The Changing Role of Revenue Cycle Leaders in a Value-Based World

As quality-driven reimbursement becomes more of a reality, organizations are ramping up their efforts to address new payment models. Senior revenue cycle leaders play a critical part in this transition as they are called on to cultivate payer relationships, leverage data analytics, and break down barriers between physician and hospital revenue streams. With this in mind, participants in this HFMA Executive Roundtable, sponsored by Adreima, share their thoughts about revenue cycle leaders' evolving role.

To set the stage, could you talk about your organization's involvement in value-based payment arrangements and how you see that changing in the next three to live years?

Jim Heffernan: The Massachusetts General Physicians Organization, as part of Partners Healthcare, has participated in Medicare's high-cost case management pilot, which is one of the agency's more successful value-based programs. We also have three commercial total-medical-expense contracts, one quality incentive agreement with a national carrier, and we manage a health benefit plan for employees as a quality-driven program. Although we see these types of arrangements expanding, we hope some significant changes occur to facilitate management. Right now, we have to duplicate fee-for-service processes along with any value-based contracts. For example, if we have a bundled payment, we usually have to attach a detailed fee-for-service claim in addition to the bundled payment requirements. This is not only time consuming but duplicative.

Kym Clift: Outside of the typical value-based purchasing arrangements with federal payers, Samaritan Health Services participates in commercial contracts that also have value-based components, such as quality incentives and some risk. Medicare is very deliberate about where they are going with innovative payment models, leading toward their goal of increasing the Medicare payments made through alternative payment models over the next several years. So, we continue to examine these models and actively work on internal operations to support the changing reimbursement landscape.

Paul Spencer: Froedtert Health participates in an ACO, Integrated Health Network (IHN), a clinically integrated network of seven major Wisconsin health systems, hospitals, and physicians. Through IHN, Froedtert Health has entered into some risk-based arrangements with payers-mostly gainsharing agreements in which we take on upside risk. In light of the Centers for Medicare and Medicaid Services (CMS)'s goal to have 80 percent of its payments be quality driven within the next five years, we all need to get on board with value-based care.

What do you think the revenue cycle leader's function will be in speeding the move to value-based care?

Spencer: New payment methodologies-bundled payments, provider-to-provider contracts, and increased patient payments-will stress the revenue cycle, resulting in significant challenges and opportunities. In this context, the revenue cycle leader's role will be to get the organization ready, and that involves new tools, new processes, and maybe a different structure that encourages more communication and collaboration.

Kelley Blair: Change is certainly afoot, and revenue cycle leaders have to structure their departments to adjust to evolving circumstances while still ensuring financial stability. In other words, they need to make sure their department continues to function and yet moves from transaction management to looking at how patients utilize the system. This is going to require a mind-set shift from running the most efficient revenue cycle operational processes to learning how to utilize data to assist the organization in delivering value and managing cost. An organization that is not ready to navigate both worlds will flounder.

Heffernan: Revenue cycle leaders can bring some practical tools to the table around administrative simplification and data reporting, and these can enable more consistency in the way organizations collect and communicate information. Moreover, revenue cycle executives have the most regular interactions with payers, so they have the relationships on which to build quality-driven arrangements.

Traditionally, revenue cycle leaders and payers came together annually for contract negotiations, but value-based arrangements will require more frequent and more collaborative relationships. How do you see revenue cycle leaders navigating these new dynamics?

Janice Ridling: To be successful, we need to be more proactive. Healthcare organizations can no longer wait until the contract is about to expire before engaging in conversations with payers. Although it's not practical to sit down with every payer, I do see the benefit in identifying those that could have a major impact and scheduling monthly meetings. This meeting would present a logical time to review strategic analytics and key performance indicators to identify trends, risks, problems, and opportunities.

Blair: In the past, revenue cycle leaders' involvement in contracting varied widely depending on the organization; however, moving forward, these leaders will have to become directly involved in negotiations to anticipate possible pitfalls of new contract arrangements and to fully assess the contract's nuances, populations, and anticipated revenue impact. Leaders need to fully understand contract modeling and the actuarial activity that typically happens. This is a new way of thinking for revenue cycle executives, and proactively spending time in the contracting space will be valuable in preparing for the future.

How will revenue leaders work with other clinical and financial stakeholders to craft acceptable payment models?

