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Revenue Cycle Management Outsourcing: Training Must Be Top of Mind

Today’s revenue cycle employees must react to constant changes — to payer requirements, regulations, coding, compliance, and legislation — and so must vendors. Training can make all the difference with revenue cycle management outsourcing, healthcare leaders have found.

“In today’s HR environment, with obstacles in recruitment and retention of staff, as well as the rapid expansion of technology, we will see an increase in outsourcing opportunities,” predicts John Woerly, RHIA, CHAM, FHAM, an Indianapolis-based revenue cycle consultant. There are some caveats, however. “One wants to consider vendors that are known to be leaders in the field, in terms of number, volume and size of clients; years in business; and proven performance,” said Woerly.

Aligning With Revenue Cycle Vendors

Hospitals are looking to deliver better customer service with reduced costs, and access to advanced technology without major investments. Vendors also need to “speak in one voice” with the revenue cycle department. “When you outsource in the revenue cycle, you are looking for a partnership. I tell people all the time: An outsource partner is an extension of your business office,” said Phillip E. Brooks, vice president of revenue cycle at Minneapolis-based Hennepin Healthcare.

Just because an account is outsourced, he cautions, that doesn’t mean you can forget about it. “Saying, ‘It’s in the collection agency’s hands, so we don’t have to worry about it’ is wrong. That is still your patient,” warned Brooks. If a vendor employee is rude to patients and has no idea the health plan has changed preauthorization requirements for a denied service, the claim goes unpaid, and the patient is unhappy.

Ensuring Training Is Consistent When Outsourcing

Hospitals that successfully outsource revenue cycle functions have found that training is the answer. At a previous facility where Brooks worked, all vendors the hospital contracted with went through the same orientation provided to the facility’s new hires. “That was very, very effective,” Brooks said. “The vendor is acting as an extension of the revenue cycle and should know, philosophically, how the organization wants patients to be treated.”

Vendors may be working from a distant geographical location, but patients and payers shouldn’t detect any differences from hospital processes. “As a vendor, you may be adjudicating our accounts from California or someplace else. But the bottom line is, I still have to hold you accountable,” said Brooks. Service level agreements are a good way to maintain quality. “Just as you would do internally, you need to manage by analytics,” he said.

Technology is not the answer for everything. “You need to have people who are empathetic and concerned,” underscored Brooks. That requires education, coaching, and experience to ensure an optimal patient experience.

Revenue cycle departments, however, are seeing unprecedented challenges with recruitment and retention. Hospitals may invest resources in orienting registrars, only to have the new hires quit to get better hours or higher pay at a nearby competitor.

Understanding When To Outsource

If understaffed departments are causing unpaid claims and unhappy patients, outsourcing can make good financial sense. “When you consider whether to outsource, you need to look at the number of accounts you have per employee and how quickly they are getting adjudicated,” said Brooks.

Payer requirements sometimes change at the same time staff are struggling to get a high-dollar claim paid. Surging A/R days are a troublesome sign. “Either internally you don’t have the resources, or the resources that you do have don’t have the skillset that it takes, nowadays, to get these claims adjudicated,” said Brooks. “To effectively run that business office, you need help from vendors who tell you what you need to hear and not what you want to hear.”

Choosing Which Claims To Outsource

Hospitals need honesty from vendors about the kind of claims that they should be outsourcing. Some denials may be listed as self-pay when the patient actually had insurance. Hospitals can probably handle those internally, by running real-time eligibility and batch processing of all self-pay accounts at night to see if there is any insurance.

“You want to outsource the exceptions — the complex claims, the workers comp or motor vehicle claims that take forever and a day because maybe there’s some legal issue,” said Brooks. Does the hospital really want a claim with pending litigation to be unresolved for several years? Probably not. Those claims are good candidates for outsourcing to vendors, because of the skillset and time that’s required.

Relieving the Pressure With Revenue Cycle Outsourcing

The hospital side of Emory Healthcare outsources a number of revenue cycle functions: Elements of preregistration and pre-certification, customer service, denials management, self-pay collections, collection agency, and bad debt.

Many functions are handled by a combination of hospital and outsourced employees. “Most staff work from home or at the vendors’ site, but if they were here in the office, you’d not be able to tell Emory staff from vendor staff without checking the ID badge,” said Pete Kraus, CHAM, CPAR, FHAM, business analyst for revenue cycle operations at Emory Hospitals.

The department also outsources the billing clearinghouse and statement mailing. Most of this is done for budgetary and sometimes technical reasons. “Various departments within revenue cycle do not have anywhere near the staff needed to do all this in-house, nor can our IS department provide sufficient resources to manage the support side,” explained Kraus.

Relying on Vendors With Specialized Expertise

Given that high-quality vendors have the specialized expertise and economy of scale to perform these roles, outsourcing makes sense from a cost-to-collect perspective.

At Emory, vendor staff who do the same jobs as in-house staff attend training classes side-by-side. Other vendor staff, such as bad debt collectors, work in accordance with Emory standards and expectations written into the vendor contracts and periodically reviewed in meetings that also assess performance trends.

“Most of our vendors have long experience working with us. We establish relationships via professional organizations, recommendations from colleagues in the field, and, where necessary, talking with comparable facilities who use a particular vendor and are willing to share their experience,” reported Kraus.

At Spectrum Health, Patient Financial Services outsources a number of functions. Vendor partners help provide automated claim status, claims follow-up, out-of-state Medicaid credentialing, insurance credit balance resolution, payment variance on zero-dollar accounts, statement mailing, early-out/customer service, bad debt collections, and escheatment processing.

“Choosing the right vendor partnership is critical to the success of any engagement. Of course, competitive fees are the first component. But cost isn’t the only thing that matters,” cautioned Courtney Guernsey, Senior Director of Patient Financial Services.
Checking references from other similarly sized or structured clients is important. Word-of-mouth recommendations from trusted peers can go a long way.

Keep in mind the staff and time needed to manage vendors as well. “Often, we find the vendor rates appealing but don’t take into consideration the cost of the internal resources still required to support that outsourcing,” Guernsey noted.

That can mean invoice reconciliation, service-level-agreement monitoring, information systems — and importantly, education and training. “Team members who are not appropriately trained or kept up-to-date with ongoing education add substantial legal and financial risk to the organization,” said Guernsey.

Lack of knowledge isn’t an acceptable excuse that will exempt an organization from repercussions after issues are found in an audit. “In addition, not keeping up to date with rules and regulations can also lead to increased denials and revenue leakage,” warned Guernsey.

The revenue cycle is complex, detailed, and always shifting. Aside from staying on top of regulatory updates and latest best practices, prioritizing education for both in-house staff and vendors requires constant attention in this ever-changing industry.


Coding and Revenue Cycle Management: "The Lifeblood of Any Healthcare Organization"

Outsourcing revenue cycle functions makes sense for many organizations. However, the need for training is crucial to stay on top of constant changes in payer, coding, regulatory, and legislative requirements, and avoid unpaid claims and unhappy patients. In this white paper, you’ll learn why medical coding and revenue cycle management are the lifeblood of any healthcare organization.

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