Healthcare organizations are often balancing growing administrative needs with a need to remain fiscally responsible and efficient. From determining insurance eligibility to submitting, pursuing, and collecting unpaid or rejected claims, each piece of the revenue cycle has the potential to contribute to the fiscal stability of a practice.
Healthcare RCM Outsourcing can provide an alternate solution that offers practices additional administrative support without requiring them to manage every aspect of their revenue cycle. By understanding how RCM can be used to meet these specific needs, how to evaluate a partner for these specific goals, and the additional considerations for ensuring quality outcomes, organizations can evaluate options for supporting their specific practices.
What Is Healthcare RCM Outsourcing?
Revenue cycle management (RCM) refers to the financial processes associated with patient care, ranging from appointment scheduling and registration to claim submission. This encompasses all facets of insurance verification, documentation, coding, billing, and account resolution. Outsourcing refers to delegating these responsibilities to a third-party organization, typically under a formal service agreement.
Not all practices delegate the same responsibilities; whereas some only outsource claim processing or follow-up, others utilize third parties on a more comprehensive basis. Each organization should consider its staffing needs, claim volume, specialty, technological needs, and additional factors before deciding the extent to which a partnership will include administrative and billing activities. While such an arrangement can reduce overall workload and provide additional expertise, providers retain responsibility to ensure accurate processes and a fair outcome for both practices and payers.
Why Healthcare Practices Consider Outsourcing
Medical billing is a highly nuanced and specific component that involves more than simply submitting and pursuing claims. It frequently involves managing each claim according to specific payer guidelines, reviewing documentation, following up if a claim remains unpaid or denied, and other tasks to ensure continued and appropriate reimbursement.
At the same time, a practice may find itself unable to manage its workload due to a growing number of patients who must be scheduled, a higher volume of bills that must be sent, or similar challenges. These issues might necessitate either additional internal staffing or a turn to an external source.
Other reasons to consider outsourcing may include:
• Delayed payments, claims that require follow-up, and similar gaps in the revenue cycle
• Billing errors that generate unnecessary rework or denied claims
• Challenges associated with managing an increasing number of patients and related responsibilities
Each of these issues can be resolved or better managed through outsourcing, depending on the provider’s needs, available in-house resources, and the capabilities of a firm.
However, results will vary based on the extent to which a practice provides training and supervision, its capacity to follow up, and other factors. Additionally, the practice must continue its role in ensuring quality and appropriate outcomes.
Key Services Included in an Outsourced Revenue Cycle
There are a variety of services that providers can delegate to external organizations according to their specific needs. These generally fall under a number of key areas:
Insurance Verifications and Patient Registration
At the initial contact and scheduling of a visit, it is crucial to register and verify patient information for accuracy. This can reduce errors later in the process by detecting ineligible insurance or missing documentation or demographic details at the earliest opportunity.
For example, by reviewing the patient’s coverage and authorization details during an eligibility check, those details can be determined or clarified to avoid subsequent issues when submitting a claim for reimbursement later in the claim cycle. However, verifying patient insurance does not guarantee payment or coverage, as eligibility can be affected by factors beyond a practice’s control.
Medical Coding
Coding ensures that services provided can be translated into standardized terms for documentation and billing. This often requires specialized individuals to ensure that charge capture activities are completed correctly.
Similarly, coders must review an individual’s claims to ensure that relevant services reported are reflected in the charge capture processes associated with the submission of that claim. Coding and charge capture practices therefore rely on appropriately trained professionals, standardized procedures, and accurate documentation to ensure proper coding and reporting of claims. Coding conventions must consider medical record documentation, code set conventions, and appropriate reimbursement policies, while avoiding assumptions based on reimbursement alone.
Medical Billing Services
Medical Billing Services ensure that claims are submitted to payers for processing, as well as monitoring and following up on these submissions, including payment posting and related reconciliations. The processes for managing each of these billing components should be clearly delineated in a contract.
Medical billing procedures typically require claim validation to meet all standards for submission, document review, and related requirements to ensure that all aspects of a claim are processed without incident. Claims that include errors or omissions during submission may require resubmission, which is best avoided through standardized, reliable procedures.
