<img src="//bat.bing.com/action/0?ti=5203022&amp;Ver=2" height="0" width="0" style="display:none; visibility: hidden;">

The Top Questions to Consider During RCM Vendor Selection

Today's healthcare leaders understand that they must consider outsourcing revenue cycle management to reduce spending and focus on value-based care initiatives. What kinds of revenue cycle management questions should healthcare organization leadership ask before signing a new RCM vendor contract? Here we will explore just that and share the top ten questions to consider during the RCM vendor selection process.

The global healthcare revenue cycle management outsourcing market is slated to increase considerably, with its valuation rising from just $11.7 billion in 2017 to $23 billion by the end of 2023, a new market report shows.

Healthcare revenue cycle management outsourcing is also becoming more attractive as healthcare organizations focus on ways to reduce costs and focus on value-based care initiatives. A recent Black Book survey states that 80 percent of hospitals said they were vetting or considering full revenue cycle management outsourcing by 2019. About 18 percent of the over 700 hospital leaders surveyed also reported already fully outsourcing their revenue cycle management functions.

"As hospitals look for ways to reduce costs, outsourcing is a valid strategy to achieve a financially healthier organization. Caution should be given with the common pitfalls in healthcare when vetting or considering outsourcing," said Doug Brown, President of Black Book Research LLC.

Finding the right company to partner with for revenue cycle management services requires thorough research and background checks but what else goes into vetting revenue cycle services?

Here we will explore some of the most helpful questions you can ask during the RCM vendor selection process.

The Common Buying Stages

Let's start by exploring some of the typical stages we experience when trying to find a solution to an existing problem:

  1. Determine Needs

  2. Explore Solutions

  3. Compare Vendors

  4. Sell Internally

  5. Approve / Purchase

Starting here helps us see that if we jump to stage 3 and begin exploring RCM solutions, without ever having identified our needs, the chances of choosing the wrong RCM vendor are high. Before you start the RCM vendor selection process, do some research to determine what your organization needs and identify the problems you are hoping to solve.

Once you have determined the needs of your organization, you'll typically begin exploring RCM solutions and then comparing those vendors. Asking the right questions during the exploratory stage can be a tremendous help once you start to compare revenue cycle services.

How do you define a right vs. a wrong question when exploring RCM vendors? While there aren't many "wrong" questions here, there is an abundance of the "right" questions that never get asked.

After speaking with our teams internally and some of our customers, we've concluded that the following questions are some of the top questions to ask during the vendor selection process for revenue cycle management services.

1. Why do some organizations not choose your solution?

Understanding why some organizations don't choose an RCM vendor can be just as useful as asking why some organizations do choose their solution. Depending on the answer, you might be able to reflect on your own situation and consider things you had not considered prior.

Consider the following example:

Question: Tell me about the last time you worked with an organization similar to ours that did not choose your solution? What happened?

Response #1: "They were concerned with their reputation in the community. Outsourcing to us meant eliminating certain positions. It wasn't something they were willing to move forward with."


Response #2: "The other service was a better fit for their needs. They were looking to keep some of the in-house billing staff that we had found were not performing at the level we expect of our employees. It wouldn't have been a partnership that allowed us to reach the results we typically accomplish for our clients."


Response #3: "We decided to not move forward with them. After analyzing the performance reports, we realized their revenue cycle was performing strong. Instead of recommending a complete overhaul of their operations, we provided onsite consulting."

  • Have you considered the effect of outsourcing on your organization's reputation in the community?

  • Are you looking for a hybrid RCM solution and could this hinder you reaching your performance goals?

  • Will the RCM vendor recognize if their service won't be an ideal fit for your organization?

 

Maybe you have already considered and addressed some or all of these matters. Regardless, ask the question. You may find the response to be a valuable insight into how the RCM vendor does business.

A partnership won't always be made up of conversations where you hear what you want to hear. Of course, there is a difference in being candid vs. creating conflict that is unhealthy. The key is to find an RCM vendor that isn't afraid of having difficult conversations or expressing a divergent viewpoint.

The process of gaining multiple perspectives on any issue is critical to identifying problems, designing interventions, and producing optimal solutions.

Not every revenue cycle management service is going to fit every healthcare organization.

Step number one of identifying your needs will be monumental in assisting you during your RCM vendor selection process.

2. Will we continue to have access to claim work, patient accounts, reporting and all revenue cycle activities in the practice management software?

Some revenue cycle vendors may perform all of the claim work and provide reports in your electronic health records software. Other RCM vendors may use another software for managing claims and reporting.

If the claims are managed in another software and reports are pulled in that software, will you have access to it? Will you be able to run reports on an as-needed basis?

A lack of transparency could result in your organization not having an accurate picture of the work being completed.

If you aren't able to run reports on the status of claims, you risk losing control. Having one central system that is accessible by your organization and your revenue cycle management vendor is ideal. If an RCM vendor is following another method for managing your RCM, request that your organization also have access to the platform in which they will be using.

3. Would you consider a performance-based fee structure?

Performance-based fee structures are showing up in more and more RCM vendor contracts. Why? We consider it a reflection of the RCM vendors that haven't delivered on their promises.

A performance-based fee structure results in credits and penalties based on the performance of the vendor. If repeated failures occur, the client might have the right to terminate the contract. If the revenue cycle management vendor continues to meet or exceed specific key performance indicators, they may be eligible for a credit or bonus payment.

