The revenue cycle is experiencing massive changes. Some of these changes are newcomers but a majority of them have trended for years.
The healthcare industry is in a state of limbo where a lot or a little may change in the near future. We’re constantly hearing speculations from politicians and executives, making it hard to weed through everything.
It’s important to understand that almost any change in healthcare affects the revenue cycle industry in some way.
We’ve weeded through all of the noise, here’s our list of the 14 biggest revenue cycle trends that are changing everything.
Table of Contents
Artifical Intelligence Will Be Back
Artificial intelligence is affecting almost every phase of the revenue cycle.
There are three main areas that have seen the most advancement in machine learning in 2019…
In patient registration, University College Hospital coded an algorithm that predicts no-shows. It looks at a pool of 20,000 appointments to make a prediction. The AI isn’t perfect but it has a 90 percent success rate.
On the claims management side, in Q1 of 2019 Change Healthcare announced their AI add-on. The technology focuses on…
Finding missing charges
Cutting down on adjudication time.
It funnels through systems to pinpoint patterns to understand what is being denied.
There are over 70,000 billable medical codes in the current reference. No one can manage those numbers without it becoming a nightmare. Present-day medical coders rely on Computer-Assisted-Coding (CAC) to find sets of codes. Once found, CAC summarizes all patient encounters to speed up the process. However, this isn’t a perfect process as there’s still a margin for error.
Medical coding also requires audits. The purpose of these audits is to find mistakes and missed revenue. The problem is that audits happen during the later stages of the revenue cycle. By then it’d cost the company more money to realize the lost revenue, rendering the insight useless.
What’s important to note about AI as a revenue cycle trend is that it isn’t trying to replace jobs. Companies put so much money behind it because it’ll enhance everyone’s productivity.
AI accomplishes the more menial tasks. It’ll also allow us to devote more time to important projects.
Hasta la vista, manual processes.
Value-Based Over Fee-For-Service
For the majority of our lives, health systems used fee-for-service care. Essentially this means that all services weren’t bundled and paid for separately.
This volume-based care approach led to an industry that's concerned with high-profit margins. It placed quality of care to the wayside.
This mindset first started to shift with the adoption of the Affordable Care Act. Now value’s on the verge of replacing volume.
It’s expected that by 2021 59% of all healthcare payments will be value-based.
Paying for treatments that lead to better experiences sounds like a move in the right direction.
Multi-Billion Dollar Mergers & Acquisitions for Integration
Back in 2017 massive healthcare organizations began a trend that shattered industry records. Of course, I’m talking about healthcare mergers.
This is what the merger landscape looks like over the past three years…
2017: 115 mergers, 11 transactions >$1 billion
2018: 90 mergers, 13 transactions >$2 billion
As time went on, fewer mergers happened but they've grown in value.
So what’s driving this trend?
Every healthcare organization’s main goals consist of the following…
Growing on a local and national level
Furthermore, if a physician is hospital-owned they’re likely using an integrated…
Electronic health record (EHR) system
Practice management (PM) system
Revenue cycle management (RCM) system
According to Black Book, this three-pronged system integration…
Increases collection by 29 percent more than independent practices.
Boosts scheduling satisfaction by 90 percent
Healthcare organizations want to be competitive. These massive mergers across the industry are the result of this ideology.
Increased Spending Makes The Patient Responsible
Across the board, healthcare spending is increasing. By the end of 2018, healthcare spending hit $3.65 trillion.
In 2003, HealthAffairs published a study that compared the health systems of countries. The study entitled It’s The Prices, Stupid compared OECD countries to the US. The study found that the United States spent more on healthcare than any other country.
In January 2019, the same authors created a follow-up study entitled It’s Still The Prices, Stupid. It revealed price as the main reason why healthcare spending in the US has more than doubled from 2000 to 2016.
As prices increase, financial responsibility falls on patients.
Deductibles continue to rise every year, forcing patients to pay more out of their pocket. In some cases, people spend nearly 12 percent of their median income on their deductible.
Higher patient responsibility means that they have to pay more money themselves. This decreases collections. Collecting from a patient with an account balance of >$5,000 is 400 percent lower than one with low deductibles.
The increase in patient responsibility is the fuel that’s powering other trends on this list such as…
Consumer-Directed Health Plans (CDHPs)
Everybody Wants Transparency
There's been a massive push for patient price transparency.
91 percent of healthcare consumers say it’s important that they know how much they owe upfront.
Providing price transparency makes it easier for patients to budget and compare prices. That last part is key. Why do patients want to price shop so much?
Patients expect healthcare “purchases” and online shopping to be similar experiences.
Back in 2000, Harvard Business School published an article that discussed cost transparency. Its focus, though, was e-commerce companies. Twenty years later and it’s the current expectation from every internet shopper.
