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Healthcare Industry Highlight: Revenue Cycle Management

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Healthcare Industry Highlight: Revenue Cycle Management Industry Highlight: Revenue Cycle Management Q1 2019 RCM Overview Intelligent, Automated Workflow Patient Access Claims Management RCM intelligently automates the complex tasks of the front and back office, optimizing: Case Management ✓ Patient encounters and consolidation of REVENUE records Charges & CYCLE ✓ Participation in value-based programs to Reimbursement generate maximum revenue ✓ Claims management, accounts receivable and claim resubmission Clinical ✓ Medical practice workflow, reducing Documentation redundant staff effort Medical Coding Increasing complexity in medical coding and rising healthcare costs make RCM an essential tool to maintain cash flow and stay solvent 1 RCM Market Size and Outlook The global RCM market is projected to grow to $65.2BN by 2025 from $23.6BN in 2016, a nine-year CAGR of 12.0% Value of Global RCM Market ($USD in BN) $80 Facing tight margins, time-consuming 60 regulation and enormous waste in the healthcare system, medical practices 40 are looking for adaptable solutions to streamline workflow, generating 20 significant drive in the RCM market 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 $23.6BN $16.5BN 40% Value of global RCM market in Estimated hospital spend on Percentage of RCM end-user market 2016 external RCM by 2020 constituted by physicians’ offices 12.0% $6.7BN 3-5% CAGR through 2025 Annual provider spend on Hospitals’ lost revenues due RCM to RCM errors 2 Source: CMS NHE Projections , Grandview Research, MicroMarketMonitor, HFMA Inefficiencies RCM Can Help Solve Key Industry Trends: RCM Market Segmented by Function Denial Management Claims and Denial Management accounts Declining Reimbursement for the largest share of the global RCM market and is also expected to Waste in HC Value Chain grow the fastest through Payment Claims/Denial 2025 Medical Coding Remittance Management Back Office Optimization Clinical Medical Billing Document Integration and Coding Up to 1 in 4 claims Improvement are denied Consumerization Patient Insurance and Value-Based Care Eligibility Check Most denials result from Automated RCM systems accurately technical or authorization issues that review and resolve rejected better integrated reimbursements, lowering the systems could easily likelihood of increased bad debt burden resolve 3 Source: ACHE, GAO, Markets and Markets Inefficiencies RCM Can Help Solve (cont.) Key Industry Trends: Claims management and ACHE has ranked Financial Challenges as the top concern for hospital CEOs three consecutive years Denial Management bad debt are among Declining Reimbursement providers’ greatest Financial Challenges challenges Medicaid Reducing Bad debt Waste in HC Value Chain Reimbursement Operating Costs Medical Coding RCM solutions solve providers’ Large medical bills... challenges related to declining Back Office Optimization reimbursement: Americans struggling with Integration ▪ Navigate changes in health benefit 70% medical debt are insured plan design Consumerization ▪ Understand complicated reimbursement models Don’t have savings Value-Based Care ▪ Update on changes to federally to cover a $1,000 mandated transaction standards 62% ER visit ▪ Identify and manage payor rules ▪ Collect payments from uninsured, Can’t meet the underinsured and high deductible higher range of out- health plan patients 63% of-pocket health cost limits …mean more bad debt 4 Source: ACHE, GAO Inefficiencies RCM Can Help Solve (cont.) Key Industry Trends: Denial Management $210BN $130BN $55BN Unnecessary Prevention Declining Reimbursement Services Inefficient Failures Delivery of Care $765BN Waste in HC Value Chain in wasted spending $105BN $190BN Medical Coding Inflated $75BN Administrative Costs Prices Fraud Back Office Optimization Integration Consumerization Little impact on quality improvement CMS recovery auditors have found & cost reduction despite a high-level payment inaccuracies Value-Based Care of spending $37BN $2.3BN In overpayment Spent by CMS incentivizing HCIT (2011-2017) $1.7MM In underpayment 5 Source: ACHE, HFMA, Market Research Future, Institute of Medicine Inefficiencies RCM Can Help Solve (cont.) The shift in medical coding from ICD-9 Key Industry Trends: to ICD-10 has increased the number of The shift from ICD-9 to ICD-10 in 2015 created costs Denial Management diagnoses and provider codes from amounting to: 18,000 to 155,000; however emerging Declining Reimbursement RCM solutions have the ability to $57K-$226K mitigate high costs for small firms Waste in HC Value Chain Demand for RCM technology has $213K-$825K increased exponentially with the for medium firms Medical Coding emergence of complex medical codes, and medical technology teams are expected to $2MM-$8MM