In a Special Report published in Healthcare Informatics’ September/October issue, healthcare finance thought leaders shared their perspectives on the shifting landscape around revenue cycle management and the importance of developing a robust RCM strategy. These finance experts pointed out that U.S. physicians and hospitals are facing considerable impacts on their healthcare reimbursement. At the CFO level, healthcare organizations face increasingly thin operating margins, declining reimbursement rates and changing reimbursement models.
For that Special Report, Associate Editor Heather Landi interviewed Sandra Wolfskill, director of healthcare finance policy at the Healthcare Financial Management Association. HFMA is a Chicago-based trade organization for healthcare finance professionals. At HFMA, Wolfskill oversees the association’s Revenue Cycle MAP, or measure applied performer initiative. Prior to her position at HFMA, Wolfskill was president of a healthcare finance consulting firm, and she spent 15 years in healthcare financial management and consulting, including serving as CFO of a small community hospital.
Wolfskill spoke with Landi about the current and evolving payment landscape facing healthcare finance leaders, what CFOs should be focusing on right now, how organizations can leverage IT to optimize revenue cycle performance and the role of the CIO in all of this. Below are excerpts from that interview.
What are some of the challenges that healthcare finance leaders are facing right now?
At the high level, CFOs are being challenged by a lot of stress on operating margins, which is another way of saying profitability. Reimbursement rates are declining, in most cases, and so it’s the struggle with ‘How do I bend the cost curve to continue to be viable in this environment where I am seeing payer mix shifts going from the commercial world over to the government world?’ And that is being influenced by the Baby Boom generation coming off employer-based health plans and moving into the Medicare world, be it through traditional Medicare or Medicare Advantage. There’s also the impact of the changing reimbursement models, whereas we’ve lived in a fee-for-service world, for a very long time, and so the emphasis was on volume, such as how many chest x-rays, how many MRIs, could I do? In the value-based world, we now are confronted with the issue of risk, and if we assume risk in our contracts with our payers, how do we control for that risk and how do we manage that risk?
An example of a risk contract that’s been around for a long time is capitation, where I get paid PMPM (per member per month) fees for providing services to the individuals covered under those plans. If I don’t calculate my risk correctly and negotiate my risk component correctly, I could end up losing a lot of money on contracts like that.
In the revenue cycle management world, what I’m hearing from colleagues is that there is a huge need to not lose sight of revenue integrity within the revenue cycle. And that’s probably the number-one or number-two concern that most revenue cycle leaders have. And what we mean by revenue integrity is making sure that we have classified and are charging for services correctly; that the services we do provide are actually documented in the patient’s electronic health record (EHR), that we have charged for them appropriately, that we have coded them correctly and that we have been paid correctly by the payer. Revenue integrity is an issue that touches across multiple areas within the organization.
The second big challenge is denials. I send claims out to my payers, and do they pay me or do they issue a denial? And how do I mitigate and reduce the amount of denials that I have to deal with on a regular basis? We’re seeing some organizations doing some very interesting things. They are having conversations with the payers, and saying ‘If you’re always denying this device, can we come up with way that you can see the patient’s record, in a secure and encrypted environment, and decide right then and there if you’re going to find the medical necessity that you are looking for and you’ll pay it?’ As opposed to, the payers denying it automatically, then the provider organization sends the records, the payer then agrees that it should be paid, and pays it, which takes more time and resources to accomplish. So how can we streamline? How can we cut the cost of transactions and cut the cost of billing and collecting, but also allow the payer to protect their interest and allow us, the hospitals, to be paid appropriately for the things that we do?
Get the latest information on Health IT and attend other valuable sessions at this two-day Summit providing healthcare leaders with educational content, insightful debate and dialogue on the future of healthcare and technology.