Spencer: Because value-based care is focused on rewarding clinical quality and performance, revenue cycle and managed care leaders will need to involve their clinical and quality peers in contracting discussions. These individuals will be essential to determining an organization's quality objectives and targets. For instance, if an organization wants to reduce réadmissions, it's not the revenue cycle or managed care executive who can say what is possible-it's the clinical leader. To make these new contracts work, revenue cycle, managed care, clinical, and quality leaders should come together and decide what a fair value-based care contract looks like. This group should also work closely with decision support to better understand the costs of care. Historically, there was enough margin in a commercial contract to cover costs. Then, the most common question focused on the amount of margin. In new era contracts, particularly narrow networks and risk-based arrangements, organizations will have to better understand their costs to know whether margins are appropriate and feasible.

Clift: There needs to be an established trust between clinical and financial leaders, and it is essential that we work to improve communication and visibility between departments and job functions. To start down this road, Samaritan has pulled together a multidisciplinary team of these different stakeholders to review the metrics we currently measure, see where and how we can improve, and prioritize them accordingly. This group represents an exciting new approach because it allows us to gauge performance through multiple lenses at the same time.

Heffernan: Educating stakeholders, especially physicians and doctors, will be key. As a first step, there is an opportunity for each group to understand each other's terminology. Plus, there are certain common areas- such as coding-where improvements can have a big impact both clinically and financially. If revenue cycle leaders work with clinicians to enhance coding, the organization as a whole can better reflect performance, which can improve care as well as optimize revenue- something that is essential for value-based care. Revenue cycle leaders can demonstrate the ROI of technology, such as natural language processing, that enables stronger coding, and this can help get clinicians more on board with new systems.

Patrick McDermott: Clinical documentation is another area in which revenue cycle leaders and clinicians can truly partner. Getting providers to accurately and thoroughly document the patient encounter to ensure the proper coding and subsequent payment is a day-today challenge, which will remain whether an organization is engaged in fee-for-service or quality-driven care. However, with value-based models, revenue leaders and physicians have a common motivation for improvement. Thus there is an opportunity for partnership to blossom.

When designing risk-based contracts, VPs of revenue cycle will be involved in efforts around contract modeling and strategic pricing, giving their input on risk tolerance. This will place demands on their abilities to analyze and discuss complex data. How do you see revenue cycle leaders meeting this challenge?

Ridling: They will be active in their use of data. When you think about it, revenue cycle leaders get a new report card every month, and they have to adapt on the fly. With value-based care, they will continue to adapt and help others in the organization respond to what's new. Any time you introduce a new payment strategy, you have to figure out what's working and what's not, and that responsibility will fall in part to revenue cycle leaders. Whether they take on a leadership role or that of a partner will depend on the organization's structure and goals.

Spencer: Most organizations have decision support and business intelligence teams with deep expertise in data analysis and management. I believe revenue cycle leaders should be active in using, understanding, and responding to data but defer the lead in this area to the experts. The type of data required to support valuebased care will be more complex, combining financial and clinical information. That said, the revenue cycle executive should actively participate and support data use for new models.

Clift: We are going to have to learn to use our data in a different way. We have to analyze and interpret it to forecast and plan. There is so much information in our claims data, and we must learn how to tap into that better. The same goes for the vast amount of information housed in the electronic medical record.

Heffernan: Let's not forget that revenue cycle leaders have access to probably the largest structured data source in the organization-the billing data. Much of the clinical data we use now has only recently gotten into electronic format. As such, revenue cycle leaders have more experience in dealing with large databases, so they could become resources for how to optimize massive data sets.

As new payment models cross the continuum, revenue cycle leaders will have to draw on extensive knowledge of physician practice and hospital revenue cycle dynamics. What elements of the physician practice revenue cycle will be particularly important for leaders to understand?

Clift: Having an appreciation of all aspects of the hospital and physician revenue cycle is crucial even outside of value-based care, and it will only gain importance as we shift to more risk-based models.

Ridling: Consolidation and standardization across the organization is imperative because that allows an entity to realize greater economies of scale and also ensure things are done appropriately and consistently throughout the organization. This can reduce waste, prevent duplication, and even save costs. As valuebased care takes hold, it will be even more important to have standardized processes and procedures to make sure the system measures patient outcomes consistently and communicates that information appropriately to the payer.

