2015 a year of changes in revenue cycle with population health, ICD-10

Population-based payments will make the new year interesting for those working in hospital revenue cycle. Add in the uncertainty surrounding ICD-10 implementation and financial managers have much to focus on in 2015.

The New Year will be an interesting one for those working in the hospital revenue cycle as population-based payments roll out. Add in uncertainty surrounding implementation of ICD-10 and hospital financial managers have much to focus on in 2015.

“This year the Centers for Medicare and Medicaid Services expands bundling of payment for services,” said John Behn, Principal with Stroudwater Associates in Portland, Maine. “This causes historical payments to drop. In order for the financial leadership to really understand the monetary impact, it becomes critical to become really good at foundational revenue cycle management.”

That means chief financial officers and revenue cycle directors have to make sure good contract management systems are in place to get every dime they are entitled to. They also have to be able communicate these needs back to the departments, who have control over costs and payments.

[Also: What CFOs think about revenue cycle]

“The RCD has more pressure to explain, understand, and educate those at the departmental level,” he said. “Success is based less on the executive suite, and more on departments’ understanding, accountability and ownership of the changes. It is supercritical that if you haven’t already looked at changes and know what they mean, do so today.”

Another issue is movement of dollars from insurance companies to the insured under healthcare exchange plans. Large numbers of people with deductibles up to $12,000 can have major impact on the revenue cycle. The time it takes to bill a payer, have them send it back because the deductible hasn’t been met and then bill the patient lengthens the cycle. This doesn’t include additional lag before the check is written.

“Hospitals are going to have to do what physicians have been doing and beef up their front end encounter with the patient,” said Suzanne Lavin, president of Healthcare Revenue Logic in Norfolk, Virginia. “They need to communicate with the patient what their financial obligations are and do more upfront collections. CFOs will have to include this in their cash flow planning.”

[Webinar: Patient engagement as a revenue cycle issue]

Then there’s the 2015 implementation of ICD-10 in mid-October and what Behn calls the “ICD-10 Derangement Syndrome” that comes because no one knows for sure if it will be implemented or if Congress will put it off another year.

“It will be a bigger change on the hospital side because they now have to code based on procedure codes instead of revenue codes,” said Laurie DeSantis, vice-president of operations for HCL. “The unknowns are especially large because the payers haven’t released their payment policies yet. It is hard to say that even when the coding is correct how the payers will react.”

Behn says that whether or not ICD-10 comes, hospitals should still be doing the same things. Those that do revenue cycle management well should be in good shape.

“If ICD-10 comes or it doesn’t, this is still a reflection of the revenue cycle,” he said. “Most hospitals call it clinical documentation or quality improvement initiatives. Documentation by doctors and nurses is something you should be really good at anyway. If you are really good at it, ICD-10 becomes manageable.”