In the present-day, the Affordable Care Act (ACA) forces hospitals to make their prices as transparent as possible. Each hospital publishes a chargemaster. These references list prices for all of the services they provide.
The biggest problem with chargemasters is their readability. They contain clunky records of thousands of goods and services that are different for each healthcare company.
On June 24, 2019, the Trump administration issued an executive order. Its goal is to improve price and quality transparency for patients. The order’s copy references allowing patients to price-shop their healthcare services seven times.
It’s important to note that an executive order doesn’t change laws or regulations. It places pressure on agencies to begin the drafting process for new rules.
Consumer-Directed Health Plan (CDHP) Offerings Dip
Organizations offer CDHPs as an alternative method to combating climbing healthcare costs. These plans combine a high-deductible with a tax-advantaged account that employees can use to pay for medical expenses.
Just two years ago, in 2017, there was a massive amount of hype surrounding these spending packages. Some even believed they were the perfect sole alternative to combat increasing healthcare costs.
The push toward CDHPs happened in part by the Affordable Care Act’s “Cadillac Tax.” It limits the preference for employer-sponsored health insurance. The tax was originally going into effect by 2020 but is now delayed until 2022.
Present-day, the number of employers offering CDHPs as the only healthcare option to employees is dropping by as much as 9 percent. This decrease happened this year in part by the delay in enforcing the new taxation.
SURPRISE! Here's Your Bill!
Surprise billing is a revenue cycle trend topic that has reached the topic cards for some of the 2020 presidential candidates. It’s nothing to hold a party about.
This topic has gotten so far into the public eye because it’s expensive and increasing. A recent study found that out-of-network billing instances increased by 10 percent from 2010 to 2016.
What’s worse is the expenses associated with this type of bill. The average price of an out-of-network bill from an emergency unit is $628. That may not seem terrible but that’s four times higher than the cost of surprise bills in 2010.
The increasing trend in out-of-network bills is forcing shifts in state legislatures.
In January of 2019 Arizona passed a new state law to give their citizens protection from surprise bills. Arizona patients can submit a request to dispute a bill through the Department of Insurance. The state agency then determines if the bill qualifies for a settlement. If the bill passes, they hold a settlement conference between the insurer, medical provider, and patient. If it doesn’t the dispute goes through an arbitration process.
In May 2019, President Donald Trump released a statement requesting a push toward ending unseen healthcare costs.
In July 2019, the House Energy and Commerce Committee approved its surprise medical bill legislation. Their legislation included the strategy of “benchmarking” out-of-network doctor payments. This means out-of-network doctors would be forced to accept the average payment for procedures based on their area.
Convenience is The Crown Prince
At the end of the day, revenue is what fuels healthcare organizations. Other than offering price transparency, convenience is extremely important to patients.
According to NRC Health’s Market Insight, convenience and access are more important than the quality of care.
The easiest way to make the revenue cycle more convenient for patients is to offer easy ways to make payments.
Some early adopters already offer new digital payment innovations that make it easier for patients to pay their bills.
Making healthcare more convenient doesn’t stop at payments. Patients also want to be able to make their appointments around their schedule.
Let's Play a Game of Telemedicine
Outside of making the payment process easier, telemedicine is another way to make the process smoother for patients. It’s growing at such a rate that it deserves its own category outside of convenience.
In one year, from 2016 to 2017, insurance claims filing for telehealth related services grew 53 percent. That statistics alone make this the fastest growing healthcare and revenue cycle trend.
If you’re not familiar telemedicine, I’ll explain. It’s where medical professionals diagnose and treat patients from telecommunications technology. This innovation helps doctor’s take care of more people while patients spend less time in waiting rooms. It increases patient engagement while cutting down on the beginning stages of the revenue cycle.
Feeling sick or getting injured
Picking up your phone
Virtually calling your doctor
Receiving his or her professional recommendations
As it stands, 64 percent of states across the nation require coverage and reimbursement for telemedicine. That number’s expected to grow due to demand from insurance subscribers.
Even so, 68 percent of physicians are waiting to utilize telehealth services in any capacity.
It’s taken the government some time to catch up to the impressive growth rate of this trend. This may be why certain providers haven’t adopted the technology.
The Centers for Medicare and Medicaid Services (CMS) did finalize expanding provider reimbursement. But it happened an entire year later in 2018.
More recently, the CMS ruled that Medicare Advantage members will have more access to virtual care visits by 2020.
Healthcare CFOs As Cybersecurity Guardians
The traditional role of a healthcare Chief Financial Officer (CFO) is shifting beyond finances. They now have to focus on improving performance across their enterprise.
