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January 19, 2024

Outsourcing Revenue Cycle Management: Benefits, Risks and Best Practices

Thomas John has 30+ years of experience in healthcare RCM and IT. He is the founder and CEO of Plutus Health Inc., one of the biggest healthcare RCM companies in the US. Thomas has comprehensive knowledge of AI-driven practice management and billing software. He believes in providing an end-to-end solution for revenue cycle and practice management.

ABA Providers Recover Dues From Patients To Efficient Your Account Receivables

Revenue cycle management helps healthcare providers reach their business goals. Explore if you should join 45% of companies that outsource their RCM so they can focus on patient care. Explore benefits and challenges, plus tips from RCM experts on how to find the perfect vendor.

In this article:

What is Revenue Cycle Management Outsourcing?

Revenue cycle management outsourcing means you hire a company to handle all or part of your revenue cycle. This helps healthcare providers maximize their revenue and focus more on patient care.

Revenue cycle management (RCM) means handling a healthcare organization’s revenue-related processes to optimize profitability and minimize errors. RCM enters every stage of the patient’s journey, from making an appointment to receiving treatment and paying the bill.

RCM is incredibly important to a healthcare organization. It will determine your total revenue and cash flow. It directly impacts the money you must pay to provide care and grow. In short, it can make or break a healthcare company.

Given its complexity, it’s not surprising that many healthcare providers struggle with RCM.

Patti Rosenberg, partner at JHD Healthcare Partners, says the key to RCM is mastering its complexities. For over 25 years, Rosenberg has led financial transformation and outsourcing operations for healthcare, business process, and technology enterprises.

“Navigating RCM involves dealing with numerous unique payers, plans, schedules, codes, and payer rules,” she describes. “These elements often act as hurdles for healthcare organizations that are seeking reimbursement. To be effective, one needs to ensure full charge capture and effective coding. You also need workflow management technology that embeds payer rules into the claims and analyzes trends in rejections, denials, and underpayments. Focusing on the root causes of denials is also critical to success. Finally, communicating collaboratively across the revenue cycle prevents errors at the source.”

Patti Rosenberg
Patti Rosenberg, partner at JHD Healthcare Partners
Rosenberg adds: "In short, it’s not an easy or straightforward job. Perfecting your RCM demands tools, coordination, and a team of experts who are devoted to the cause."

One common solution is to outsource these tasks to a trusted partner specializing in RCM. This group of experts is dedicated to perfecting your RCM, and they have the time, resources, and expertise to do it effectively.

Most research suggests that outsourcing RCM is a common and growing practice. In 2023, Plutus Health conducted a survey, the Plutus Health Revenue Cycle Management Challenges Index, of over 200 U.S. healthcare providers. The purpose was to learn how healthcare organizations with RCM teams of 50 to 700 members manage RCM and identify key RCM challenges and pain points. They reported their findings in the whitepaper Diagnosis Critical: Revenue Cycle Management Challenges Among Healthcare Providers in 2023.

The survey shows some interesting statistics about RCM outsourcing. Around 45% of the respondents rely on external support in some capacity—but only 6% outsource their entire RCM to a single vendor. That means about 55% of organizations rely on internal support.

Ways Healthcare Providers are Executing RCM

However, the survey also shows that more providers might begin to outsource their RCM. When asked how they plan to manage RCM challenges, 22% of respondents said they plan to work with a trusted external advisor.

Top Plans for Improving RCM in 2024

“RCM outsourcing provides the technologies, focus, expertise, and resources needed to stay on top of RCM challenges and build a bulletproof RCM system,” says Rosenberg. “Outsourcing is appropriate for many healthcare organizations. Providers needing better RCM performance, lower costs, or accelerated cash flow will particularly benefit from outsourcing. Likewise, healthcare organizations in a high-growth phase or looking to scale could consider outsourcing.”

RCM outsourcing is a growing industry all on its own. The Market Report, an index of business conditions for various markets, estimating RCM Outsourcing to grow to $23 billion by the end of 2023, up from $11.7 billion in 2017.

