CommerceHealthcare® was proud to partner with HealthLeaders Media for the "2019 HealthLeaders Revenue Cycle Survey." More than 150 financial executives, from across the healthcare industry, took part in the survey. To access the full survey results and download a copy of the report, including a perspective article from Richard Heise, Senior Vice President of CommerceHealthcare®, click here.
Revenue cycle is a critical function for every healthcare provider, and maximizing patient revenue through management, tracking, and collection is essential to providers’ financial well-being.
In fact, 98% of respondents in our 2019 HealthLeaders Revenue Cycle Survey say that revenue cycle activities have a high impact (70%) or moderate impact (28%) on achieving their organizations’ financial goals.
“With industry margins in the low single digits, it doesn’t take much to move the needle either into the red or the black,” says Kris Zimmer, chief financial officer of St. Louis–based SSM Health, an 11,000- physician health system with 23 hospitals serving Missouri, Illinois, Oklahoma, and Wisconsin, and advisor for this HealthLeaders Intelligence Report.
“Revenue cycle is the lifeblood of any healthcare provider. If an organization is not focused on revenue cycle activities, I would be concerned because the outside world is working every day to pay less,” says Zimmer. “We have to work equally hard every day to make sure we’re reimbursed fairly.”
Activities with greatest impact.
While it takes a comprehensive approach to revenue cycle to maximize both billing and collection, there are a handful of strategies and practices that generate the most financial impact. In an industry with shrinking resources, it’s important for providers to focus on the activities most likely to generate return on investment.
As an example, more than two-thirds (70%) of respondents say that the revenue cycle activity that they expect to have the greatest financial impact on their organization is minimizing denials. The attention spent on minimizing denials is in response to payer strategies that focus on denying an ever-greater number of claims, forcing providers to constantly prove their legitimacy.
“In the past year or two, the sense I get in talking to peers across the nation is that payers have tripled and quadrupled their denial resources,” says Zimmer. “The increasingly aggressive payer denial actions cause providers to be in a defensive position. So there is a lot of anxiety and frustration among the provider community that payers have adopted a position that they never owe anything unless you prove that they do. It’s flipped from historically where there was a presumption of coverage.”
Perhaps as a result of such payer policies—an example is Anthem’s policy that denies coverage and payment for ED visits it deems unnecessary—the response for improving clinical documentation (63%) finishes a close second to minimizing denials when it comes to the revenue cycle activities with the greatest financial impact. This is because providers must constantly challenge payer denials, and they have a strong need for accurate and detailed clinical documentation to support their claims.
Growth in transparency.
While increasing price transparency has been a goal for the healthcare industry for some time, and more recently CMS has been focused on improving it, real progress has been slow in coming. Part of the issue has to do with the inherent complexities of the payment system, which makes effective solutions difficult to achieve.
The good news is over two-thirds (70%) of respondents in our survey say their organization provides price transparency for all care provided (49%) or most care provided (21%), which suggests that solid progress is being made.
One method providers are using to improve transparency is publishing their chargemaster prices online. In fact, 37% of respondents currently use this tactic, and another 15% plan to in the next six months. Note that momentum for this particular trend is likely being driven by recent CMS regulations. On the other hand, an almost equal number (36%) say they do not publish their chargemaster prices and have no plans to do so.
There are a number of reasons why providers may be reluctant to publish their chargemaster prices, says Zimmer. Chargemaster prices can end up having little to do with what a patient will actually pay because patients may have insurance coverage through a commercial or government payer, or they may be self-pay. In addition, many patients simply have difficulty understanding their insurance coverage and are unable to determine their out-of-pocket costs.
“At SSM Health, we don’t find publishing the chargemaster helpful, and feel that it confuses patients,” says Zimmer. “People assume that it translates to what they’re going to pay, and it never does.”
“One of my wishes for our industry is to eliminate the chargemaster, unless we want to keep it for internal tracking or costing methodologies. What we should be providing is transparency of the net price to the individual patient. And while today we try to estimate that and it’s getting better and better, it really should be a seamless process between insurer, patient, and provider. It shouldn’t require electronic reach-outs, phone calls, and manual staffs. It ought to be a seamless automated system,” he says.
Survey respondents were asked about the methods they use for providing price estimates, with the majority (43%) saying they use revenue cycle specialists on the phone, and 19% saying they offer an online estimator tool. In six months, responses indicate that having revenue cycle specialists on the phone to provide estimates is expected to grow to 48% and use of an online estimator tool will grow to 27%.
