Selecting the Best Revenue Cycle Management Partner

March 7, 2013

Does your medical practice allocate more time to medical billing and collections than actual patient care? Even with automation, the growing complexity of the process makes it increasingly labor intensive. Perhaps it's time to outsource?

Does your medical practice allocate more time to medical billing and collections than actual patient care? It's a likely scenario as health plan rules are always changing, claims are denied for a myriad of reasons, and patients may be responsible for larger portions of their bills as employers seek to cut costs. Even with automation, the growing complexity of the coding and invoicing process makes it increasingly difficult and labor intensive.

To control costs and improve results, many medical groups are evaluating a new generation of practice management and revenue cycle management (RCM) solutions to streamline work flow, raise clean claim percentages, and speed payments. The promise of these solutions is to reset the balance between payers and providers while improving overall financial performance.

But, wading through the various solution options for RCM can be confusing. One obvious measure is the price of the solution, but that doesn't account for the total revenue cycle management expenses when working with an outside partner. It's important to evaluate the total cost of ownership of the solution to make sure the practice is making the right decision to ease the workload on staff to better focus on patient care.

Selecting the right RCM solution

The main benefits of selecting the right RCM solution are to increase reimbursement, lower accounts receivables, and lower expenses by eliminating or repurposing full-time equivalents (FTEs) of office staff. Often, a practice may use the percentage of net collections in the RCM partner's contract as the main decision factor. But that assumes all RCM providers are equal. It's important to calculate the annual total cost when outsourcing RCM in terms of both actual fees and the remaining workload delegated to practice staff, as well as ease of use.

Let's say you are buying a car and comparing prices on what looks like similar vehicles. Car A lists for $10,000 while Car B sets you back $12,000. Car A looks like the better deal - until you dig a little deeper.

A closer look at Car A's sticker reveals you'll need to pay extra for the engine, tires, doors, and service, while Car B includes all features and services. Now you have a clear picture of the total cost of each car and can make a better decision. In the same way, it's important to look under the hood when selecting an RCM provider.

There are five main issues you should consider to make sure you're getting the solution that best meets the needs of your practice.

1. Strength of the technology solution. The core of any outsourced RCM solution is the technology that drives all of the business functions of the practice. At first blush, most RCM solutions meet the basic requirements. But make sure you take a close look at the software to ensure it includes rich features that easily adapt as the billing and collection environment changes or your practice grows.

• Is the practice management software easy to learn and navigate for your staff?

• Does the solution help you reduce FTEs by automating time-consuming tasks like claims submission, appointment reminder calls, eligibility verification, and referral management?

• Does the solution provide robust business analytics so you can proactively manage the revenue cycle, assess provider productivity, and benchmark performance, not just react to issues?

• If you decide to make a change in the future, is the solution portable or will you need to implement a new solution from scratch?

2. Optimization of office processes. The right RCM partner works closely with you to review daily routines and implement processes that optimize your use of the new technology and make your staff more efficient. You should get a complete overview of which tasks your staff continues to perform and what the partner handles. Do you want to outsource tasks like self-pay collections, patient statements, appointment reminders, collection letters, and calls, or continue to maintain some functions internally?

Your staff should have input on how the processes work to match the needs of your practice. In combination with the right technology solution, transitioning to the outsourced model should be smooth with complete buy-in from staff members who can easily see the benefits of the new system.

It's also a good idea to ask the RCM provider about fees associated with handling certain tasks. For example: Are patient statements provided or charged on a per statement basis? These "extra" costs can quickly add up to a substantial expense and should never be overlooked. Ask similar questions about eligibility verification, electronic claim submission and remittances, reminder calls, and other transactional activities.

3. Support for the solution. You're selecting an RCM partner for the long term, so it's important to know if they're going to be there for you when you need them.

Ask the RCM vendor if they provide phone support during all of your office hours? Is the help desk staffed domestically, or are calls routed offshore? Do they provide support service to handle calls about billing questions, or is your staff required to manage all patient-facing issues.

Employee frustration with an RCM outsourcing arrangement could potentially lead to drops in productivity and growth in necessary FTE staff to make up for tasks either not handled or handled poorly by the RCM partner.