This growth and the survey results reflect that more vendors will enter the market to meet burgeoning demand. All in all, outsourcing RCM is becoming an even more popular and attractive option for healthcare organizations of all types and sizes.

Key Takeaways:

  • A growing number of healthcare organizations are outsourcing their RCM to improve their finances and focus more on patient care.
  • A good vendor ensures full transparency, informing you of the RCM processes and results.
  • Taking time to validate potential partners ensures they align with your organization's needs.
  • The major benefits of outsourcing include increased revenue, lower costs, and improved patient experience.
  • Look for vendors that use AI and machine-learning software to provide advanced RCM solutions.

Why Outsource Revenue Cycle Management?

Healthcare providers outsource their RCM because it offers several distinct advantages. The biggest reason is to increase your revenue by trusting your RCM with a dedicated team of experts. Outsourcing RCM also will improve your operations by giving you more time to focus on patient care.

According to Rosenberg, any weakness in your RCM process can lead to issues, potentially reducing revenue and restricting cash flow. This creates a domino effect of negative impacts, ultimately affecting patient care. Establishing a robust RCM system is crucial for ensuring strong processes and results.

“At every point along the RCM continuum, payers seem to find reasons to deny, delay, or underpay a claim,” Rosenberg says. “A small fraction of reasons are caused by lack of correct information from patients, such as the wrong insurance plan ID. In other cases, the provider was not credentialed, coding was insufficient, the claim was not accepted by the payer… The list goes on and on.”

Rosenberg says outsourcing is the best way to create reliable RCM processes for many organizations. “RCM outsourcing provides the technologies, focus, expertise, and resources needed to stay on top of these challenges and build a bulletproof RCM system.”

Balaji (Bala) Ramani, vice president of business development at Plutus Health Inc., emphasizes that outsourcing lets healthcare organizations focus more on clinical care. Bala is a senior management sales professional with several years of experience in building teams for marketing, sales and customer success in the field of healthcare RCM.

Bala Ramani
Balaji (Bala) Ramani, vice president of business development at Plutus Health Inc.
"Many organizations would rather focus on the patient than chasing paperwork,” Bala says. “If a billing company handles large aspects of your revenue cycle, you’ll have more resources, time, and energy to devote to improving the patient experience."

Benefits of Outsourcing RCM for Healthcare Organizations

Outsourcing RCM can improve an organization’s revenue and reduce costs. It also aids cash flow and helps the organization follow regulations. And with outsourced RCM, organizations can focus more on patient experience.

Here's a summary of the main benefits of outsourcing RCM for healthcare providers:

  • Reduces costs and redirects overhead costs
    Typically, outsourcing is more cost-effective than maintaining an in-house team. Outsourcing reduces the overhead costs of hiring, training, and managing an RCM staff.

    "Outsourcing reduces the cost of in-house space, salaries, benefits, furniture, fixtures, and equipment," Rosenberg says. "These and other tasks are usually less expensive for outsourced solutions. It also increases the cost-effectiveness of leveraging technology into the RCM processes, and it provides a lower-cost approach to scale your organization."

  • Gives you access to a dedicated team of RCM experts
    RCM vendors specialize in being comprehensive RCM experts. Their focus allows them to dedicate their energy and resources to RCM expertise. Having these seasoned experts on your side is invaluable.

    "Top vendors ensure consistent best practices in RCM performance," Rosenberg says. "You can expect top-level expertise with well-defined service level agreements, performance incentives, and penalties."

  • Improved denial management
    A critical part of RCM revolves around minimizing, addressing, and preventing denials. Establishing a robust denial management system stands out as one of the most effective methods for enhancing RCM, boosting cash flow, and improving overall revenue. RCM vendors approach denial management with the precision of experts, meticulously streamlining the process to minimize denials.

    Rosenberg sums up the impact of outsourcing on denial management: "You will collaborate with top-notch experts, including skilled analytical and program management leaders. They will thoroughly investigate, document, and engage effectively with clients and payers to resolve denials within the appropriate timeline."

  • Improves compliance
    Staying abreast of ever-evolving healthcare regulations can be challenging. Your RCM partner should be an expert in the relevant laws. They'll ensure your compliance and minimize the risk that you'll incur legal and financial penalties related to non-compliance.