Back Office Optimization grow by 15% by 2024 for large firms Integration Computer-assisted coding technology help Costs drivers include: identify correct codes for medical ▪ professionals, increasing accuracy and The new system required Consumerization productivity extensive training for employees to learn the ICD-10 codes Value-Based Care AI and machine learning technology help ▪ Highly manual code computers quickly identify manual coding revision process decreased errors upon entry, preventing costly claim IT departments’ denials productivity ▪ Incorrect coding caused by As medical coding continues to evolve, the changes led to RCM solutions can help hospitals avoid increased claim denials costly errors through new technologies and outsourced solutions 6 Source: Nachimson Advisors, Streamline Health, GENPACT Process and Staff Optimization Key Industry Trends: Denial Management 54% 33% Physicians report negative Turnover rate for medical Declining Reimbursement professional morale receptionists Waste in HC Value Chain 12 27% Medical Coding Hours each week spent on Time spent by physicians non-clinical paperwork in clinical encounters Back Office Optimization Integration 63% 49% Physicians say EHR has Time spent tending to EHR Consumerization detracted from efficiency & and desk work patient interaction Value-Based Care Time-consuming administrative challenges: ✓ Reporting to government quality performance programs ✓ Processing a practice’s incoming paper documents ✓ Managing payor rules ✓ Collecting payments from underinsured/high-deductible health plan patients ✓ Having a live operator answer patient phone calls after a practice closes for the day and communicating physician orders and referrals to others 7 Source: ACHE, HFMA, Market Research Future, SEC Demand Driver: Data Platform Integration Key Industry Trends: Collecting comprehensive data at the beginning of the revenue cycle makes the Denial Management claims process more efficient, reduces Hospitals that implement denials and reduces time replication of RCM systems enjoy a very Declining Reimbursement effort high ROI, but the integration of RCM Waste in HC Value Chain technology is very difficult Drive to integrate patient information from disparate systems: a comprehensive Medical Coding Due to the extensive medical record for each patient medical records held by Back Office Optimization providers, implementation of a new system requires an immense amount of Integration RCM will be a tool for data analytics as work well as for improving clinical and Consumerization financial outcomes As a result, RCM companies that can offer a Value-Based Care broad offering of services that minimize the Firms with a wide offering of population complexity of integration are often most attractive health tools, revenue cycle management to health care providers services, patient portals, dashboards and analytics will emerge as the next wave of health IT leaders 8 Source: Harvard Business Review Demand Driver: Patient Consumerization Key Industry Trends: Changes in regulation and policy are Patients are becoming leading patients to take a more active price-sensitive... Denial Management role in healthcare costs Large employers now offer a price Declining Reimbursement Demand for 77% transparency tool ▪ Real cost information upfront Waste in HC Value Chain ▪ Online portals for statements and payments Patients report using home remedies “Patients are more likely to pay if they instead of seeking 33% Medical Coding medical attention understand how much they will owe out of Back Office Optimization pocket upfront, reducing the amount of uncompensated care the system must swallow.” Forgoing care when - Sarah Knodel, VP of Revenue Cycle, sick or injured Integration Baylor Scott & White Health 15% because of cost Consumerization Covered Workers with a …and more likely to shop Deductible Higher than $1,000 Value-Based Care The number of Americans with an HSA Account 60% 51% is expected to skyrocket 50% 40% 34% 30% 17MM 50MM 20% 10% 0% 2012 2017 2014 2020 9 Source: Harris Williams, KFF Demand Driver: Move to Value-Based Care Key Industry Trends: Key RCM Role: Accurately determine Denial Management $260BN 57% how much revenue will result from value-based Declining Reimbursement Hospital payment rate sources cuts (2013-2022) 57% of physicians self- Anticipate that some Waste in HC Value Chain report at least some percentage of potential unfamiliarity with the revenue will not be Medical Coding Medicare Access and realized due to either Chip Reauthorization internal error or Act (“MACRA”) Back Office Optimization $415BN inaccurate payment Integration Total Fee-For-Service (“FFS”) rate cuts Practices that outperform under new Consumerization (2013-2022) models could see revenue increase by ~19%, whereas those that don’t could Value-Based Care see revenue fall by ~9%
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