According to a recent Black Book Survey, revenue cycle management outsourcing stood at $11.7 billion at the close of 2017 and is expected to climb to $23 billion by 2023. Key reasons for this surge include a new focus on value-based care or value-based reimbursement, HIPAA compliance ease and strategic planning goals.
In other words, for some providers or healthcare institutions, the pros of revenue cycle management outsourcing outweigh the cons. Based on the latest numbers, 80% of hospitals are currently vetting revenue cycle management outsourcing providers, and 98% are considering outsourcing or more outsourcing because the practice has been shown to cut costs and overhead by close to 25%.
In healthcare, revenue cycle management refers to the steps taken to collect revenue from patients. These steps include:
- Patient scheduling and registration.
- Information collection.
- Patient encounter and case management.
- Charge capture and coding.
- Claim submission.
- Follow up.
- Claim processing and possible rejection.
- Payment posting or appeal for payment.
Revenue cycle management accuracy and accountability are crucial to avoid claims denial. Implementing each and every step is essential. Missing a single step can mean a claim denied or repetition of several cycle steps. In other words, it can take months, maybe as long as a year, to be reimbursed for services rendered.
Worse? A missed cycle step can mean you will not be reimbursed at all. This is why revenue cycle management outsourcing is becoming the go-to solution for patient revenue collection – a delicate management system that you should place in experienced hands.
Let’s look at the pros and cons of outsourcing revenue cycle management.
The cons of revenue cycle management outsourcing
The pros are many, and the cons are few, but there are cons, of course. These mostly have to do with vetting and choosing the right revenue cycle management team or company to take over your revenue cycle and help elevate your practice to the next level.
Vetting Revenue Cycle Management Outsourcing Providers
Finding a good revenue cycle management provider can be difficult. You want a third-party contractor who is a compliance expert, or a contractor who can create on-demand reports based on patient demographics or other.
It is essential to conduct due diligence and assess your current operation to assure best practice benchmarks and outcomes.
It is not until you outsource revenue cycle management that you realize how much time relevant staff spends monthly or daily on revenue cycle management steps! How will you utilize your staff’s freed up time?
The pros of revenue cycle management outsourcing
The pros associated with revenue cycle management outsourcing run from peace of mind to stripping away a stringent compliance stratum, or everything from freeing up staff to generate more revenue to providing a more patient-centered level of care.
In-house billing requires storing patient data on-site unless cloud servers are utilized; but even then, upgrades are ongoing to meet HIPAA privacy requirements. When revenue cycle management is outsourced, relevant staff compliance training and necessary certification requirements can be eased – even though they are still required – through shifting part of the responsibility to a knowledgeable third party.
This is one of the pros of revenue cycle management outsourcing that harkens back to the 25% savings, mentioned earlier, reported by some providers. In general, cost savings are usually one of the main reasons to consider outsourcing.
Enhanced Analysis, Benchmarking and Strategic Planning
Outsourcing revenue cycle management with a third party has other benefits you may not have considered, including data analysis and accurate medical practice benchmarks. In other words, the right third party can analyze revenue data and produce reports for strategic planning, for example, to help your medical clinic or facility create goals and reach those goals faster.
Value-Based Care/Value-Based Reimbursement
According to one study, the current IT infrastructure is not designed to accommodate the coming transition to value-based care or value-based reimbursement, and this inability to accommodate the transition falls largely on inadequacies in revenue cycle management.
An experienced third party can up claims acceptances to curb potential revenue that may be lost under a value-based reimbursement system.
It is critical to understand, that the individual circumstance, the size of the organization the number of providers, and the number of locations a clinic may operate – all may influence the pro or con considerations, and must be evaluated by a conciencious due-diligence process.