  • Better tech and reporting
    Your RCM vendor will have advanced tech that many healthcare companies wouldn't normally invest in themselves. This software leverages AI and other automated processes to expedite billing, make coding more accurate, streamline the payment posting process, predict whether a payer will deny a claim, and more.

    "Outsourcing partners have workflow management technologies specifically designed to track unpaid claims and accelerate the collection of A/R,” Rosenberg says. "They also have claim follow-up tools that can resolve specific claim issues much more quickly."

    Rosenberg also emphasizes that the best vendors will keep you up to date every step of the way. "Outsourcing partners ensure transparency via dashboards and reporting that gives providers, managers, and investors confident in RCM performance."

  • Improves financial forecasting
    The advanced technology, analytics, and reporting capabilities of your outsourcing partner will give you a deeper understanding of your financial health and growth potential. Collaborating with your outsourced partner empowers stakeholders to make informed decisions, identify and proactively address potential issues, and continually implement measures to optimize revenue.

  • Enables you to focus on enhancing the patient experience
    RCM helps connect the clinical and business sides of healthcare. By outsourcing, you can focus on that clinical piece, your core competency.

    To see how outsourcing RCM helps improve the patient experience, it’s helpful to consider what happens when your RCM is poorly managed.

    A poorly managed revenue cycle will delay the scheduling and pre-authorization process. This increases the wait time for patients for appointments and procedures, resulting in understandable frustration. Also, billing errors and delays will lead to patient dissatisfaction.

    Outsourcing RCM means cleaning up these and other processes to ensure a smooth patient experience. "The billing company can bring in software that can easily handle and improve parts of the patient experience like making and confirming appointments, processing patient billing, and posting payment," Bala says. "Overall, you can expect a smoother RCM cycle to directly benefit the patient experience."

Key Benefits of Outsourcing for Hospitals

Hospitals usually need more extensive RCM services because they are more complex organizations. Outsourcing RCM means that a hospital doesn’t need to hire and train a large staff capable of handling RCM for a large institution.

Key Benefits of Outsourcing for ASCs

Ambulatory surgical centers (ASCs) have an intricate billing structure and specific compliance regulations. ASCs benefit from outsourcing because specialized teams can handle these particular needs. Finding and retaining this expertise in-house is challenging.

Key Benefits of Outsourcing for Private Practices

Private practices need to scrutinize their revenue collection more than most because they are under more economic pressure and usually have a smaller margin for acceptable billing errors. Many cannot train an in-house team.

Moreover, numerous private practices specialize in a specific area or cater to a particular demographic. Outsourcing proves instrumental in optimizing their revenue cycle, allowing them to maintain independence and deliver the highest quality of specialized care they are known for.

Risks and Challenges in Outsourcing Revenue Cycle Management

The main challenge of outsourcing RCM is transitioning from internal to external management. Integrating the new team within the entire healthcare organization can also be challenging. Both parties can implement plans to address these and other challenges.

Outsourcing your RCM isn't a hands-off task; trusting a partner with your entire revenue cycle management involves risks that need careful consideration. It also demands that you work with the outsourced partner to create the best outcome for both entities.

“Many clients underestimated the resources and work that’s required to outsource effectively,” Rosenberg says.

Managing risks starts with identifying and clearly articulating your expectations to your vendor. Understanding your role and responsibilities is crucial to fostering a successful partnership.

Here's a list outlining the primary risks and challenges of outsourcing, along with tips from Rosenberg and Bala on how actions organizations and vendors can address and prevent issues:

  • Fear of losing control and oversight of the billing cycle
    "Lots of healthcare organizations fear that if they outsource their RCM, they'll lose control over their entire revenue cycle," Bala says. "It's understandably difficult for some people to get used to that loss of control."

    Bala says healthcare organizations must scrutinize their vendors to deal with this issue. "Make sure that your vendor will share any reports with you, give you full access to their software, and provide you with complete transparency and visibility into your RCM. For example, we get on a call every week with each of our clients. We discuss what happened the previous week, talk about issues, and keep them fully aware of what's happening with their billing and collections."