4. Data transparency. It's your data that gets transferred to the RCM partner, so you might assume you'll have access to all patient accounts, payment collection status, and other key management files, right? Well, maybe.

With some arrangements, you may only have access to static, monthly reports about the key metrics you rely on to run your practice. Want to know the status of payments from a payer you've had issues with? You'll need to wait a few weeks, or task your staff with contacting the payer directly for an (often time-consuming) update.

A better approach is to work with a partner that enables dynamic, real-time access to all information you want to review throughout the month, tailored to your needs. In addition to standard, static reports, does the solution also offer more comprehensive analytics? Does it allow you to easily distribute vital information to the various constituents within your practice? Does it allow you to benchmark your performance against peers?

5. Account management. When selecting an RCM provider, the emphasis is on finding a long-term partner. Does the vendor provide a dedicated account manager, responsible for answering your questions and making sure the solution is delivering what you need? Is this account manager easily accessible to you and do they have the ability to answer questions and resolve issues quickly? Does the account manager bring new ideas to you that can improve productivity and collection rates? Are you kept up to date on solution developments?

Unfortunately, many medical practices don't find out until it's too late that their calls may route directly to a general help desk where no one is personally invested in improving outcomes. This is a big red flag that could indicate ongoing issues in how your practice is going to be serviced.

It's a simple question that often fails to get evaluated but can have big consequences for the success of the RCM solution.

Determining total costs

By carefully reviewing these topics with solution providers, your practice gets a better picture of the tangible and intangible costs of deploying an outsourced RCM system. While it may be attractive to select a vendor with a lower initial cost of the technology solution, the total cost of working with them may be higher in the long term if they do not effectively address all of the issues outlined above.

Make sure you evaluate the exact scope of services and technology provided by the RCM partner, along with all costs and responsibilities remaining with your practice to get a true picture of the total cost and find the right outsourced solution for your practice.

Outsourcing vs. co-sourcing

There are typically two types of arrangements available when selecting an outside RCM partner: outsourcing and co-sourcing. Both have their benefits depending on how your practice operates. What's the difference?

Outsourcing: The RCM provider automates processes to optimize the productivity of a practice's most important and expensive asset: its staff. Streamlined work flows help shift the staff's time and focus from routine billing tasks to exceptions that require their attention. Significantly fewer staff hours and staff are needed to do the same or more work. The outsourcing partner handles all of the "heavy lifting" from the beginning to the end of the revenue cycle.

Co-sourcing: A third party provides support for medical billing, but it's not an end-to-end solution. The office staff is still heavily involved in the process and often times remains the main point of contact for insurance providers and patients. You'll need staff time to maintain the system to handle certain tasks; for example, managing self-pay collection activities or handling denied insurance claims.

What about cloud-based solutions?

Cloud-based applications are a hot topic right now. The idea is all your data and applications are stored on a provider's server, accessible by you from any Internet-connected terminal. But, is it always the best approach for outsourced RCM?

Not always. While cloud-based solutions do offer the advantage of no server hardware or software license investment, they also have some common drawbacks of being generally less flexible and not being portable. Want to bring billing back in-house or transfer to a different provider? With a cloud-based solution, you'll need to start over from scratch.

A client-server architecture RCM solution generally gives you more flexibility in how the system can be configured and, if you ever decide to make a change, you can take your fully-configured client-server-based solution with you and hit the ground running without costly conversions, implementation, or retraining.

For smaller practices, a cloud-based solution can sometimes be simpler to implement and also can be less expensive; certainly points to consider.

While both the cloud-based and client-server-based solutions offer the opportunity to avoid buying and maintaining servers and software, the key differentiators of configurability and future strategic flexibility tend to separate the two solution types. Make sure that you consider those points in making a decision on which solution best suits your practice.

Edward Wrzesinski Jr., CMPE, is the director of revenue cycle management services for health IT vendor Allscripts. Wrzesinski has almost 20 years of experience leading medical practices in various specialties. He also founded and managed a billing service during his tenure in practice administration.

This article originally appeared in the March 2013 issue of Physicians Practice.