Developing contract language that incentivizes the RCM vendor can lead to higher quality services over time and benefit the client by serving as a means to avoid or minimize risk.

4. Do you offer training during onboarding?

During onboarding, it's rather common for a medical billing service to provide onsite training. This training could range anywhere from EHR optimization, medical coding education, patient check-in best practices, or general revenue cycle management process/best practices training.

The onboarding phase can be stressful. Learn about the process each RCM vendor follows to ensure a successful and seamless transition onto their services.

5. Do you include any other additional services or products with your service?

Having a comprehensive list of the services and products included from each RCM vendor makes the comparison process much more manageable. Understanding what one vendor is willing to cover for your organization vs. another can also work in your favor when it comes time to negotiating contracts.

Be cautious of RCM vendors that might not include many add-on products or services. A lack of add-on products or services could be a limitation for your organization down the road. Partnering with an RCM vendor that can add on products and services with ease is a sign that the company is staying informed on industry changes, modern-day challenges, and the technology required to compete in the healthcare landscape.

6. Has your company sustained a loss in any of the last five years?

Request detailed information from each RCM vendor on the organization's financial position. A short-lived, less than stellar financial situation might not be a red flag but poor financial performance over many years can be a warning sign.

Failure to acknowledge RCM vendor growth or lack thereof may lead to researching other RCM vendors in the months or years ahead.

7. What is your denial management strategy?

The Medical Group Management Association (MGMA) found that approximately 65 percent of claim denials were never corrected and re-submitted to payers for reimbursement. When speaking to RCM vendors, ask if all of the claim denials will be worked according to their denial management strategy or if any claims denials will need to be worked by your practice.

Keep in mind, not all denials are created equal. For example, a claim with a value of $1,800 may be denied due to insufficient documentation to support payment for the services billed or specific documentation could be missing. This type of denial is going to require a bit more effort than others especially since it requires clinician involvement. 

Compare this scenario with a claim for $150 denied due to a data-entry error like a misspelled name. The denial for a misspelled name is going to be easier to overturn but the value of the claim is lesser than the $1,800 claim.

If your revenue cycle management service is going to overturn every $150 claim but avoid high dollar claims, how much of your cash flow will be at risk? Will your practice need to intervene in order to receive payment for those high dollar claims? These are questions to address during your RCM vendor search.

8. What is the percentage of claims denied on initial submission?

This question might seem like a no-brainer. However, it's a question designed to even further drive the conversation you have with RCM vendors about their process for managing claims. An Advisory Board study shows that 90 percent of claim denials are preventable. RCM vendors should be proactively preventing claim denials which would, in turn, lead to faster payments.

Measuring whether an RCM vendor is taking a proactive approach vs. a reactive approach means asking about the percentage of claims denied on initial submission, discussing the top reasons for these denials, and how the denials are being handled in order to prevent future instances.

Let's say, for example, an RCM vendor has a high denial rate on the first submission but claims to have a proactive denial management strategy. Requesting further details into the reason for a majority of these denials will expose whether denials are a reflection of ineffective client processes (patient demographics are incorrect) or if these denials reflect a poor claims management process (timely filing).

9. What percentage of denials are successfully appealed?

Next, gauge each RCM vendors denial resolution efficiency by requesting details on the percentage of denials that are appealed and the percentage of denials that are successfully appealed.

Since payers' have various timeframes in which a denial can be appealed, ranging anywhere from forty-five days to three hundred and sixty-five days, the appeals process must be highly organized to create a high success rate for overturning a denial. Appeal letter templates, denial tracking, and maintaining reports to prevent future denials are points of discussion to have with an RCM vendor.

If and when a denial occurs, you want to feel confident that the RCM service has a proven method to seek payment for the claim.

10. Who is responsible for reviewing performance reports with us and when will the review take place?

Your revenue cycle is only as effective as the person overseeing it. If you plan on outsourcing your revenue cycle management, find out who is responsible for the performance of your account. What is the role of this person? Will they meet with you weekly, bi-weekly, monthly, or quarterly? How can I get in touch with them if something comes up?

Clarity equals confidence. Understand the role of your primary contact with each RCM vendor, whom they report to, and their level of expertise in working with organizations similar to yours.

Additional questions to consider for performance reporting:

  • Will the reports delivered be generated from our EHR software?

  • How frequently will reports be delivered?

  • What type of reports will be provided?

  • What is the process for the data that is included in the reports?

11. Describe the spin down process and transition of accounts and data should we decide to leave your service.

Failing to prepare is preparing to fail. This question is going to open up a discussion that allows you to understand whether an RCM vendor will still have your best interest at heart even if you decide to terminate the partnership.

Having this discussion can prevent miscommunication should you decide to outsource to another RCM vendor or bring the billing in-house. Discuss the claims management process during this time and whether there will be any data migration or additional fees.

 

Cash Resources to Prepare for the Healthcare Business Impacts of COVID-19
Cash Resources to Prepare for the Healthcare Business Impacts of COVID-19
Telehealth and COVID-19 Billing and Coding Resources
Telehealth and COVID-19 Billing and Coding Resources
5 Common Reasons for Claim Denials
5 Common Reasons for Claim Denials
4 Common Mistakes that Lead to High Accounts Receivables
4 Common Mistakes that Lead to High Accounts Receivables
Building a Patient Centric Revenue Cycle
Building a Patient Centric Revenue Cycle

Join the 1,000+ healthcare professionals already receiving updates.