    Bala adds that organizations should avoid vendors that don't provide full access to their RCM software or ask to take over the healthcare organization's bank account. “These are both red flags of a bad partner,” he says. "I've seen some organizations who don't know what their A/R is, what their denial percentage is, and where they stand on other key performance indicators. Being at the mercy of third-party software is not the sign of a healthy partnership, and no organization should have to give up that control or accessibility when they're outsourcing their RCM."

  • Failure to integrate RCM across the entire healthcare organization
    "Many organizations miss the crucial point that the revenue cycle spans the entire healthcare enterprise, not just a standalone department," notes Rosenberg. "This oversight often results in isolated and fragmented RCM. Without integration throughout the organization, the suboptimal performance persists, making it challenging for the outsourcing partner to bring about improvement."

    Here are the solutions that Rosenberg suggests organizations can implement:

    • Engage with clinical and operational leaders and staff to clarify their RCM roles.

    • Document the entire RCM process, highlighting intersections, owners, dependencies, and expectations.

    • Define responsibilities for onsite and outsourced teams, addressing breakdowns and performance measurement.

    • Establish reports and dashboards to track revenue cycle performance and address issues promptly.

  • Lack of visibility and transparency
    "Healthcare organizations may not realize the amount of data and monitoring needed to keep the RCM clean and productive," says Rosenberg. "The outsourced partner should be transparent, but clients should also reconcile their own data to the outsource partner’s data to be sure nothing drops through the cracks. Essentially, you always want to be on the same page and be completely transparent with one another. Remember, you're on the same team—success for one partner brings success for the other."

    Here are the solutions that Rosenberg suggests:

    • The healthcare organization should:

      1. Send nightly updates of A/R data to the outsourced partner to load into their work queue management system.

      2. Provide access to the billing system and require the outsourced vendor to load all notes into the client billing system.

      3. Create reports or dashboards necessary to provide transparency so that claims and payments are processed quickly and effectively.

    • The outsourced partner should:

      1. Provide dashboards of all transactions in their workflow management system.

      2. Accommodate client needs for transparency and accountability.

  • Miscommunication about values and expectations
    The healthcare organization and vendor must be on the same page regarding expectations and values.

    "Sometimes, the outsourced partner may underestimate how many resources they need to implement or maintain a productive RCM relationship," Rosenberg notes. "They may not provide effective leadership of their teams, which causes the relationship to fail. In some cases, the healthcare organization is forced to bring functions back in-house at an extra cost."

    Here are some ways that Rosenberg suggests organizations and vendors can prevent this issue:

    • The outsourced partner should:

      1. Demonstrate the skills and capabilities of the individuals who will lead and work on the client's project during and after implementation.

      2. Accommodate changes in scope and process as the client learns how to integrate and perform with the outsourced partner.

      3. Offer strong leadership and a confident assurance that they're motivated to ensure a successful partnership with the client.

    • The healthcare organization should:

      1. Monitor RCM performance, working with the outsourced partner to resolve backlogs and issues quickly.

      2. Implement a formal “Issues Escalation and Root Cause Resolution” process as part of governance.

      3. Take responsibility for resolving onsite issues that cause RCM backlogs, poor RCM performance, and conflicts between team members.

      4. Include service level agreements (SLAs) and termination language in the outsourcing agreement in the rare instance that the relationship becomes untenable and unproductive.

  • Difficult and costly transition from in-house to outsourced management
    "Clients often underestimate what it takes to implement and integrate onsite and outsourced teams, causing frustration, blame, and implementation delays and failures," notes Rosenberg.

    Here are the solutions that Rosenberg says can mitigate this risk:

    • Define the scope of onsite and outsourced teams, preferably with SLAs and standard operating procedures (SOPs) that you refine over time.

    • Determine and provide the reports and dashboards necessary to transfer data, monitor work queues, escalate risks, and monitor/measure performance.

    • Create a detailed transition plan with critical milestones and dates.

    • Provide effective leadership for the implementation. Identify a team member who can build strong relationships between onsite and outsourced team members and help them achieve critical milestones to keep the implementation on track.

