Preparing your revenue cycle for accountable care
Becoming an accountable care organization (ACO) requires healthcare organizations to approach the revenue cycle with an entirely new mindset. Costs will no longer just affect overall profitability, for example; they will be evaluated in conjunction with efficiency to determine reimbursement parameters. Healthcare enterprises need to be able to collect the correct financial and quality data, compile accurate reports and run predictive analytics in order to meet ACO objectives of better care at lower cost.
Few organizations, however, fully understand how to adequately assess the risks and benefits ACO participation might pose to their revenue cycles. The assessment involves a careful analysis of data capture methods, revenue cycle infrastructure, and available clinical and financial analytics tools to help maximize efficiency during the transition.
One of the biggest misconceptions about joining an ACO is that the revenue cycle will be easier to manage. In fact, just the opposite is true. The reality is that the complexity simply shifts. Not only do payers demand more granular data about the management and outcomes of patient populations, but providers and organizations need more sophisticated cost and performance information to be able to negotiate viable contracts. Because cost control becomes more crucial under risk-based contracts, organizations will need to rely more on integrated data systems and predictive analytics.
Data is the answer
The key difference between today’s healthcare environment and that of the 1990s, when capitated payment contracts first became popular, is a greater ability to capture, analyze and share data—especially clinical data. These capabilities will only become more powerful as electronic health record (EHR) and other healthcare IT systems mature.
At the end of 2011, 55 percent of physicians were practicing with an EHR system, according to the Centers for Disease Control and Prevention’s National Center for Health Statistics. Nearly 35 percent of hospitals also had adopted an EHR, according to a survey from the Office of the National Coordinator for Health Information Technology and the American Hospital Association.
EHR systems make the discrete capture of large amounts of patient data possible. By applying the appropriate analytics tools to discrete data, organizations can measure and monitor the costs and outcomes that directly impact compensation within the ACO. Likewise, when fully integrated with a practice or enterprise management system, organizations can pinpoint and predict how much it costs to treat certain patient populations and how resources should be utilized. It is this broad, population-based analysis that is necessary to put organizations in a better position to evaluate ACO opportunities and performance.
Capture the right information
Before organizations can perform a risk-benefit analysis, clinical and financial leaders must determine whether they are capturing the right information. It is not just a matter of having the right technology; technology must be configured to capture the right information, with processes in place to use it correctly.
On the clinical side, CPT and ICD-9/10 codes submitted to payers must be accurately captured and aggregated for later analysis. This data can form the foundation for understanding current fee-for-service revenue—and future ACO revenue—for given patient populations. Once the revenue level is determined, organizations need to consider their costs to treat these patients. Other than wage expenses, what kind of materials and equipment are used for these patients? Are devices owned or leased? What kind of special testing is required?
With revenue and costs established, organizations can start to create forecasts, but must also consider clinical and business innovations arriving in the near future. For example, do not overlook new diagnostic equipment or medications arriving on the market that might significantly change costs or revenue.
Once an ACO contract is approved, comprehensive data capture and analysis must continue, with performance, revenue and costs measured on a weekly, monthly and quarterly basis. Results must be compared to revenue expectations and budget. From there, performance and cost concerns must be discussed and short- and long-term improvement goals established.
Collaboration is the name of the game
Data will continue to play an increasing role in the clinical and financial future of healthcare. Just as ACOs require a more collaborative approach to the use of clinical information, the same holds true for the revenue cycle. Healthcare organizations new to risk-based contracting and analysis will need to engage partners that can help them capture and use data in meaningful ways—not only to negotiate ACO contracts, but to successfully manage those contracts going forward.
Right now, organizations must focus on ensuring they have the right people, processes and technology in place to benefit from the redesign of healthcare reimbursement models. ACOs are rapidly forming. Understanding the financial decisions that need to be made and how technology can optimize revenue cycle efficiency will allow organizations to take advantage of ACO agreements while competitors remain at the starting gate.
Monte Sandler is Executive Vice President of NextGen RCM Services, a business unit of NextGen Healthcare, a provider of healthcare information systems and connectivity solutions.
