Expected Reimbursement - Maslow’s Hierarchy of Revenue Cycle Needs

To our healthcare colleagues and industry friends,

Maslow’s ‘Hierarchy of Needs’ outlines a pyramid of requirements that are essential to meet self-actualization – or to put it simply, the ability to be one’s best self. At the base of the pyramid are the physiological essentials for living – food, water, shelter. The second layer, physical and social security. Third, social acceptance. Fourth, internal and external respect. Only once each is achieved may one ascend to the next tier – ending with full potential realization.

While healthcare in Maslow’s time certainly looked different than healthcare in our world, the same principles can be applied to the modern revenue cycle. We are often dazzled by business intelligence dashboards, RPA, artificial intelligence, and the latest patient accounting system bolt-on, but what many fail to do is to evaluate whether the foundational elements are in place for revenue cycle self-actualization to be achieved.

At the base of the revenue cycle pyramid is an often-overlooked and under-appreciated core competency – expected reimbursement. It’s a feature that every executive knows is necessary, but often not a tool that receives the love and attention it deserves.

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Our Perspective

Accurate Expected Reimbursement is challenging to establish and even more challenging to maintain. Never-ending changes to agreements, amendments, fee schedules, payer policies, and new plans entering the marketplace make for an incredibly demanding environment ripe for error. However, investment in this base level of the pyramid is essential to a streamlined revenue cycle.

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Benefits

Productive Workflow

The most apparent benefit to trustworthy Expected Reimbursement is a productive workflow. When revenue cycle teams are faced with inaccurate Expected Reimbursement, unproductive account touches are at an all-time high – working accounts that don’t warrant additional revenue, pursuing payors for incorrect rates, and being bogged down by posting manual contractuals on false underpayments and credit balances can be detrimental to a team’s effectiveness. Resolving false variances through correcting contract management logic will immediately impact cash acceleration as workqueue volumes decrease and teams can value/prioritize accounts effectively.

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Vendor Spend

Inaccurate Expected Reimbursement can have unexpected impacts to vendor spend. Investing in Expected Reimbursement can reduce vendor spend by eliminating these common scenarios:

• Zero-Balance Vendors collecting on underpayments because internal revenue cycle teams did not know what payments should be expected – either because the rate wasn’t programmed or because there was an error in the contract pricing logic
• Outsourced AR Vendors/ Staff paid to resolve open AR – either to manually adjust incorrect balances that could’ve been addressed by the system or to spend valuable hours working accounts that don’t warrant additional reimbursement 

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Process Improvement & Reimbursement Maximization

Retrospective reviews of Expected Reimbursement through standard variance reports can bring light to systemic issues such as inaccurate registration, faulty registration/coverage logic, billing edit errors, coding issues, denial/remark programming, contract interpretation and even payor behavior for contracting negotiations.

When utilized properly, Expected Reimbursement will drive an efficient revenue cycle through encouraging productive touches, reducing vendor spend, and fostering process improvement. Furthermore, it can serve as a unifying metric for revenue cycle, finance, and contracting for AR Valuation and contract negotiation.

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Our Remedy

RemedyIQ has experience working nationally in almost every contract management/patient accounting system which allows us to identify their individual limitations and create customized solutions for supplementing their strengths. Below are some of our best practice recommendations:

• Standardized variance reports should be established and reviewed on a regular cadence by personnel that has the technological expertise to understand contract management programming, the revenue cycle expertise to diagnose variances (e.g., true/false variance), and the contracting expertise to interpret negotiated agreements; the results of these reviews should be fed back to teams responsible for updating the contract management system logic, providing feedback on upstream processes (e.g., registration errors) to revenue cycle teams, and communicating underpayment/denial/overpayment trends to respective teams and contracting

• Ensure a robust testing process with checks and balances is in place prior to new build (e.g., newly negotiated contract rates, amendments) moving to a production environment; should errors be identified in advance of production, the gain in productivity and reduction in re-work by revenue cycle teams is exponential

• Develop workflows and provide education to counteract contract management system pricing limitations (e.g., coordination of benefits, interim claims, unclassified drugs and biologicals), so that revenue is accurately identified and quantified; even the best contract management systems have limitations, but stop-gaps should be implemented to catch underpaid revenue before it goes to downstream vendors or is closed out in error

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Our clients have experienced millions of dollars in losses from Expected Reimbursement mismanagement – both from lost revenue going unnoticed and from paying downstream vendors to collect or post adjustments. Even the strongest internal controls for accuracy are not perfect and our best practice recommendations can help fill these gaps. RemedyIQ has partnered with our clients to tighten internal controls through identifying and correcting errors in expected reimbursement logic build and identifying process improvements across the revenue cycle (e.g., registration, coding, billing, denials) to maximize reimbursement.

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Our Summary

We are often drawn to the new shiny technology – business intelligence dashboards, RPA, and artificial intelligence. While there are incredible benefits to these tools, we urge you to first consider investing in your revenue cycle’s hierarchy of needs. 

Establishing and maintaining accurate Expected Reimbursement is at the base of the revenue cycle pyramid. It drives the second layer of workflow, informs the third layer of subject matter experts within finance, contracting, and revenue cycle, and lastly establishes a means of delivering the fourth layer – consistent feedback and process improvement. With these pyramid layers in place, your revenue cycle can achieve self-actualization, too. 

RemedyIQ has the expertise to help you find the Expected Reimbursement accuracy that your revenue cycle needs.

We hope that our perspective has given you food for thought. We are thankful for the opportunity to share our lessons learned with those that serve our communities. If you have any comments or questions, please do not hesitate to contact me at matthew.thomas@remedyiq.com.

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Truly yours,

Matthew Thomas

Partner | RemedyIQ

www.linkedin.com/in/mattheweugenethomas