    • Formally document the policies and procedures that onsite and offshore teams will use in their work and decision-making.

  • Fear of outsourcing because of a prior bad experience
    Bala says that many healthcare organizations are too afraid of outsourcing because they tried it once and lost money.

    "Unfortunately, a lot of organizations select vendors based on one metric: the cost. While price is obviously important, the cheapest billing companies out there usually lead to lackluster results. They burn the client badly. Now, the client categorizes every RCM company to be like their failed partner. It can be difficult convincing a company that there are reputable billing partners that will lead to a positive experience."

    Bala says it's important to do your due diligence when selecting an RCM company for healthcare companies in this position. Ensure they’re reputable and understand your goals and expectations.

    We include a comprehensive list of questions to ask potential vendors later in this article. These questions will help you validate that the RCM partner is reputable, effective, and cost-effective.

Risks and Challenges of Outsourcing RCM

Challenge or Risk Solutions
Losing control and oversight of the billing cycle Ensure that the vendor:
- Gives you full access to their software
- Does not ask to take over your bank account
- Provides you with weekly calls and reports
- Assigns a dedicated staff member to field questions and provide updates at any time
Failing to integrate RCM across the healthcare organization

Define responsibilities for your internal team and the outsourced partner

Establish a dashboard to track revenue cycle KPIs and monitor any issues

Ensure all leaders across the organization understand how their role intersects with RCM

Lack of transparency Articulate your need for transparency to the vendor only select partners that provide reporting as often as you want
Miscommunication about expectations

Clearly articulate the goals and expectations to your outsourced partner

Validate that your potential partner has the necessary experience

Include SLAs and termination language in the contract

Difficult transition from in-house to outsourced team

Create a detailed transition plan with critical milestones

Establish a team dedicated to ensuring the transition goes smoothly

Fear that your outsourced partner will repeat a prior bad experience

Validate your partner and ensure they meet all your needs

Contact references and past clients of your potential partner

Consider paying for higher-quality RCM outsourcing

Signs That You Need to Outsource Your RCM

Signs that you should outsource your RCM include reduced revenue, failure to achieve industry KPIs and high staff turnover. Frustrated patients and a high denial rate are two other signs that might indicate a weak RCM process.

Here's a fuller list of signs that you should outsource your RCM:

  • Failing to achieve "best practice metrics"
    According to Rosenberg, you can assess certain RCM key performance indicators (KPIs) to determine if your RCM is struggling alone or in multiple stages.

    The following metrics may indicate a weak RCM that could benefit from outsourcing.

    • Accounts Receivable (A/R) over 90 days comprises more than 40% of the total A/R.

    • Days in A/R surpass 50.

    • Net collections ratio falls below 96%.

    • Denials or rejections are notably high (exceeding 4%).

    • Unresolved A/R extends beyond 250 days.

    • The total cost to collect exceeds 8%.

  • High turnover of RCM staff
    Rosenberg says that a consistent churn of RCM management or employees indicates that your in-house team may not be up to par. Managing staff is time-consuming, and when a key member of your internal RCM team departs, it can disrupt the entire workflow. Consider outsourcing if this trend persists.

  • Lower revenue, ineffective billing, reduced collections performance
    If your revenue is declining, you probably have an RCM issue. Identifying the problem can be challenging, but an RCM expert can pinpoint the issue and offer a solution.

  • Frustrated providers, managers, or investors
    You may have operational challenges if providers, managers, or investors consistently express frustration, even if not specifically related to RCM. Outsourcing RCM could be beneficial in such cases, as it enables a focus on revenue processes.

  • Patients complain of lower-quality care or difficulty in making payments or appointments
    You likely have operational problems if patients consistently complain about lower-quality care, difficulty in making payments, or challenges scheduling appointments. Outsourcing RCM can help address these issues by improving financial processes, enhancing patient experience, and streamlining administrative tasks.

  • Uncoordinated RCM
    "Any fragmentation and lack of integration of the RCM cycle indicates an issue,” says Rosenberg. For example, if your credentialing, coding, providers, front-end, back-end and payers are consistently uncoordinated, it could signal a need for some outside help."

