Despite the healthcare industry’s shift from volume-based reimbursement to more risk-bearing value-based care (VBC) payment models, few revenue cycle management (RCM) companies are developing solutions or selling work related to these new payment models, even though they are helping their clients transition to this new and potentially cannibalizing form of payment.
The Affordable Care Act (ACA) set in place a transition from legacy payment models that historically rewarded providers for the quantity of activities they performed to payment structures that reward better value, in terms of cost, quality and outcomes measures. According to a HealthLeaders Media survey, 72% of surveyed health executives said that the industry will switch from volume to value.1
The emerging shift to a new payment model could prove to be a major hurdle for RCM companies that currently generate revenue by processing claims retrospectively for a percentage of dollars collected. Consistent with VBC, many providers in the future will receive payments prior to service in the form of bundled reimbursements or per member, per month capitations. Additionally, retrospective submissions of quality metrics could allow for quality-linked cash bonuses or penalties.
“While the majority of reimbursement is still fee-for-service, the future is clearly value-based payment,” responded Allen Sugerman, Chief Financial Officer of Patient Accounts Services. “There is significant opportunity for a RCM company to develop the technology and expertise to be at the forefront of the RCM industry.”
In an effort to quantify where RCM companies stand with respect to assisting their clients with these changes, Intrepid’s Healthcare team surveyed RCM companies nationally and compiled the results. Nearly 25 RCM companies participated in the survey, responding to questions about how they might be preparing for or participating in the shift to VBC.
Less than 40% of RCM companies surveyed currently market any products for provider clients that would help them process capitated or bundled payments. Similarly, less than 30% of RCM vendors have assisted any provider clients with adjudicating shared savings programs, of which 60% had not yet processed any shared savings payments.
While the overwhelming majority of RCM companies are not preparing for the industry shift, 59% of RCM companies reported that they had sold services to a provider client to help them process capitated or bundled payments in response to client’s requests.
“While the majority of reimbursement is still fee-for-service, the future is clearly value-based payment,” responded Allen Sugerman, Chief Financial Officer of Patient Accounts Services. “There is significant opportunity for a RCM company to develop the technology and expertise to be at the forefront of the RCM industry.” While on the surface it may seem that RCM companies are falling behind the national trend towards VBC because they are not broadly marketing for capitated and bundled programs, the vast majority are still providing their clients with the necessary services to adapt to the evolving payment landscape.
The imminence of VBC payment models in healthcare will eventually require traditional RCM vendors to make a fundamental shift in their business or risk losing clients to more progressive competitors.
1 “Industry Survey 2014: Forging Healthcare’s New Financial Foundation.” HealthcareLeaders Media. January 2014.