66 percent of healthcare CFOs are now involved with influencing non-financial purchases. They’re no longer spending the majority of their time finding ways to save the company money. They’re making cybersecurity and technology decisions alongside Chief Information Officers (CIO)
CFOs need to ensure that their organization invests in the right cybersecurity technologies. 77 percent of them are just as concerned about information breaches as their CIO.
To make the right purchasing decisions, they need to have a strong technological background.
The Slow Decay of Rural Hospitals
Rural hospitals account for more than 50 percent of all hospitals across the United States. You’ll find this type of healthcare provider in areas where there’s nothing but green pastures and farm animals, hence the term rural.
Rural patients that seek treatment include farmers, ranchers, and other agricultural workers. This demographic has to travel much farther on average than those in suburban and urban areas. Some of them have to travel more than 30 minutes.
When a rural hospital closes, it causes an butterfly effect that affects its surrounding town.
First, staff members need to find new jobs. Even if these hospitals operate on the smaller end and employee 100 workers a closure puts 43,113 people out of work. Second, the patients, who already travel long distances to seek medical care, would have to travel even greater distances. Third, these closures have a massive negative impact on the economic ecosystem of the rural areas they live in.
Rural hospitals are typically among the top three biggest employers in their respective area. Their livelihood affects schools, housing, transportation, and other key economical services.
Due to the complexities involved with the healthcare industry, it’s hard to pinpoint exactly what’s causing rural hospitals to shut down. The major blame for their slow decay is the Medicaid expansion.
Becker’s Hospital Review states that rural hospitals that hadn’t expanded their Medicaid coverage were far more likely to close. In rural communities, the average income tends to be lower, making the number of uninsured people higher. MotherJones placed the average income of rural communities at $45,000 in 2017 while urban areas were $10,000 higher.
The World Health Assembly in May 2019 debuted of the 11th version of the International Classification of Diseases (ICD-11).
This new version features 55,000 different codes, a 76 percent increase in the number of codes from the previous versions. Some of the classification codes have moved while others are entirely new. One of the codes that have drawn the most controversy is “Gaming Disorder” listed under addictions.
Although this version won’t go into effect until January 1, 2022. Practices, medical billers and coders, and revenue cycle companies need to begin preparation as soon as possible.
One of the biggest goals for the new handbook was to make it more user-friendly. Within WHO’s official ICD-11 press release, it mentions how the new version focuses on simplifying coding structures.
The good news about ICD-11 is it’s entirely electronic for the first time.
RCM? There's an Outsource for That
As revenue cycle phases become more complex smaller hospitals struggle to keep up.
So what can smaller hospitals and practices do to save time? Outsource.
These smaller hospitals and practices that haven’t merged want to outsource their entire RCM processes to save time.
In 2017, healthcare RCM outsourcing industry realized nearly $12 million in value. Four years from now that number will almost double.
When deciding whether to outsource your RCM there are many aspects to take into consideration beyond finances. Like anything, there are pros and cons associated with outsourcing…
Collecting more patient balances
Patients are more likely to pay balances that aren’t covered by insurance
Outsourcing leads to an average of 33 days of collection time
Insurance denial rate is higher
Final denial rate is higher
Global Growth Across The Board
By 2026 the revenue cycle industry will be worth $73.2 billion at an average growth rate of 12 percent each year.
Two key countries contribute the most to the average growth rate of the industry - China and Germany.
Germany attributed over 20 percent of Europe’s revenue cycle growth in 2015. Their contributions were so large because of increased spending.
According to Global Market Insights, China’s revenue cycle industry will grow to a value of $5 billion at a rate of more than 15 percent through 2024.
EHR Calls for Better UI
Using outdated software makes simple tasks complicated and time-consuming. Clunky processes lead to employee burnout.
That’s exactly what doctors face today with their EHR systems.
There’s been a slight push over the last couple of years within the medical industry for optimized EHR interfaces. This push gained its initial support in 2017. First, The Journal of the American Board of Family Medicine tested four different EHR note styles. They found that fewer notes reduces cognitive load and improves productivity.
Second, the University of Illinois Chicago looked at visualizing healthcare data. Their researchers found that different EHR data utilizations matters for different providers. It improves comprehension and leads to better-informed patient care.
Present-day, 40 percent of physicians think that there are more challenges associated with their EHR system than benefits. In some cases, it could take a medical professional more than 45 minutes to for a physician to schedule a patient exam within their records system. That’s not including extra time with an insurance provider after the fact.
Each of these trends will have a massive impact on how the revenue cycle operates.
By reading this you have a leg up on your fellow doctor’s and healthcare providers. By knowing what’s coming, you can adjust your processes as necessary to ensure a smooth transition as the revenue cycle continues to adjust in the coming months.
What other trends should revenue cycle managers think about?