Expected Reimbursement - Maslow’s Hierarchy of Revenue Cycle Needs

Published in HFMA New Jersey Chapter Newsletter, Garden State FOCUS - Fall 2025, Vol 72, Num 1 | Author: Matthew Thomas, Partner, RemedyIQ‍

To Our Healthcare Colleagues & 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. While executives recognize its importance, expected reimbursement is often not prioritized or leveraged to its full potential – leaving what Maslow may have called, an “unstable foundation”.

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.

Benefits

When utilized effectively, 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, vendor management, and contract negotiation.

Drive 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 burdened 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.

Leverage Automation

In many modern patient accounting systems, Expected Reimbursement can unlock powerful automation capabilities that reduce manual intervention and streamline operations. For example, late charge billing can be automated to trigger only when reimbursement increases exceed a defined threshold – eliminating unnecessary touches and focusing staff efforts where they matter most. Additionally, in some systems, Expected Reimbursement directly feeds front-end patient estimates. The more reliable the reimbursement logic, the more trustworthy the patient estimates will be to ultimately drive improved point-of-service collections and patient financial transparency.

Increase Accountability

Expected Reimbursement isn’t just a financial tool – it’s a powerful mechanism for driving accountability across the revenue cycle ecosystem. When leveraged effectively, it becomes the shared source of truth for Finance, Contracting, and Revenue Cycle teams, aligning internal operations around a unified view of anticipated revenue. It also empowers health systems to hold external vendors accountable by measuring performance against accurate reimbursement expectations, ensuring that outsourced efforts are both efficient and justified. Additionally, Expected Reimbursement can feed real-time payer performance dashboards, providing visibility into whether negotiated rates are being realized and highlighting discrepancies that warrant attention. With all stakeholders operating from the same data foundation, transparency and accountability are no longer aspirational – they’re operational.

Decrease Vendor Spend

Inaccurate Expected Reimbursement can have unexpected impacts to vendor spend. Investing in Expected Reimbursement can reduce vendor spend by eliminating common scenarios of revenue leakage. For example, zero-balance vendors collecting on underpayments internal revenue cycle teams did not see or understand– either because the rate wasn’t programmed or because there was an error in the contract pricing logic. For those with outsourced AR vendors, contracts may include fees to manually adjust incorrect balances which could be automated through system actions or valuable vendor hours may be wasted working accounts that don’t warrant additional reimbursement.

Improve Processes & Maximize Reimbursement

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.

Challenges

While the benefits of accurate Expected Reimbursement are substantial, achieving and sustaining it is no small feat. Health systems face a trifecta of challenges that must be addressed to unlock its full potential. Without addressing foundational challenges, the pyramid remains unstable and cannot support higher-level functions like automation, accountability, and strategic insight.

Subject Matter Expertise

Programming Expected Reimbursement requires a unique blend of skills that spans both technical, legal, and operational domains. It’s not a task that can be owned solely by IT or Managed Care – instead, it demands professionals who understand contract language, reimbursement methodologies, system logic, and how decisions will impact revenue cycle workflows. These experts serve as the bridge between negotiated agreements, system configuration, and operational efficiency to ensure that reimbursement expectations are accurately translated into actionable logic. Without the right resources in place, even the most advanced systems will fall short of delivering reliable results.

Technology Limitations

Even industry-leading contract management systems have limitations. To counteract Expected Reimbursement system pricing limitations, workflows should be developed to provide education and safety-net processes to ensure revenue is accurately identified and quantified. Common technical limitations include coordination of benefits, interim claims, cost-based reimbursement, and unclassified drugs and biologicals. Creating stop-gaps for these shortcomings can help ensure underpaid revenue is captured before it goes to downstream vendors or is closed out in error.

Establishing Robust Controls

To ensure the integrity of Expected Reimbursement, health systems must implement both proactive and retrospective controls. Standardized variance reports should be reviewed regularly by cross-functional experts who understand contract logic, revenue cycle workflows, and payer agreements—feeding insights back into system updates and upstream process corrections. Additionally, a rigorous testing protocol must be in place before any new contract build or amendment goes live, with checks and balances designed to catch errors early. These controls not only safeguard accuracy but also reduce rework, accelerate productivity, and foster continuous improvement across the revenue cycle

Our Summary

We are often drawn to the latest innovations – 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. Just as individuals cannot reach self-actualization without meeting basic needs, health systems cannot achieve peak revenue cycle performance without a solid foundation of Expected Reimbursement.

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