Next-Generation Revenue Cycle

Accelerating Cash Flow Under Risk-Based Contracts

Topics: Margin Performance, Finance, Billing and Collections, Revenue Cycle, Denials Management, Accounting, Health Policy, Market Trends, Strategy, Risk-Based Contracting

By reading this white paper, members will learn how to:

  • Adapt revenue cycle functions to new incentives
  • Structure clinical documentation improvement to support care management
  • Retool the front office to manage more complex collections, verification, and enrollment processes
  • Handle new exchange products and greater risk with new capabilities
  • Financial Leadership Council and Health Care Advisory Board members, log in to download the white paper.

Executive Summary

Adapt revenue cycle functions to new incentives

As coverage expansion by way of Medicaid and health insurance exchanges continues to roll out, leaders must not only change the way they approach care delivery but also the way they bill and collect for patient services.

Responding to these potentially disruptive developments will require progressive systems to reevaluate many of the clinical and administrative functions built for a fee-for-service environment. To prosper under reform, hospital revenue cycles will need to adapt over time to support care delivery on a budget and to manage the new complexities introduced by exchange-based products.

Three imperatives for optimizing revenue cycle performance under reform

Through our research, we've encountered a few progressive systems making return-motivated operational changes to the revenue cycle. As risk-based reimbursement and exchange-based products become more widespread, more providers will likely follow suit.

To optimize performance under reform, we recommend eight strategies targeting three critical areas of the revenue cycle.

Refocus documentation efforts to capture quality

As health systems continue to assume a greater volume of risk-based payments, clinical documentation improvement (CDI) will begin to shift from a revenue-enhancement mechanism to a function organized around capturing quality and managing high-risk patients. The most progressive systems actively structure CDI to support care management and standardize documentation patterns to capture payments tied to achieving certain quality thresholds.

Outfit front office for reform

Point-of-service collections, insurance verification, and insurance exchange eligibility screening and enrollment will become more common and more complex, inevitably making front-office capabilities and processes more critical to organizational success.

Update billing operations to handle risk and exchange products

Most revenue cycle best practices today are geared toward managing accounts receivable—billing, collecting, and managing denials and underpayments. But the transition to risk compels providers to also extend accounts payable capabilities and shift their approach to medical necessity denials—recognizing denials as valuable data sources for understanding the root causes of inappropriate utilization, rather than forgone revenue opportunities in need of appeal.

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Financial Leadership Council and Health Care Advisory Board members, log in to download the white paper. Not a member? Visit the Financial Leadership Council's website or contact us to learn more.