Director of Revenue Cycle, XIFIN
Senior Customer Service & Account Manager of MDx, XIFIN
Several factors are driving the growth of independent diagnostic testing facilities (IDTFs). For example, 80% of seniors, ages 65 and higher, have at least one chronic disease, and 77% have at least two, requiring disease monitoring and routine testing to manage care. At the same time, the number of senior Americans is projected to nearly double from 52 million in 2018 to 95 million by 2060. This suggests that volumes for various patient monitoring specialties will increase to try to meet this exploding demand.
Health Advances, a healthcare consultancy researched the remote patient monitoring and IDTF segment of the healthcare industry and found that payors are increasing their scrutiny, and their coverage policies are becoming more restrictive. More patients are enrolled in high-deductible plans, leading to higher patient responsibility. The study also found merger or acquisition activities are increasing.
- Timely identification of unpaid or underpaid claims
- Rules-based workflow to manage payor requirements
- Exception processing for denials with payor-specific appeals requests
- Analytics for more accurate accounts receivable (AR) and revenue forecasting
Many companies in the IDFT business fail to recognize just how important and complex the RCM process is and how significant the impact is on finances, cost, and valuation. It is essential for IDTFs to understand claim processing, billing, and the payment collection process, as well as where things go wrong or to hire a specialist firm that has expertise in these areas.
Strategy for Improving Valuation: Moving Beyond Billing ― Adopting a Patient-to-Cash Revenue Cycle Management Approach
Revenue cycle management is a term that many healthcare technology vendors use, but its meaning can vary substantially between technology providers. For some healthcare tech companies, it can mean as little as the process of submitting a claim. However, true RCM goes far beyond this. RCM is the process of managing the administrative and clinical functions associated with claims processing, payment, and revenue generation, including the identification, management, and collection of patient service revenue. Moving from a traditional billing focus and adopting a patient-to-cash RCM approach is one of the best mechanisms to improve valuation.
The RCM process starts with a patient encounter. Even before the first patient encounter however, IDTF leadership teams must consider pricing and payment strategies. Regarding payment strategies, things that need to be considered include:
Importance of Payor Contracts
Processing services as “out-of-network” typically leads to large variances in reimbursement rates and high patient responsibility amounts. This makes physicians wary, and thus both physician and patient adoption of a novel product or service is a far slower and more difficult path. To make matters worse, in many “out-of-network” situations, the payor reimburses the patient directly, and the IDTF is left to chase the payment from the patient.
Achieving “in-network” coverage with payors for new or differentiated diagnostics, technology, or other remote patient monitoring devices can provide significant advantages. Some of the benefits of gaining “in-network” status include:
When an IDTF achieves “in-network” coverage at a favorable rate, more payments by the payor, coupled with lower patient responsibility, removes one of the most challenging barriers to test or device adoption.
That said, moving from “client billing” to “payor/patient billing” adds a level of complexity that requires expertise in policy and program requirements beyond the scope of many IDTFs. It also requires as much automation as possible.
Look for part two of this blog series next week, which will focus on the life of a claim.