    Signs of poor integration include delays, errors, or inefficiencies in billing and reimbursement. Monitoring the overall flow and communication between these components can help determine if your RCM needs better coordination.

Questions to Ask When Outsourcing RCM

It’s essential to ask the right questions when choosing an RCM partner. For example, consider their experience, expertise, and technology. Ensure they use a fair pricing structure and are committed to continually improving your RCM.

“You must validate your outsourced partner,” Bala says. “You don’t just want to give anyone the keys and call it good. Instead, ask them a lot of questions about their experience, their past results, their processes, and more.”

Bala also suggests contacting some of their clients to validate how the company works and performs.

Here are key questions to ask a potential RCM partner:

  • Expertise, experience, and culture
    Understanding a vendor's experience and expertise is the first place to start. You'll want to know how long they've been in the business and how much experience they have working with healthcare organizations similar in size or specialty to yours.

    Also, if you outsource RCM, your vendor will interact with patients. It's important to ensure they'll uphold the same standard of patient experience you value.

    Finally, you'll want to evaluate how your vendor manages their staff. You need to ensure they all have the right accreditations and certifications, and it’s always best if they are vendor employees. All this information will help you determine if your vendor can meet your expectations.

    Here are specific questions:

    • How long have you been providing RCM services, and what specific services do you offer?

    • Are you a member of any associations like the Healthcare Business Management Association (HBMA)?

    • Who are your current clients? Can you provide us with references we can contact and any reviews?

    • What is your experience with healthcare providers like our organization?

    • Can you provide specific case studies that show how you helped healthcare providers like us improve their RCM?

    • How do you stay up to date with regulations and payer changes?

    • Are you prepared to follow up with our patients in the same manner and tone we use? How can we be sure our patients will be happy with their interactions and experience?

    • Do you provide a dedicated account manager that will be dedicated to our account?

  • Technology
    RCM vendors usually bring their own systems and software

    • Do you provide us with full access to your software?

    • Is your system easy to use? How long will it take my staff to learn it?

    • Does your technology integrate with our existing EHR and EMR systems?

    • Does your technology include important tools that patients appreciate, like appointment reminders or patient portals?

  • Access
    You might be afraid to outsource RCM because you will lose some control. Get peace of mind by asking these types of questions:

    • Will you provide full transparency to all the records?

    • How much will my team have access to? How will we access and monitor the RCM data?

    • Will you provide regular reports and updates on the RCM performance?

    • Do you provide weekly calls to update us on our status and any issues?

    • Will there be a representative we can contact at any time to ask questions?

  • Denial management and coding

    • What is your denial management process?

    • What is your average denial rate? What percentage of denials do you successfully appeal?

    • Do your team members have medical coding credentials?

    • How do you reduce coding errors?

  • Reporting and analytics

    • Which KPIs do you track? How do you ensure that you are meeting our goals and setting us up to improve continually?

    • What kinds of reports can you generate? Do they include forecasted revenue and expenses?

  • Pricing structure

    • What is your pricing model? For example, do you utilize a pay-per-use, subscription model, or percentage of revenue? (Pro tip: Choose someone with a percentage-based fee or a flat fee).

    • Do you charge setup fees?

    • How long is your contract?

    • How do you try to reduce costs?

    • Do you charge us for the technology on top of your service offering, or is the technology included? Will you train us in the technology if our relationship ends?

  • Partnership goals

    Before asking these questions, make sure you understand what goals you hope to accomplish by outsourcing. For example, are you looking for a vendor to handle your RCM process end-to-end permanently? Are you just looking to outsource specific targets? Do you want your vendor to help you become self-sufficient and train staff?

    With a firm understanding of your expectations, ask your potential partner these questions:

    • Do you want to outsource our RCM permanently, or do you want to collaborate to help us resolve our issues and train our internal team to become self-sufficient?

    • Will you be able to scale with us if we grow?

Download our cheat sheet that includes essential questions to assess potential vendors

Best Practices for Outsourcing RCM by Stage

RCM involves five key stages: pre-service, service, billing, payment, and post-payment. Many providers opt to outsource specific stages. Follow best practices particular to each stage to make sure you select the right outsourcing partner.