The use of online estimator tools targets patients who prefer to conduct their personal activities online. Note that providers are likely offering both options rather than using one or the other exclusively, following both a revenue cycle and a patient experience trend of providing patients with an increasing array of consumer-oriented options to choose from.
However, while online estimator tools may provide patients with more options, there is some question as to whether they are a better option than person-to-person interactions.
“SSM Health does not currently use a patient-driven estimator, although we plan to evaluate one in 2020,” says Zimmer. “What we’ve found is that it really takes a knowledgeable expert to be involved that is able to ask the right questions, such as who is your employer and which of these plans do you have at your employer? And we feel that misinformation is actually worse than no information at all,” he says.
Threat or opportunity?
Ultimately, the majority of respondents have an optimistic view of price transparency. Fifty-three percent say that transparency is both a threat and an opportunity, and nearly one-third (30%) say that it is purely an opportunity.
“At SSM Health, we view it as an opportunity. We believe not only is it the right thing to do, but we welcome the competition with our local competitors,” Zimmer says.
Notably, only 4% of respondents say that transparency is purely a threat, meaning that for most providers there is always an upside to transparency.
“Transparency helps those that are prepared to compete on value, with value being a combination of both price and quality elements,” says Zimmer. “I’m a little surprised by the 4% figure for threat because in the markets that I’m aware of, there are high-cost providers that enjoy a market position that would be at risk if there were greater transparency.”
The rise of automation.
Providers are always looking for ways to automate processes to drive efficiency and reduce costs throughout their organizations, and revenue cycle is no exception. One relatively new development in this area is the use of electronic kiosks.
One-quarter (25%) of survey respondents say that their organization uses kiosks for patient check-in, which helps ensure the accuracy of patient information and keeps staffing costs down, and 17% of respondents report that their organization uses kiosks for patient payments, giving patients another opportunity to pay up front and improving patient experience by giving them an additional payment method.
However, not everyone is convinced that kiosks are a better solution than using provider staff, particularly those focused on preservice collection.
“My thoughts on kiosks are that if our primary focus was staffing efficiency, we’d be using kiosks for patient check-in,” says Zimmer. “But our primary focus is making sure that we use our last preservice contact to make sure that everything looks correct in the record so that we’ll be able to successfully collect from the payer. And that we also use this last preservice opportunity for point-of-service collection. We want a face-to-face connection and going through a mental process to see if there’s anything that needs to be changed or fixed.”
At 54%, a fairly large number of respondents indicate that their organizations require front-end, preservice payments, although it is an open question whether this policy is effective with kiosk use. Note that 55% of respondents say requiring preservice payments is moderately effective, and 25% say it is very effective, irrespective of kiosk use.
Another aspect of revenue cycle automation involves automated patient insurance verification systems. These systems are fairly common, with 60% of respondents reporting that their organization uses one, and their increasing use is part of an automation trend to free up revenue cycle staff so they are able to work on more complex tasks.
Also part of revenue cycle automation is the use of analytics, including systems based on artificial intelligence. For example, 13% of respondents say that they are currently using artificial intelligence to minimize denials. Providers are increasingly looking to use technology to level the playing field with payers as well as free up revenue cycle staff for more complex transactions.
“Our view is that the highest return-on-investment IT solutions are in back-office functions and business-to-business connections, and include advanced artificial intelligence, sophisticated analytics, and robotic process automation,” says Zimmer.
Perhaps in response to this trend, some providers are placing their dedicated IT departments under revenue cycle’s jurisdiction, in order to better focus IT personnel and resources on enhancing revenue cycle automation. In fact, 19% of respondents reported that their dedicated IT department falls under revenue cycle management.
Driven by the growing use of high-deductible plans and patients who are self-pay, providers are increasingly offering patient lending options as part of their revenue cycle activities. In fact, 29% of respondents in our survey say that they offer either a low- interest option (15%) or a zero-interest option (14%), and another 13% say they will add a lending option in the future.
“We added a zero-interest option for our hospitals about six years ago,” says Zimmer. “It has been very effective and continues to grow, and we expanded it to our medical groups a little more than a year ago. At this point, more than 10% of our patient payments come through the program. It’s been essential to helping patients with high- deductible plans.”
To read the full HealthLeaders/CommerceHealthcare® survey, click here.