Don’t Let a Crisis Misguide Your Choice in Revenue Cycle Management Systems for Outreach or Outpatient Labs

Hospital outreach program leaders are very familiar with management from the hospital or health system proposing that the current electronic health record (EHR) system is sufficient to support the outreach and outpatient laboratory revenue cycle management (RCM) process. “It’ll save money,” they say. “They (the vendor) tell us that it works fine for outreach and outpatient lab claims,” they add. Of course, there is always pressure to save money and make cost-effective solutions. Even more so during the crisis of a pandemic.

The pandemic has pushed the importance of laboratory testing into the national spotlight. This is no time to “take one for the team.” While EHR vendor sales representatives will tell you that their system supports all of the RCM needs of outreach and outpatient lab claims, International Data Corporation (IDC) published a whitepaper that says otherwise. In the whitepaper, “Making a Case for Purpose-Built RCM: How Actionable Data and Lab Visibility Benefits Health Systems” IDC research director, Mutaz Shegewi outlines the many reasons that a laboratory-specific revenue cycle management (RCM) system is the best choice for hospital and health system outreach laboratories.

IDC found that hospital outreach laboratories, for example, require sophisticated, lab-specific capabilities, including business intelligence and connectivity that are not available through the enterprise billing and RCM system used by the rest of the hospital or health system. They also found that laboratories that adopt next-generation revenue cycle management capabilities can grow volume, while reducing costs, and providing a better experience for patients, physicians, and hospital administrators, alike.

What are outreach and outpatient labs giving up when forced or pressured into using the enterprise system for lab-specific claims? If you’re working with an enterprise system when it comes to billing and revenue cycle management (RCM), you’re likely lacking:

• An advanced rules engine with built-in compliance logic that virtually eliminates clerical errors, dramatically reduces denials and labor costs
• Timely system updates that incorporate payor edits and requirements
• Real-time visibility into errors, exceptions, and other operational metrics
• Full referential integrity
• The ability to quickly generate bulk appeals with all supporting documentation that can be transmitted to the payor right away

Enterprise EHR systems simply fail to support the unique RCM needs of outreach and outpatient labs. Most enterprise EHR systems also fail to optimize operational efficiency. In addition, trimming operating costs will not make up the shortfall in revenue from sub-optimal reimbursement. When an outreach program is working claims with an EHR system some things will fall through the cracks. That means missed revenue, or even worse, compliance issues.

RCM staff working with EHR systems are frequently instructed to concentrate on high dollar claims. Often resource constraints lead to policies to automatically write-off all claims below a certain dollar threshold, especially if a claim requires additional work due to missing or incorrect information. Since the average size of an outreach or outpatient claim is relatively low when compared against an in-patient procedure, chances are that a significant portion of your outreach business is being written off automatically. Not only does this burden the outreach lab with unusually high write-off rates, it is common for hospitals and health systems to incorrectly categorize these write-offs as revenue adjustments rather than bad debt, implying the write-offs were uncollectible. Lacking the appropriate RCM tools and solutions prohibits maximizing reimbursement for the outreach and outpatient testing performed. Other reasons for erroneous write-offs that occur when relying on an EHR system to handle lab claims are:

• The EHR system is not regularly updated with the latest payment rates for outpatient or outreach lab claims
• The system is unable to provide the detailed financial reporting needed to identify and pursue any underpayments

More than ever before, laboratory leaders expect to have a firm handle on revenue and require the tools to be able to identify when the lab is being chronically under-reimbursed. To run and grow a profitable outreach program you also need visibility into specific data required to maximize reimbursement and optimize operational RCM processes. Many EHR systems are unable to provide this visibility, which prevents real-time tracking of lab-specific key performance indicators (KPIs). Lab leaders need to understand the profitability of specific tests, payors, and clients to ensure growth is guided in the right direction, and EHR systems simply cannot provide this. 

A purpose-built RCM system is proven to more than pay for itself by increasing cash collections while reducing labor costs, write-offs, and compliance risk. In addition to the monetary benefits, a purpose-built RCM system helps the outreach and outpatient lab teams develop better data quality and machine learning-driven analytics fuel new insights, improve business process automation, optimize staff utilization, support better decision making, and increase forecast accuracy.

It’s never the best solution for an outreach program or outpatient lab to rely on an EHR system to optimize revenue cycle management, but it’s especially important during a crisis. To allow a hospital or health system to require that puts the lab at a significant disadvantage for the many reasons discussed above.

Register for our complimentary webinar on July 8th to hear from MercyOne lab leaders regarding their experience with XiFin and how they improved their revenues by 15%.

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