All five stages are crucial for financial management. “It’s reasonable for a healthcare organization to outsource certain large categories of the RCM process,” Rosenberg says.

Bala agrees. “People are apprehensive about outsourcing to begin with,” he explains. “They don’t want to just hand over the keys on day one. A common way to start is by outsourcing one area, like pre-billing, coding, denials, or whatever aspect they’re having the most trouble with. Then, if things go well and the company enjoys how it works and is pleased with the results, they’ll give more responsibility to the vendor until they’re ready to outsource the entire cycle.”

Bala also says outsourcing by stage is a great way for a healthcare provider to transition slowly from an in-house team. “If a healthcare practice has a team of five people managing their RCM and decide to fully outsource their billing cycle, they’ll have to either find new roles for these individuals or let them go,” he explains. “However, if they outsource by stage, they can just choose not to recruit new people as staff members leave. Depending on the level of engagement, they’ll have a few people to coordinate with the billing company.”

Here are RCM stage descriptions and the best practices for each stage:

  1. Pre-service: Pre-service RCM involves activities that happen before the patient receives services. These include patient registration, insurance eligibility verification, and obtaining necessary medical authorizations and pre-certifications. Best practices include:

    • Automated eligibility check:
      Look for an expert who can automate insurance prior authorization and eligibility. Automated systems will save time, reduce costs, and increase accuracy.

    • Integration with existing systems:

      Ensure the partner can also automate authorization requests for specialist referrals and procedures.

      Try their scheduling and registration technology, and make sure it works well for your front desk staff. Ensure it integrates with your existing systems.

  2. Service: The service stage of RCM covers everything related to delivering healthcare services. This includes medical coding and ensuring compliance with healthcare regulations and guidelines. Best practices are:

    • Ensure that your partner is an expert in medical coding.

    • Verify that the partner adheres to all relevant regulations and guidelines, like HIPAA.

  3. Billing: In the billing stage, the RCM team prepares and submits claims to insurance providers. Managing denied claims also falls under the billing stage. Best practices include:

    • Claims scrubbing and submission:
      If you want to outsource billing, Rosenberg recommends ensuring your partner has a process for claims scrubbing and submissions. "They should use technology and human resources to review claims for payer and clearinghouse rules."

    • Automated billing and coding:

      Select a partner that uses advanced RPA and AI tools for billing and coding. They should use AI predictive software to flag problematic claims for human review before being submitted.

    • Payment posting:

      Good partners will have a system to ensure accurate bills before the patient receives them. This involves using software to identify potential errors in the final bill.

    • Denial management:

      Ensure that your outsourcing partner has a robust system for tracking, appealing, and preventing denials. Ensure they have a proven track record for reducing their clients' denial rate to 2% or less.

  4. Payment: The payment stage focuses on processing payments made to the provider from an insurance provider, patient, or other payer. It involves payment posting and account reconciliation. Best practices include:

    • Account reconciliation:
      Your partner should regularly check that the accounting system and the payment are in sync.

    • Contractual analysis:
      Does the outsourcing partner review the contracts with payers and the rates to ensure they get the best contract terms and rates?

  5. Post-payment: In the final RCM stage, post-payment, the RCM team manages any outstanding accounts and monitors financial performance with relevant KPIs. Best practices include:

    • A/R management:
      Seek a partner with a strong ability to manage accounts receivable, ensure timely collection of payments, and automatically follow up with overdue payments. Rosenberg says this includes "EOB posting and following up on payer rejections for in-network and out-of-network providers."

      Your outsourced partner in this stage should be accountable for A/R performance metrics, like days in A/R and the net collection rate (NCR).

    • Payment posting:
      Make sure your partner understands they are accountable for timely and accurate payment posting and bank reconciliations. This includes being responsible for posting ERA payments, checking payments, and researching unidentified payments.

      With insurance payment done, this stage also involves patient invoicing. "The partner will be accountable for creating accurate patient accounts with clear identification of transactions, creating and sending patient invoices, and researching patient invoice inquiries," Rosenberg says.

