Unlike most industries which have a clear cost and billing structure, the healthcare revenue cycle remains an overly complex, opaque, and inefficient tangle of patients, providers, employers, and insurance companies.
The stresses of the ongoing pandemic and changing government requirements have upended health care providers and forced a deeper examination of how to improve transparency and efficiency of health payment models. These twin challenges offer new opportunities for all types of practitioners to finally address long-standing patient concerns while ensuring a more consistent, reliable revenue stream for their business.
Every industry is rethinking the way payments happen — but health care faces the greatest challenge. Unlike most industries which have a clear cost and billing structure, the healthcare revenue cycle remains an overly complex, opaque, and inefficient tangle of patients, providers, employers, and insurance companies. The inherently complicated system of determining who owes what and the medical claim submission and reimbursement process that often takes months to sort out has left patients flummoxed and angry.
Over the course of the pandemic, many patients have lost their jobs and health insurance. These consumers are extremely attuned to cost and need more certainty to plan ahead. Revenue cycle tools that generate reliable out-of-pocket costs at the time of scheduling can help patients make better decisions, provide them options of payment plans or financing, and is an opportunity for providers to improve customer satisfaction and the patient experience. These tools can provide clear information about how much services will cost when provided by either an in-network or out-of-network provider. Lack of price transparency has become a major issue for consumers, and the federal government and the states are stepping in to address it.
On January 1st, the Price Transparency Rule, passed by the Centers for Medicare and Medicaid Services in 2019 and expanded by Congress in 2020, came into effect. Unfortunately, only 5.6% of hospitals are compliant eight months after its implementation. As a result, the Biden Administration has proposed significantly increased penalties for hospitals that fail to comply with transparency requirements, raising the maximum fine from $300 up to $5,500 for larger hospitals. In addition to Washington action, 33 states have already enacted laws to protect patients from balance billing. With these changes already underway and the No Surprises Act scheduled to take effect next year, it is clear that either providers improve transparency in how patients are billed, or the government will force a less optimal solution upon them.
Of course, meeting compliance requirements is always a necessity, but price transparency is not just good for patients. It can be a major boon for providers as well. Upfront price transparency – a full understanding of who owes what –can significantly reduce administrative costs and costly delays that come with collecting payments if payment alternatives such as payment plans or financing are offered at the time of service.
Transparency efforts can help providers in a myriad of ways.
No industry is in greater need of revenue cycle transformation than health care. The complexity of healthcare payment cycles not only confuses patients, but it also confuses providers, which leads to lost, or reduced, payments and greater inefficiencies.
According to one recent JAMA study, nearly one-quarter of all U.S. healthcare annual spending -$265 billion- is lost to administrative waste. One way to reduce inefficiency is to utilize AI, machine learning, and additional tools to manage the payment process. Health care providers can use machine learning to predict estimates combined with Robotic Process Automation to determine what patients owe for their care. Thankfully, the technology to achieve this already exists and is helping thousands of health care providers improve their services and increase revenue.
Big data in health care offers providers the ability to identify gaps in care and opportunities to increase efficiencies and quality of care. By leveraging the abilities of predictive analytics, providers can closely monitor risks, costs, and quality, as well as their impact on reimbursements
The pandemic has forced many health care stakeholders to seek out innovative tech solutions that improve their revenue cycle management, as the crisis continues to highlight the inefficiencies of an overly complicated (and often manual) process.
According to the American Hospital Association, hospitals and health care providers lost $202.6 billion over the last year due to canceled or postponed procedures, rising costs due to equipment and supply shortages, the dramatic rise in uninsured patients, and the high costs of treating COVID-19 patients. Providers in hard-hit and rural areas have been the most affected. Providers need to safeguard every dollar, and the increased efficiency of RCM is the first step.
Effective RCM reduces the time-consuming dance between providers and insurance companies over what the patient owes, addresses transparency concerns, improves patient relationships and outcomes, ensures more reliable revenue streams for providers, and installs better processes to meet current and future challenges. Key stakeholders need to ensure successful reimbursement through an efficient, patient-centric revenue cycle management approach, including:
These steps save staff time and reduce the chance of a rejected claim and the time and costs providers waste chasing those payments.
Addressing the transparency challenge will allow health care providers to not only strengthen relationships with patients but can improve critical processes and drive revenue in a time of flux and change. An effective revenue cycle management program and additional automation solutions can improve operations, reduce costs and delays, and allow greater focus on more value-added tasks that accelerate cash flows and improve operating margins.
Mel Gunawardena is a Managing Partner at SYNERGEN Health, transforming health care organizations’ revenue cycle ecosystem from end-to-end, generating the revenue essential to the viability of practitioners, enhancing patients’ experience, and enabling financial success.