Next Level Unlocked: Four Stages of Proactive Revenue Cycle Management

A rapidly changing reimbursement landscape, fast-paced technological innovation, and ongoing staffing challenges make it difficult for any revenue cycle team to think beyond maintaining the status quo. As a result, many health systems miss revenue opportunities that could positively impact their missions. The obstacle of overlooking ‘the forest’ of strategy for ‘the trees’ of daily operations affects any number of healthcare organizations in today’s increasingly complex environment.

To evolve beyond the status quo, establishing a proactive outlook within the revenue cycle operation is essential. But what does a proactive approach look like, and how does an organization get there? Based on my work with hundreds of the nation’s top hospitals and health systems, a cornerstone of high performance is having a revenue intelligence approach that combines specialized expertise with smart, purpose-built technology, coupled with a continuous improvement mindset that unlocks innovation and growth. However, it’s difficult to achieve this without a true handle on where the organization is today, where exactly it needs to go – and how.

Most health systems fall within four different levels of revenue cycle management sophistication. Figuring out which one you’re in is the first step towards achieving meaningful revenue improvement.

Level 1: Baseline

A system operating at this level accomplishes baseline work, which means the essentials of a revenue cycle management program are in practice—information is processed, data flows through the system, bills are submitted, and payments are received on a relatively consistent basis.

Still, this system may be unprepared for the unexpected. Typically, when changes are made to reimbursement, contracting and coding, new regulations or legislation are rolled out, or any number of major changes occur, a revenue cycle team at this stage is highly reactive and often scrambles to respond. Teams are burdened with manual tasks and are prone to burnout.

As teams graduate from baseline to more sophisticated operations, they can see the road ahead more clearly. They put processes and systems in place to anticipate changes, train, and notify employees quickly, and thus, minimize risk to revenue capture.??

Level 2: Baseline Plus+ ?

As organizations ascend past level 1, it is essential to ask key strategic questions along the way. For instance, as teams are building out their RCM functions, they need to evaluate whether they have the right technologies and proper resources in place, and determine if a partner is necessary to fill critical gaps and stay ahead of changes and disruptions.

At level 2, an RCM operation is functioning just above baseline and starts to bear these strategic considerations in mind. Here, there are subtle signs of proactivity. For example, revenue cycle teams can navigate the perpetual roadblock of claims denials, manage challenging cases, and possibly overturn certain payer decisions. Teams are slightly more prepared for disruptions and respond more nimbly to the external environment.

Level 3: One Step Ahead

With over 140,000 code options for treatment and diagnosis and increased scrutiny of claims, it is well known that the reimbursement system is more complex than ever. A team that is operating at level 3 is far more engaged in proactive management.

Referring to the key strategic considerations above—these organizations continue to evaluate and implement the technology, people, and systems they need to thrive in this complex financial and reimbursement environment. Teams are also maintaining a vigilant watch over contractual compliance, billing, charging, and coding—through manual or automated processes–and are getting in front of issues more quickly. These are high performing organizations that are purposefully designed to evolve through continuous change and have support of the entire organization to adapt quickly.

Level 4: Maximum Horsepower

If operating at ‘maximum horsepower,’ a revenue cycle management team is striving toward peak performance. The team is proactively managing the entire reimbursement ecosystem and predicting–not reacting to–the simplest to the most complex of payer behaviors. Provider organizations proactively managing the revenue cycle can make positive impacts to staffing and workflow, while reducing administrative costs to operate more efficiently long-term.

These teams also see fewer trends toward employee burnout because they are less burdened with low-value manual tasks, redundancies, and avoidable errors. As a result, revenue cycle teams can operate at the top of their skill set and dedicate time to increasingly more strategic and high value activities.

Unfortunately, in my experience, fewer than 10% of revenue cycle operations achieve “Maximum Horsepower” due to lack of internal support, staffing challenges, or capacity to continuously monitor and adapt to the changing reimbursement environment.?While tackling the evolution from one level to another may seem daunting, a critical first step is going back to the strategic considerations spelled out in level 2. Teams should continually evaluate the people, technology, and resources they need to unlock the next level of revenue cycle management sophistication and determine whether this work will be taken on entirely by an in-house team or whether a partner is more effective in their endeavor. Ideally, with a Revenue Intelligence partner, you’ll maximize each other’s strengths and resources to power continuous improvement at every step of the revenue cycle journey. The highest performing revenue cycles in the country are not alone in their journeys, but instead select proven partners to expand operational capacity and capture reimbursement missed by standard internal processes. In the end, a revenue cycle is not a stand-alone function; it is an ecosystem of partners ensuring that Health Systems are appropriately reimbursed for the services that they provide.

This article was authored by Cloudmed President and General Manager Kyle Hicok, who brings over 20 years of healthcare industry and revenue cycle leadership experience to the role. As President, Kyle leads our commercial team, focusing on growth, client services, and performance for all solutions.

Prior to Cloudmed, Kyle was responsible for multi-state revenue cycle operations, national consulting and shared service operations, and general management of revenue cycle technology and services organization.