    • Analytics and reporting:
      Your partner should have robust reporting and analytics capabilities, especially with RCM KPIs. Important ones are the denial rate, days in A/R, and clean claims rate. The best partners should strive to improve the RCM process continually.

Outsourcing Revenue Cycle Management Success Stories

Many success stories show how outsourcing revenue cycle management can improve a healthcare provider’s finances and operations. For example, one hospital reduced denials and increased revenue. Another clinic boosted cash flow and improved patient care.

The benefits of RCM aren’t just theoretical. Healthcare providers that find the right RCM partner can expect to experience real, tangible increases in revenue, reductions in denials, and improved operations.

Here are three real-world success stories from Plutus Health:

  • Mid-sized hospital reduces denials and increases revenue
    A mid-sized hospital grappled with various RCM challenges, struggling to adapt to new coding guidelines and facing staffing shortages. As denials mounted, the hospital turned to Plutus Health for help. Plutus provided certified coding professionals adept at handling the specialized outpatient, inpatient, and ICD-10 coding intricacies that had posed difficulties.

    By entrusting these RCM concerns to a team of experts, the hospital experienced a boost in cash flow and a significant drop in denial rates. In just five months, they achieved an impressive 98% claim reimbursement rate and a 10% rise in revenue. Most notably, coding denials were reduced to under 2%, and coding quality exceeded 95%. RCM outsourcing allowed Plutus to target and address their specific issues, leading to comprehensive benefits across the hospital.

  • Urgent-care clinic revamps its RCM
    An urgent-care facility in Dallas was dealing with a limited billing department that couldn't meet the clinic's complex RCM demands. As a result, the facility's cash flow suffered, with payments stuck in accounts receivable for more than two months at a time. To improve their RCM and cash flow, the clinic outsourced all their RCM operations to Plutus.

    After proposing a specific, cost-effective plan that alleviated the client’s concerns about high initial expenses, Plutus got to work. They assessed the clinic’s existing procedures and created a plan to ensure swift and precise bill posting. They leveraged robotic processing automation (RPA), and their billing specialists collaborated with the clinic’s accounts receivable team. Together, they created best practices and strategies for revising claims.

    After just one month, the clinic embraced end-to-end RCM management. Within six months, they cut their average days in A/R from 72 to 33 days. This dramatic improvement in cash flow allowed them to redirect their focus toward patient care while Plutus managed their RCM.

  • Multi-facility urology ambulatory surgical center (ASC) dramatically improves A/R
    Plutus Health addressed the revenue challenges of a multi-facility urology ASC struggling with a significant A/R backlog, exacerbated by the impact of the COVID-19 pandemic. The ASC faced a complex situation: 95% of their outstanding invoices were over a year old, and payers denied 45% of their A/R claims.

    Plutus Health managed an experienced coding and billing team to strategically appeal various denial categories, segregate claims, and rigorously follow up with outstanding invoices. As a result, Plutus helped the ASR successfully generate $500,000 in revenue, clean the A/R inventory within three months, and collect $150,000 from the A/R they had considered dead.

Efficient Revenue Cycle and Denial Management

Plutus combines top technology with the best healthcare talent in the industry. Healthcare organizations of all sizes trust Plutus to handle their revenue cycle management so they can stay focused on patient care.  

With over 15 years of experience serving more than 800 healthcare providers, Plutus has the experience to handle any organization’s RCM. With a customized approach tailored to your needs, Plutus collaborates closely with our clients to ensure top-tier service that exceeds expectations.

With a unique, tech-driven focus, Plutus brings proprietary software to the table that other companies don’t. We use RPA, AI, and machine learning approaches to optimize processes that save you money, improve the patient experience, and smooth out your RCM. Alongside our team of healthcare experts, we can handle any RCM problem.

Partner with Plutus and watch your denials plummet while your patient satisfaction and revenue grow.

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Thomas John, CEO of Plutus Health

Thomas John has 30+ years of experience in healthcare RCM and IT. He is the founder and CEO of Plutus Health Inc., one of the biggest healthcare RCM companies in the US. Thomas has comprehensive knowledge of AI-driven practice management and billing software. He believes in providing an end-to-end solution for revenue cycle and practice management.

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