The Transition to Managed Care

RCM Mandate:??Transition from Claim Appeal to Contract Management

Healthcare Revenue Cycle Management (RCM) has historically been centered around a few “experts” who “know the payers” and appeal claims with little overview.?In the past, these individuals have the ultimate trust of the physician leadership.?These individuals have critical, repetitive knowledge of a payers behavior.?However, this information is not codified or transferred throughout the RCM operation to enable the organization to extend this “expertise”.?How many times have we heard, “we cannot operate without this expert”??It is amazing that these organizations, whether big or small, appeal claims without operating metrics to determine efficacy or efficiency.?If these individuals extended their expertise, then why do our RCM operations need more and more people??With the significant investment in technology, married to our RCM experts, why are denials ever increasing??

Blaming the payer is an easy and emotionally comfortable reason for these continued, inefficient trends over the past twenty-five years.

Today, we experience multiple amendments and changes within a managed care contract during a particular plan year and without any public reason.?Providers do not know why these changes occur and how these changes will impact their RCM.?Despite lots of efforts, the healthcare providers do not have access to the payer system to (i) understand the myriad of inputs that affect the allowable for a particular episode of care and (ii) the managed care information to identify an underpayment or contractual change. We forget that a managed care contract is a summary document of the payer’s particular rate sheet.?Our payer rate sheets are 143 pages long full of algorithms to determine the allowable for a particular plan for a particular provider

For example, a REVELOHEALTH client experienced a revision to their managed care contract that changed the payment index from current year Relative Value Unit (“RVU”) to the 2008 RVU index.?While the healthcare provider loads its “contracts” within its RCM system, they were unable to calculate the change and update their systems.?This single change accounted for a 18% drop in the total contracted allowable within the plan year.?Additionally, this client’s Medicare Advantage plan was changed from site specific Medicare Rate Index (“MRI”) to the broad, rural MRI, resulting in a similar double-digit reduction in the contract allowable.?With the current RCM systems in place, the practice was unable to identify and react to these contract changes.?They were left with their “experts” appealing claims as underpayments when the contract rate had changed.

Appealing these claims was an expensive and ineffective effort as the payer’s repricing system is accurate with these changes.?This was a contractual issue and not a payment issue.?RCM systems do not have the ability to separate these issues in real time.?When these issues surface, the resolution is a legal battle that spans two to three years of claims.?The healthcare provider spends significant operating effort to no avail and then engages legal or account receivable recovery firms on a contingency basis to resolve.?Why not avoid these underpayments versus contractual issues?

In our collective provider RCM experience, managed care activities were limited to 4 (four) to 6 (six) weeks around the contract maturity.?Provider managed care executives had little to no involvement with the RCM executives during the year.?Sampling of payment data on a periodic basis was the typical managed care contract activities outside the contracting period.?The complexity and volatility of the RCM activities demands a continual, current managed care process that is driven from the RCM information.?

At REVELOHEALTH, we call this "Contract Integrity".?Contract Integrity is the first step in a SMART RCM process, whereby the allowable from the provider equals the allowable from a current payer repricing system.?To achieve Contract Integrity, one must transition from an RCM focus to a payer focus whereby the price or allowable is the first step in the process.?Having access to a payer repricing system enables that provider to understand the payer’s pricing and claim resolution process at or before the point of care.?Alternatively, the healthcare provider creates an Explanation of Benefits (“EOB”) before the payer adjudicates the claim.?If the allowable produced by the payer equals the allowable generated by the provider’s repricing system, then traditional RCM process can commence.

Our Contract Integrity process ensure that (i) RCM appeals are underpayments to the equivalent allowable, (ii) credit balances are accurate and (iii) any contract changes are identified outside the cost of RCM claim appeals.?Combined with eligibility determination, a provider can generate an EOB at the point of care, not only for transparency compliance, but also for patient responsibility identification and payment.

RCM “experts” are indispensable today as in the past.?The addition of a Contract Integrity process ensures that a provider and their “RCM experts” understands the payer behavior in real time as well as reduces the cost of collection from appealing claims that are correct within the payer repricing system but underestimated within the provider RCM system.?Imagine an RCM operation with fewer claim denials and fully staffed!