Revenue Cycle Services in Healthcare – 3 Tactical Outsourcing Observations

Revenue Cycle Services desk with pen

It’s a decision all healthcare organizations must struggle with at some point when assessing their revenue cycle services: Does it make more sense to outsource revenue cycle services or keep them in-house?

The revenue cycle is complex, and an error at any point can derail the entire process. It’s important to look beyond the cost of paying a company for revenue cycle services. To comprehend the true cost of savings, healthcare organizations must consider the benefits of a well-run billing and receivables department.

Intuitively, hiring staff for billing seems to be a cost-saving solution. However, there are hidden expenses to consider beyond simply comparing your staff’s salary versus paying an outside firm to provide revenue cycle management services. And today, you have the added element of increased telehealth visits and their constantly changing regulations impacting provider billing.

Let’s explore what is involved in the billing and collections process and why it might make sense to outsource.

 

Why is an efficient revenue cycle services so critical?

The revenue cycle management process is everything administrative and clinical that happens from the day a patient’s account is created to the day their bill is paid, including patient intake, clinical documentation, coding, billing, insurance claims, and collections.

A healthy revenue cycle is required for providers to get paid for services rendered. At any point in the process, an error can mean a delay in payment or no payment at all. Close monitoring ensures accuracy and efficiency.

Patients today are paying more for healthcare than ever before. Data from the Kaiser Family Foundation show that out-of-pocket costs rose 54% from 2006 to 2016. And costs continue to rise; in 2018, patient out-of-pocket costs were, on average, 12% higher than the previous year.

Patient responsibility for bills is increasing, and it’s critical that providers follow proper insurance billing procedures, such as correct coding and preauthorization for treatments. They also need to follow best practices when billing patients, like promoting price transparency and providing estimates upfront.

 

Common ways the revenue cycle can go wrong

Many failings can upend the process of collecting payment, either from the insurance companies or from the patients.

Some of the most common to watch out for are:

  • Not obtaining preauthorization for treatments.
  • Seeing patients without a referral (when required).
  • Neglecting to collect co-pays.
  • Not billing promptly.
  • Committing billing code errors, resulting in lost time spent refiling with the insurance company.
  • Committing clinical documentation errors, resulting in rejected claims.

 

The impact of telehealth on the revenue cycle

As stated previously, telehealth services have increased dramatically in the past year. But how does this complicate the revenue cycle, and why might it make outsourcing your revenue cycle services ideal?

Recently, the government has relaxed regulations regarding telehealth visits. It’s unknown at this time if these relaxed regulations will be temporary or permanent. With these new regulations, providers need to be sure they are billing for the correct medical codes based on services rendered. The medical coding for Medicare and Medicaid was updated in March of 2020 and continues to be updated. To ensure timely payments, administrative departments need to be vigilant of the correct codes.

 

How can outsourcing save money?

The decision comes down to what is right for your organization. But before you make any conclusions, consider the hidden costs of in-house billing.  What are the hidden costs beyond comparing salaries versus a billing or revenue cycle management firm fees?

  • Employee benefits, including health insurance, paid vacation, retirement plans, health savings accounts, and life insurance policies, makeup about 32% of salaries. Don’t neglect these extra costs when determining the cost of hiring employees.
  • Billing software costs. If you’re billing in-house, you need software that integrates with your clinic and your administrative department. Software costs include training, upgrading, and maintenance. Don’t forget software licensing fees or the annual cost of cloud-based software, which most software companies are transitioning to for unified service and automation.
  • Higher overhead. Employees take up real estate space and contribute to general overhead costs.
  • Staffing turnover and training. Hiring staff includes the costs of finding, hiring, and training employees. It also remains a challenge to find individuals with medical billing and coding experience to fit your needs.
  • Office equipment and supplies.
  • Supervision of employees.

These costs may seem small individually, but they can add up. And perhaps the highest cost of all is the price of a billing department that cannot collect 100% of reimbursements. Although it’s not always the fault of an employee, the billing process is so nuanced that items can easily fall through the cracks.

When you hire professionals to outsource your billing, you benefit from a team of experts that work on the revenue cycle day in and day out. They are well versed in the changing codes, regulations, and other facets that make the billing cycle complex.

 

What should you do?

Admittedly there is a lot on the table when considering whether to keep billing in-house or outsource for revenue cycle services.

A small clinic, or start up practice, may well do best to outsource billing and revenue cycle management services.  Once a clinic or practice reached a size or critical mass, in-house might be the preferred solution for revenue cycle service management.  At this point, it is well worth it to engage a qualified consultant to assess and audit your current operations, billing, coding, and medical necessity documentation, and the overall revenue cycle management services needed.  The consulting firm you engage should be well qualified in helping you implement the outcome of the assessment, which would then lead to your best decision to outsource . . . or not, compared to best practices benchmarks.

As long as you are armed with knowledge, you can feel confident you are making the right decision.

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