Numerous regulatory changes and policy updates in 2023 compelled hospitals to enhance their revenue cycle management strategies. This comes at a time when health systems are facing diminishing margins, fluctuating labor needs, and escalating cost pressures. This article explores four primary factors influencing hospitals' financial stability and provides three strategies to face what lies ahead.
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In 2023, hospitals were increasingly focused on effectively managing their revenue cycles and updating chargemasters in response to ongoing policy changes, regulatory updates, and rising healthcare costs. The stakes were high as embattled hospitals sought to maintain financial stability amidst shrinking margins, fluctuating labor needs, and mounting cost pressures.
This environment led healthcare providers to work more earnestly to reduce claim delays and denials, capture accurate charges, and achieve compliant billing while staying informed about changes in medical codes, billing policies, and regulatory updates. Health systems also relied more on strategic partnerships and comprehensive technology solutions to meet evolving coding and billing guidelines as well as new requirements from federal lawmakers.
Meanwhile, four critical areas took priority in 2023 as health systems sought to streamline healthcare cost management, and they represent areas that all hospitals can target in 2024:
Based on a 2023 report by KLAS Research and Bain & Co, hospitals and health systems are prioritizing revenue cycle management (RCM) as their primary focus for IT spending due to financial challenges and thinning margins. According to the report, healthcare executives maintain that RCM and other areas offer clear, immediate returns on their investment (ROI).
Every year, healthcare organizations must grapple with the task of updating their billing and coding policies. In the past, providers and suppliers have faced significant challenges in accurately capturing charges due to new, more complex requirements. This has resulted in billing mistakes, payment delays, and an uptick in claim denials in recent years.
A well-executed RCM strategy that includes a comprehensive and up-to-date chargemaster, annual training for coders and billers, and updated policies and procedures has the potential to enhance revenue collection and streamline claims processes, ultimately contributing to financial stability. Consequently, providers are emphasizing RCM for the coming year and planning to allocate resources to applications that address specific subsegments crucial to billing and reimbursement, such as revenue integrity, charge capture, and medical necessity.
In 2023, providers had to stay abreast of several important changes related to revenue cycle management. These included the Centers for Medicare & Medicaid Services (CMS) decision to reverse 340B payment cuts in calendar year 2023, new Hospital Price Transparency requirements, and numerous updates to Current Procedural Terminology (CPT®) and Healthcare Common Procedure Code System (HCPCS) codes.
The implementation of updated coding guidelines for specific medical procedures, along with advancements in technology and medical treatments, made it crucial for providers to code all procedures accurately to ensure proper reimbursement.
Additionally, modifications in medical necessity guidelines required healthcare organizations to adhere to strict criteria when determining if a service or procedure is deemed necessary for patient care—a change aimed at reducing unnecessary services and improving overall cost-effectiveness in clinical settings.
Furthermore, revenue integrity remained a top priority as healthcare systems strived to minimize errors and maximize revenue capture. Many organizations invested in advanced software solutions that could automate the billing process, flagging potential inconsistencies or discrepancies before submission.
Among other notable federal regulations associated with revenue cycle management, CMS introduced new hospital price transparency requirements in the CY 2024 Outpatient Prospective Payment System (OPPS) Final Rule. These updates will be gradually implemented and encompass various requirements.
The requirements include the introduction of a CMS-mandated template, a stipulation for hospitals to provide an affirmation statement, a refinement of the requirements for publishing standard charge information, and the addition of new data elements.
CMS also unveiled substantial policy modifications and reimbursement updates in the Outpatient Prospective Payment System (OPPS) final rule. The OPPS Final Rule's significant provisions have far-reaching effects on healthcare cost management, charge capture policies, and how hospitals and their staff operate moving forward, including which outpatient services may require prior authorization.
Healthcare providers need efficient and effective revenue cycle management solutions in 2024 to streamline billing and collection processes and reduce errors and delays in reimbursement. Not only does this improve financial performance by increasing revenue, but it also helps to optimize cash flow.
An optimized revenue cycle management system enables accurate medical service coding during each patient encounter. This reduces the risk of claim denials or rejections due to coding errors or incomplete documentation. Given these factors, effective coordination among departments, patients, clinicians, and payers requires advanced technology and strict adherence to regulatory standards.
Health systems allocating resources to revenue cycle management in 2024 should consider the following strategies:
By embracing innovative tools and selecting dedicated partners, hospital billing departments can operate with greater transparency, strategic pricing, and consistent billing accuracy. As a result, health systems and providers can achieve financial stability through more precise reimbursement, improved operational efficiency, and vigilant regulatory compliance.
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