre-care estimates in ways that make the most sense to patients. Webinars and online courses are emerging along these lines, and practice managers may be capable of providing the necessary understanding and empowerment.

That spirit of communication should follow the patient throughout the full revenue lifecycle of the patient encounter. Recommendations for procedures or tests not originally anticipated should be accompanied by an explanation not only of why the test or procedure matters to the patient's health, but also what it will cost, and why.

This is not to say that every single item must be accompanied by a price tag, but rather that major items should be explained in advance. If this continues through the end of the care episode, the unpleasant surprises that accompany final patient statements would largely disappear.

Insurers have a role as well Effective and accurate patient responsibility estimates require a bit of assistance from payers, as estimate accuracy depends in large part on pinpointing exactly what the payer will cover. In an ideal world, we would be able to adjudicate a claim in real-time. While that's not practical today, it's important that the data supplied by payers in eligibility requests is timely in terms of copays and deductibles. When payer system updates occur weekly and a patient is receiving a good deal of ongoing care, even the most carefully prepared and presented estimate may be unintentionally inaccurate.

Moving forward We're still transitioning toward consumerism in healthcare, with patient responsibilities expected to increase further. Yet much of that shift has already occurred, and higher out-of-pocket expenses are a fact of life for millions of patients. This shift makes patients themselves essentially payers, and on a grand scale.

If a new payer of similar size were to enter the market with unique needs, the industry would push tremendous resources toward accommodating it. It's time we made a similar accounting for the patient as payer, an essential next step in improving the healthcare revenue cycle.

Source: http://healthcare-executive-insight.advanceweb.com/