Denial Management
Denial management refers to the process of identifying why a claim was denied and what action should be taken to resubmit it. This includes determining if an edit or other correction can be made prior to resubmission. In cases where no corrections can be made, the billing team must identify if an appeal can be submitted within the parameters of applicable laws and regulations.
Effective denial management therefore requires effective follow-up, including reviewing a claim’s content and documentation prior to its initial submission, rather than repeatedly attempting to resubmit the same denied claim.
Benefits of Healthcare RCM Outsourcing Partners
Well-managed outsourcing can ensure practices achieve greater efficiency by defining roles, tracking progress, and enabling consistent, reliable billing. As an example, a practice could begin managing its RCM needs by reviewing delinquent claims for accounts receivable, including the age of each claim and the reason for any outstanding or denied balances. From there, representatives could meet with outsourced staff and the practice’s management to define priorities, assign responsibilities, and track outcomes, potentially through regular reporting from both sides.
Potential benefits for such an arrangement might include:
• Enhanced follow-ups for denied or unpaid claims and enhanced reviews of outstanding accounts receivable
• Additional resources for more intensive follow-up responsibilities
• Standardized documentation, reporting, and oversight to meet the needs of the practice and its clients
• Improved capacity to monitor staffing requirements, identify areas that require additional retraining or spot issues
These benefits apply specifically if the practice utilizes strict guidelines to monitor progress and ensure outcomes meet expectations. Failure to establish appropriate expectations and review actual results may lead to assumptions that denial rates are lower, collections are higher, or expenses are decreasing, even when they are not.
Important Risks to Review before Outsourcing
A practice’s financial information requires careful protection and should only be shared with an organization that has established appropriate internal controls and safeguards throughout the processing of that information.
Organizations considering a business associate agreement (BAA) with an RCM outsourcing partner must pay specific attention to how information is shared, staff responsibilities are delegated, and expectations are established for both parties.
Patient Privacy and HIPAA Requirements
When a billing company qualifies as a business associate because it possesses Protected Health Information in connection with a covered entity, the HIPAA Privacy Rule typically requires the covered entity to execute an appropriate BAA. A BAA must specify the activities permitted or proposed to be carried out by the business associate. As explained by HHS, a BAA should address appropriate safeguards and provide details on notification responsibilities, among other items.
Healthcare providers considering RCM outsourcing must determine the extent to which the outsourcing partner complies with HIPAA Rules, particularly in regard to permissible uses and disclosures, the safeguards required in its standard policies and procedures, and related responsibilities.
Communication and Quality Assurance
Outsourced teams need to understand the expectations, escalation procedures, and reporting timelines for each aspect. It is crucial for the client organization to define who will be responsible for questions, coding or registration exceptions, questions from payers, or other billing-related concerns.
Quality assurance procedures, including routine reviews and audits to ensure appropriate processes are being followed, must consider what actions to take if errors occur.
Contractual Terms and Reimbursements
It is important to understand the extent of services covered by an outsourcing agreement, those that are not, and the costs involved. Specific attention may be required to the compensation models for services included or submitted separately. For instance, agreements that base payouts for submitted reimbursement claims on a percentage of reimbursements received could face additional legal scrutiny by appropriate national and state entities. Additionally, a formal request for legal counsel to review such an agreement may be required.
Measuring the Success of an Outsourcing Arrangement
It is important for a practice to consider how the success of an outsourcing arrangement should be measured according to the needs the organization has and how well an outsourcing company is following protocols to meet them. Organizations can identify appropriate performance indicators, including clean claim rates, denial rates, accounts receivable, aged receivables, cost to collect, claim turnaround, and other items, in order to review ongoing performance. The following items should be considered when reviewing performance reports with a business associate:
Definitions of measurement components. For instance, a clean claim rate may have a specific calculation that describes what that claim includes compared to one that is not clean.
Applicable costs or expenses that impact expenses (for instance, the cost to collect) or expenses impacted by the service.
Variance analysis that explores what changes have occurred, why they occurred, and if actions should be considered to prevent future occurrences. Claims denied or denied after multiple follow-up attempts could require enhanced review or additional steps to prevent recurring issues.
Trends, such as changes to average days in accounts receivable or increased expenses or cost to collect, should be considered within this context alongside any changes to service mix or patient volumes.