The revenue cycle management process might be the hottest topic in healthcare as consumerism and changes to payment models bring big shifts in how systems get paid.
"The increase in consumer financial responsibility is the number one issue," said Stuart Hanson, chair of the HIMSS Revenue Cycle Improvement Task Force. "We've seen this flood of consumers with high-deductible health plans, whether they came from a public or private exchange, or their employer," he said. "Providers are now, in earnest, starting to grasp how quickly this paradigm shift is occurring.
Hospitals 10 years ago you probably collected about 5 to 10 percent of their revenue from patients, added Hanson, senior vice president of healthcare consumer payment solutions at Emdeon. "In the past 18 months or so, that number has shifted dramatically. Now it's more like 30-35 percent."
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Part of that has to do with the growing impact of Obamacare, said Pamela Jodock, senior director, health business solutions at HIMSS.
"Large numbers of people signing up under ACA chose high-deductible health plans, which was not the trend that was anticipated," she said. "That dramatically accelerated the impact of self-pay on providers."
There's a whole lot of talk these days about the shift from volume to value, of course. But there's also a lot uncertainty about just what that means – and what it will continue to mean in the long term.
"We're still as a market trying to determine, what exactly does value-based reimbursement look like? How do we define it? How do we associate price to value?" said Jodock.
While the market is "still experimenting so much in that area and providers are still not able to predict what their revenue will be under value-based care," she said, "the patient portion of a provider's revenue stream is an area where they can exercise a bit more control at the moment."
"You've had providers who have historically waited for things to be certain before they react," Hanson said. "I think the semi-certainty of Obamacare being here to stay means more insured consumers and higher-deductible health plans are probably here to stay."
That's good news for providers looking for a bit of certainty to hang their hats on. But it also means they'll need to be investing in some upgrades to their revenue cycle management systems in the years ahead.
"On the IT front, one thing is really clear: the IT systems behind revenue cycle, most of them were built in the '80s or '90s – and that's being generous to some of them," said Hanson. "Over the past 25 years they've been tweaked and optimized for maximizing commercial and government receivables management, and in some cases had some bolt-ons to deal with patients responsibility."
But the game has changed. "Those systems are not really capable of dealing with the revenue cycle shift that these organizations need to go through to effectively manage their receivables," he said.
"One of the things we're trying to do with the Revenue Cycle Improvement Task Force is to move revenue cycle from a back-end process to a front-end process," said Jodock. "And we need IT systems that will support that, while at the same time understanding that we'll need to integrate those technologies with legacy systems that are very much outdated."
At the same time, "as much as we know they're outdated, we know that the cost of fully replacing those systems and starting over with completely modern technology is not realistic," she said. "The cost of doing that is exorbitant."
"It's not going to be an overnight switch," added Hanson. There simply aren't many tools like that ready to buy right now: "To some extent it's going to be slower than even the CFOs would like because the proven solutions aren't out on the market yet. I don't think the vendor solutions are proven enough – companies they can trust and put their money behind."
A recent report from research firm peer60 shows providers increasingly attuned to the need for innovative revenue cycle tools.
"As providers face the challenges presented by these new payment models, they will require help from RCM vendors far beyond what's historically been provided from these firms," according to report.
"Our research indicates that as providers transition to this new world, vendors that fail to innovate on this front are being viewed as deadwood, and CFOs are about to pick up their axes," said peer60 CEO Jeremy Bikman.
Jodock points to "a decrease in trust between vendors and providers," thanks largely to the former groups big promises – not always delivered upon – during meaningful use.
"There are providers who sort of feel like they've been taken advantage of. That has sort of harmed the level of trust and I think providers are much more skeptical of what (vendors) they've worked with for years are telling them now," she said.
Still, there are some defensible reasons vendors have been slow to innovate. And it all goes back to a lingering confusion about just what this new value-based world will actually end up looking like.
"Until we answer some of those questions, it's difficult for vendors to develop solutions to provide that information," said Jodock. "They're looking for answers from the industry."
To that end, she said, the RCITF is working to bring a "broad array of stakeholders" together in hopes of setting those terms "in a more proactive manner, rather than waiting for the government to tell us."
In the meantime, she's noticed some interesting trends on the RCM front, a shift in the status quo, a "changing (of) roles and responsibilities for existing players, an opportunity for new players to enter the market."
For instance, said Jodock, "We're seeing partnerships between financial institutions and providers that facilitate that upfront experience, moving RC to the front of the business process."
She points to a couple companies that are "introducing funding solutions for consumers so they have access to dollars to pay for their healthcare upfront – to finance their portion, so they can move forward with care without trying to figure out where the money is coming from. I think we're going to see more and more financial systems getting creative," she adds. "Not just with the consumer portion, but there's also the potential down the road that we see some vendors who start to consider whether or not it would be viable for them to front the provider payment for the payer, from the health plan side, so the provider sees more rapid reimbursement, and there's a reconciliation that happens in the background between that vendor and the payer."
For the moment, however, some facts are hard to argue with, even in this time of revenue cycle uncertainty.
First, "the more informed consumer is here to stay," said Jodock. "That's one thing I think providers don't quite understand. Many still believe that the majority of individuals are going to defer to what their provider tells them when it comes to a catastrophic or major medical expense. I'm not sure the market fully appreciates this next generation of consumer, which has grown up very tech-savvy."
As they becoming more engaged, having become used to other industries that are more retail-oriented – never mind the fact that "they have such skin in the game from a financial perspective" – they're expecting to have predictability around the cost of care," she said.
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Another certainty? "Analytics is going to be critical in value-based reimbursement models," said Jodock. "We're going to rely very heavily on data to understand pricing structures. Analytics are going to be critical to helping an organization determine what does it actually cost them to deliver a service or a bundle of services or an episode of care, end-to-end."
Finally, as all these questions swirl and a new landscape takes shape, another fact remains, said Jodock: "There are enough market forces on the industry that make it clear we can't keep doing things the way we've been doing them and expect to succeed."
This story first appeared on sister site Healthcare IT News. It has been abridged.