Understanding Every Dimension of Revenue Cycle Management Outsourcing

In the latest wave of challenges accompanying the shift to value-based care, creating high-touch patient experiences, and enabling virtual health, many providers find themselves navigating uncharted territory. As these challenges grow in number and complexity, Revenue Cycle Management (RCM) has become an easy target for outsourcing. In reality, however, the considerations that accompany the decision to outsource are multi-faceted and transcend the administrative and operational. Whether you are considering outsourcing your Revenue Cycle Management capability or have already done so, there are multiple factors, across providers, payors, and RCM vendors, that play into the success of the outsourcing decision.



Provider Nuances

If you are multi-state provider with many payors and a high degree of change, you have your work cut out for you.  It is not uncommon to have several hundred Managed Care Organizations in just one state.  Multiply that by the states in which you serve.  Each MCO has what can feel like capricious rules around timely filing, and requirements around submitting, correcting, resubmitting, and appealing claims.  And payors don’t always process claims correctly, even when compliance is met.  It can be extremely difficult, as a provider, to operate successfully in this environment.  A sophisticated RCM vendor, coupled with a strong internal QA function, is critical in a successful move to outsourcing.

A provider with a more static and confined RCM environment will have greater RCM vendor options to consider.  Maintaining diligence both before and after contracting is required for positive outsourcing results, irrespective of RCM characteristics.

RCM Vendor Considerations

While a production line setup may sound like the solution, recognize that the cookie cutter, one-size-fits-all approach won’t optimize results in today’s complex environment.    Because each MCO has significant freedom to establish its own claim handling and payment processing rules, intimate knowledge of every payor is required in merely attempting to productionize the process in compliance with individual payor requirements.  It appears that some RCM vendors are learning as they go with system development and operational tweaks, reactive to client issues and complaints.  Do you really want a vendor building operational capability on the fly with your revenue dollars at stake?

Common RCM vendor frustrations include:

  • High denial rates due to the RCM vendor’s generalized payor setup and operating processes that don’t comply with individual payor requirements, causing denials and mounting Accounts Receivables
  • An inability to access the client’s claims data due to vendor technology limitations and HIPAA concerns
  • Lack of visibility to the individual client’s revenue cycle.

Payor/Market Forces

Let’s face it – the payors are in the driver’s seat.  A cynical observer might suspect that the payors make it as difficult as possible to collect, in an effort to minimize provider payouts.   Regardless of intent, providers – despite their best efforts to jump through payor hoops—are often underpaid for healthcare services provided in good faith.  Even worse, with the low yields associated with government claims and the number of touchpoints associated with resolving denials, it can be a losing proposition to collect on low -dollar claims.

It’s not surprising that providers have said “enough” and are looking to offload their RCM function.   But in the desire to offload RCM problems, providers must recognize what’s at stake and the level of investment and setup work required to successfully outsource. Though possible with careful planning and execution, it is very difficult and costly to transition to a new vendor once an RCM vendor is operational.  Consequently, the best approaches are those which involve the right moves on the front-end.

Those providers that have pulled the trigger and are unhappy with the results have likely discovered the hard reality that everything is harder and takes longer to address when you forfeit control of key resources. Poorly constructed outsourcing contracts compound these challenges and hinder remediation efforts.   For example, one client had tight SLAs around dropping initial claims but missing SLAs around RCM vendor claim follow-ups.  Unfortunately, the client discovered this much too late.  The result was a significant, aged accounts receivable balance, missing timely filing windows and associated write-offs, and hiring additional resources to help remedy the situation—all at significant cost to the client.

Successful RCM outsourcing stems from a careful consideration and understanding of the key forces playing out across providers, payors, and RCM vendors. As the healthcare environment grows in complexity, so does the temptation to outsource RCM capabilities.  At the end of the day, providers should not view RCM as a quickly-outsourced administrative task. Ultimately, outsourcing should be handled as a key strategic decision, with results shaped by multiple stakeholders across an increasingly variable and complex healthcare landscape.