If 2020 was a year of financial crisis, then 2021 is shaping up to be the year of financial resilience – and healthcare providers are nothing if not resilient. After last year’s estimated $323 billion financial loss, bouncing back is no small endeavor for hospitals. The winter COVID-19 surge has caused expenses to soar, with labor and supply costs escalating 14% and 13%, respectively. Previously slim operating margins have become even more paltry and could be as much as 80% lower than pre-pandemic levels by the end of this year according to KaufmanHall.
With these evolving market factors taking their toll on hospital finances, savvy leaders began developing revenue cycle optimization strategies as early as Q3 and Q4 2020. Instead of trying to reinvent the wheel, it is critical to focus on improving major revenue cycle components, such as claims submission, coding, documentation, and accounts receivable, that can offer significant returns. A revenue cycle partner can help health systems develop a solid revenue integrity program that optimizes these key revenue cycle processes in a way that prevents revenue leakage and minimizes overall compliance risks leading to greater overall yield. A pre-pandemic HFMA survey found that nearly 70% of hospitals’ revenue integrity programs increased net collections; 61% reduced compliance risk and resulted in higher revenue.
Download our infographic, Are you in the dark about leakage? for more about the industry’s outlook on revenue integrity.
In the most optimistic scenario, approximately 40% of all hospitals will operate in the red this year. In the most pessimistic one, a full half will – making this the perfect time to work with a revenue cycle partner to either kick-off or strengthen your revenue integrity program. A partner, like R1, can help your health system build a solid and compliant foundation for pricing, coding, and charging while monitoring reimbursements for accuracy. If interested in driving the greatest revenue lift, be sure your partner can incorporate the following components into your overall revenue integrity strategy:
It’s the scenario 7 out of 10 hospital revenue cycle teams face: their multiple technology vendors lead to a patchwork of cobbled-together IT systems. Added to that, many vendors’ revenue integrity solutions have grown through mergers and acquisitions – which means the hospital’s patchwork is on top of the vendor’s patchwork. Even if a hospital’s revenue cycle vendors offer best-in-class functionality, this value is negated when the lack of integration means its best-in-class systems can’t connect with each other and seamlessly share data.
For your revenue integrity program to drive improvements, it’s necessary to have a one-stop partner with a single technology solution for RCM. This single solution can help you avoid hazards like a lack of integration in chargemaster services – which, if the chargemaster is inadequate or noncompliant, can result in overpayments, underpayments, denials or even unwanted legal exposure.
Frequently, vendors emphasize and rely solely on the pre-bill approach to revenue integrity. This tactic relies on a review of claims prior to their submission to identify missing or inaccurate coding, charges and documentation errors. When accounts are flagged, a coder then audits the associated medical records to confirm the opportunity to recoup revenue. Putting all your eggs in the “pre-bill basket” has its share of risks and challenges – the biggest being that this approach can result in lengthier charge capture lag times which can lead to spikes in A/R days.
In most cases, a reliable partner will recommend a comprehensive approach that leverages the right combination of both pre-and post-bill activity. By analyzing the full billing cycle, root causes of leakage can be identified, and corrections can be made accordingly, thus preventing the reoccurrence of typical problems. In addition to maximizing revenue, this method can expedite reimbursement by allowing for a pre-bill review and increase efficiency by allowing for a proper post-bill investigation of missing or inaccurate information to prevent common errors from happening in the future.
A focus on payer contracts can result in both greater compliance and a considerable increase in revenue, so make sure your health system has access to a revenue integrity team with the experts needed to manage payer contracts and monitor payments to ensure accurate reimbursement. These experts should ensure all contracts are correctly modeled per the hierarchy of services provided – establishing a clearly defined process that verifies each payer’s consistent and timely contract completion. This means, for instance, they’ll need to incorporate a process for reviewing detailed information at the account level and comparing it against the payer’s payments.
Payer contract management should also entail regular analysis to better understand how changes in prices impact reimbursement across your payer landscape. By analyzing the gross and net revenue for a price change, you’ll be able to validate how the negotiated rate impacts your organization as a whole. This type of comprehensive view can give you a greater understanding of your organization’s key areas of sensitivity – and arming yourself with this information will better prepare you for annual contract negotiations. Such analyses can also provide valuable insights related to payer-capped reimbursement, which frequently occurs when services cost more than the total amount billed. This is another opportunity to potentially improve revenue by arming yourself with the pertinent data; in this circumstance, a simple increase in the chargemaster could provide additional reimbursement if it aligns with the overall pricing strategy.
In our current healthcare environment, it’s an excellent time for hospital leaders to evaluate their revenue integrity program with an eye toward making improvements that drive higher compliance and a sizable increase in revenue. To achieve the greatest revenue lift, components such as the three outlined above are not optional. Implementing them in-house is a possibility; however, in addition to being time-consuming, it’s also typically difficult and costly – and it comes with no guarantees.
When you partner with R1, you not only get the technology and expertise necessary to optimize your revenue integrity program, you get a partner who can commit to helping you achieve agreed-upon KPIs such as a revenue lift of up to 1.5%.
Nicole Shingler is Director, Revenue Cycle & Physician Advisory Services at R1.