Spencer: I would say that it's not just the physician revenue cycle that hospital leaders need to be aware of but the post-acute revenue cycle as well, since bundled payment or any type of capitated reimbursement will be based on more holistic care. Revenue cycle leaders will have to recognize how these providers are paid and determine what equitable payment is.

Patient engagement will also be a key success factor for value-based care. What role do you see revenue cycle leaders playing in enhancing the patient experience and cultivating satisfaction?

McDermott: The front end of the revenue cycle-particularly scheduling and registration-will set the tone for the entire experience and drive patient loyalty with a hospital's brand. First impressions are going to mean a lot-everything from how courteous and competent the staff are to how the organization helps patients wayfind to how the facility communicates about patient financial responsibility. People will want to know what their costs are across the entire care continuum. Currently, patients are confused on what they owe for the various parts-the physician visit, hospital stay, therapy, etc. They want to know the cost for different elements, and more importantly they want to trust that the numbers are accurate.

Ridling: There are lots of things organizations can do right now to make the experience more consumer friendly. First, you want to make payment viable for the patient. We've had a loan program for a long time, and last year we changed it to offer zero interest, which was a huge patient satisfier. We also have certified counselors to help patients navigate the health insurance exchanges and identify possible insurance coverage or charity care. We even send thank you notes to patients. Our registrars pick patients each day and send them a note thanking them for visiting and expressing hope that the experience was a good one.

Blair: Building transparency with patients is not always easy. It has to be more than "this is complex and I'll do my best to help the patient understand it." Instead, leaders should be thinking "how can we make this not so complex for the patient-even if it requires extra work from us?" Leaders who embrace this new way of thinking are going to be successful because the new entrants in the healthcare market operate this way.

What are some strategies revenue cycle leaders can take to prepare for their new function?

Ridling: They must educate themselves on the different care models that are out there. It seems like there is a new one introduced every day, and it's incredibly important for revenue cycle leaders to appreciate the good and the bad of these arrangements and which ones might be appropriate given their organization's strategic goals.

Moreover, if revenue cycle leaders don't have strong analytic tools at their disposal to slice and dice information and pinpoint problems and opportunities, they will need to get them right away because those kinds of tools are critical to realizing value-based care.

Heffernan: It comes back to data analytics and data mining. Revenue cycle leaders have to go beyond collecting, reporting, and responding to past performance. They will have to become more proficient in data mining to anticipate problems and predict future success-things like trending to forecast patient volume and resource utilization to see if there will be growth or decline. Similarly, leaders will need to be able to mine data to determine sources of current and future patients so they know where to best allocate resources.

McDermott: Revenue cycle leaders should also make sure they understand both the hospital and physician revenue cycle. Those who are only focused on the hospital side should be taking a keen interest in their counterparts' work. Although some organizations aren't ready for full integration, even thinking about how to marry these sides and taking steps to make that happen is helpful. For instance, you could start small by experimenting with how to collaborate-perhaps sharing software or vendors or setting up pilot programs where the same staff execute a function and serve both the hospital and physician departments.

Spencer: The bottom line is that revenue cycle leaders historically haven't been required to think creatively about what's coming. To get ready for the new era, they should picture a world where almost all services are paid in a bundle or by a cap rate or through some other risk-based arrangement and then ask, can I administer those in a way that's replicable and scalable? Do I have the right contracts with payers? Do I have the right tools in place? The answers may or may not entail adding extra people. We need to adopt a value-based approach to the work we do, and find ways to support these new models with the resources we have rather than add costs to the system.

PARTICIPANTS IN THIS HFMA EXECUTIVE ROUNDTABLE

Kym Clift is vice president of revenue cycle for Samaritan Health Services in Corvallis, Ore.

Jim Heffernan is senior vice president, finance and treasurer for Massachusetts General Physicians Organization (MGPO) in Boston.

Patrick McDermott is vice president of revenue cycle for Sutter Health in Sacramento, Calif.

Janice Ridling is vice president of revenue management for Baptist Health System in Birmingham, Ala.

Paul Spencer is vice president, managed care and revenue cycle services for Froedtert Health in Milwaukee, Wis.

Kelley Blair is executive vice president for Adreima.