5 Ways RCM Teams Can Prepare for Financial Success in 2023 & Beyond
The healthcare industry has been rocked by change over the last two years, and we expect 2023 to be another year of transformation for the sector. Revenue cycle teams have toiled through challenges, including ongoing workforce shortages, disconnected technology systems, patient payment complexities, tight margins and more. As we look ahead to the new year, teams must take a proactive, forward-looking approach to RCM program planning.
To that end, Cloudmed’s RCM experts have identified five core considerations that will help set up your team for success no matter the economic or regulatory environment.
1. Maximize profits by better balancing cost management and revenue management
The COVID-19 pandemic put historic financial strain on health systems and hospitals that will persist well into 2023. In fact, 2022 was the worst financial year for U.S. hospitals since the pandemic began. As a result, we see an increasing number of hospitals nearing and/or filing for bankruptcy.
To alleviate the strain, many systems spent this past year focused on rationalizing spend, including reducing supply and overhead costs, all while dealing with increased labor costs. While traditional cost-cutting strategies are important, the current state of hospital finances and continued labor shortages mean cost-cutting isn’t enough.
Instead, spend time balancing costs and revenue, which will allow teams to focus more on improving margins. This can be done in many ways, including:
Taking control of denials.
Effective denials management means first starting with prevention. This requires cross-departmental teams to stay current and coordinated on areas like coding regulations, denial risks, and reimbursement leaks (more on that later). Keeping denials management top of mind means your team will be able to uncover root cause issues and implement prevention measures to ensure they are being addressed successfully.
Paying greater attention to missing charges.
Ensure revenue accuracy and compliance by staying vigilant about capturing missing charges and coding anomalies. According to Cloudmed’s Chris Gaarlandt, SVP, Auditing Operations and Chris Wisbrock, SVP, Operations, “In an uncertain economy, capturing every dollar matters more than ever. RCM teams must prioritize collecting what they may not have realized was missing.”
To help capture every missing charge or anomaly focus on some of the main revenue leakage areas, such as:
- Emergency and OR services
- Medical devices and supply chain
- CDM mapping
Prioritizing institutional knowledge.
Implement employee retention tactics targeted at preserving highly valued institutional knowledge. This is also where supplemental support from partners and third-party vendors can solve for labor challenges and shortages and fill in the gaps for any specialized areas your teams need help addressing. In turn, your employee engagement will benefit from the efficiencies.
2. Implement proven automation solutions to avoid pitfalls
Automation continues to be a top priority for all 2023 RCM planning discussions. Not only does automation technology help streamline many parts of the revenue cycle, like insurance verification or coding, but it also helps offload significant administrative burdens so teams can focus on high-priority tasks.
In fact, Cloudmed found teams that embraced RCM automation reported increased revenue (74%), reduced costs (82%) and increased efficiencies (91%).
However, automation is not without its pitfalls, including missing critical subject matter expertise and lack of training. According to Cloudmed Vice President of Automation Matt Jarvis, subject-matter expertise is fundamental to knowing where and how to thoughtfully apply automation, particularly in the nuanced world that is the revenue cycle.
The reality is there are limitations to what your current EHR can automate, and revenue cycle leaders are finding it difficult to maintain and scale automations internally. As a result, it’s important to look for partners with deep revenue cycle and automation expertise, coupled with proven metrics that demonstrate automation resilience and scale. This will help your team stay in front of the ever-changing payer and technology landscape while creating a future-ready revenue cycle.
3. Level up the way you handle payer contracts with regular reviews
While your team is likely fluent in all things regarding your payer contracts, now is the time to conduct a deep dive audit to ensure they capture everything that’s contractually obligated.
View it as a vital exercise to generate additional revenue. Payer contract optimization is especially important to ensure you collect every possible reimbursement dollar. This means building a culture of accountability and continual improvement around areas like contract clarity and specificity.
Cloudmed Senior Vice President of Rules and Contracts Jon Kollerer notes, “Shifting codes and reimbursement logic naturally adds risk to agreements. Greater procedural specificity in handling for changes can mitigate the risk of these events.”
Start with these areas to help alleviate risks and secure future revenue:
- Gather and assess key documents related to payer contracts. With everything in one centralized place, your team can uncover which contracts represent the greatest percentage of revenue and areas for optimization.
- Review important contract details. This can include each payer’s reimbursement requirements, the contracts’ fee schedules and requirements, and the periods for renegotiation and termination. Arm your teams with as much specific contract knowledge as possible to avoid potential disputes or revenue loss.
- Prepare to negotiate with payers. Using the above data analyses, combined with data about your own system (i.e., advantages you can offer payers compared to others), you can start to build a compelling negotiation plan that demonstrates mutual benefits to the payer. Adding in another detail, Kollerer advises: “always put in a sample calculation into your payer contracts. Showing the math can take out assumptions at the negotiating table and removes assumptions for those of us on the back end administering the rates.”
4. Improve the patient billing experience to minimize bad debt
A good clinical experience has always been integral to providing a strong patient experience, but financial experience is also top of mind for patients now. Case in point, a study found 60% of younger patients will switch healthcare providers if they have a poor digital experience for things like online bill pay.
Digital payment solutions offer benefits to both patients and providers – personalized and paperless payment options, an easy view of acute and ambulatory charges, Explanation of Benefits (EOB) information, and the ability to manage multiple family accounts in one place. This type of technology can also help RCM teams turn bad debt into revenue by enabling them to collect more cash from payments that might have otherwise been written off.
With tech-driven managed services, hospitals and health systems can now tackle some of the biggest patient billing issues. In addition to benefiting providers financially, a digital-first experience, along with highly personalized assistance, significantly improves patient satisfaction.
To that end, Cloudmed president Kyle Hicok advises, “While we’ve seen a big increase in digital adoption by healthcare consumers, not everyone is digital-first. It’s important for health systems to be able to meet their patients where they are – whether that’s over the phone, a guided tour of the digital application, or person-to-person interaction. We’ve found it’s important to offer both a great self-service experience, and a great customer service experience”
5. Double down on your core competencies and identify partnerships to address gaps
Come together as a team and conduct an honest review of weak areas – whether due to staffing shortages or broader gaps – in addition to the core competencies in your organization.
Historically, many hospitals and health systems have struggled to staff the expertise needed to keep pace with industry change. Hicok recommends, “Teams should continually evaluate the people, technology, and resources they need to unlock the next level of revenue cycle management sophistication and determine whether this work will be taken on entirely by an in-house team or whether a partner is more effective in their endeavor.”
From ever-changing codes to regulatory updates and payer-issued provider manuals, the lack of expertise can result in missed revenue opportunities that could limit your ability to achieve your mission, both for revenue cycle teams and providers. Look for partners that can combine specialized expertise with purpose-built technology to unlock the necessary innovation and growth you need to thrive in today’s complex financial environment.
When evaluating your next RCM partner, be sure you know:
- What percentage of their staff come from revenue cycle backgrounds
- If they offer dedicated account managers
- Their team’s individual credentials
- Their net promoter score (and overall customer service)
- How much they invested in technology last year
Not sure what to prioritize in your RCM program in the year ahead? Explore Cloudmed’s resource library developed by our revenue cycle team or speak with one of our experts.