B2B Payments

New Payments Models in Healthcare

Reimbursement is a tricky subject for many organizations to tackle and healthcare is no exception. The healthcare reimbursement environment is complex with multiple sets of payers and multiple sets of rules that are often changing. How can organizations involved in this field best work through the clogs in the system that prevent forward movement?

While providers have to be nibble and prepared to adjust to the changes in regulation and the impact of healthcare reform, CFOs are working quickly to understand the new payment models and the changes that surround the rollout of health insurance exchanges. With much of healthcare organizations revenue coming from the fee-for-service system, how can physicians and hospitals put themselves in a place where they can succeed in a reimbursement environment?


Healthcare executives need to take a step back and look at what the factors are that are impacting the professional revenue cycle and ways that they can implement organizational models that create efficiencies in billing operations and claim management.


Health care consultants believe that if the professional revenue cycle is not managed effectively, billing costs will rise, collection rates will drop, and accounts receivable (A/R) will increase to the point that the value of the acquisition is lost.”


As the structure of providers is changing and hospitals are acquiring or developing affiliations with smaller, independent practices, it is especially important that organizations understand the full healthcare revenue and reimbursement cycle.


There many billing models for this vertical, each with their own set of advantages and disadvantages:


  • Centralized billing model -the majority of billing functions are completed in a central business office (CBO). Advantages are economies of scale, consistency, dedicated expertise, standardized reporting and monitoring, and opportunities for enhanced IT systems/resources. Disadvantages are increased physician billing and response lag, higher billing cost, potential for “not my job” mindset among frontend staff.
  • Decentralized billing model - the majority of billing functions are completed/managed at the site of service. Advantages are it allows organizations to have site-level control, close relationships, and prompt resolution of physician-driven errors. Disadvantages it can lead to disparate standards and processes as well as staffing inefficiencies.
  • Outsourced model –where functional areas (backend functions) are managed by a third party, so the organization can focus on its core competencies. Disadvantages are that the third parties are not as likely to “care” as much as much for the patients and the billing services themselves.
  • Hybrid  (e.g., coding, charge capture/entry, co-pay posting) gives organizations a mix of all models. Disadvantages is that it does require additional training and the implementation of reporting/control tools.


The healthcare organizations that are most successful in managing their revenue cycle are those that have access to the overall picture and ensure that their system consists of the following parts


  • A scalable, coordinated, robust practice management system.
  • Dedicated and well-trained staff to support professional fee billing.
  • Shared accountability between the front- and back-end.
  • Consistent, well-documented, and properly communicated policies, procedures, and performance expectations.
  • Effective management reporting around relevant performance metrics.


“Actively reviewing the revenue cycle of your clinical practice will identify opportunities for cash improvement, cost reduction, and increased margins, regardless of whether billing functions are centrally maintained,” says Colton.





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