In an effort to soften the payer/provider relationship, many large health insurers are rolling back on prior authorizations.

UnitedHealthcare (UHC) is the latest to cut back on its prior authorization list. 

Beginning last week, the health insurer removed hundreds of codes from its prior authorization list—mostly for genetic testing. More codes for radiology services are scheduled to be removed November 1.

Prior authorizations have long been a pain point for revenue cycle leaders, so while UHC says these removed codes account for tens of thousands of prior authorization requests a year, how much will it really help your operations?

Between the administrative time spent on submitting requests to the heap of denials they can accrue, any reduction in volume will likely speed up some revenue cycle processes—but as UHC is one payer in a large market, without a complete overhaul, this change is unlikely to make a huge dent in the overall revenue cycle prior authorization burden.

As leaders will likely still struggle with the administrative burden in 2024 and beyond, automation may be the key to lighten the workload. In fact, 39% of respondents in a recent survey said the biggest area of focus for their revenue cycle management automation in 2024 will be on prior authorization.

The decision for UHC to roll back prior authorizations comes on the heels of a substantial back-and-forth with gastrointestinal providers earlier this year.

UHC was set to require added prior authorizations for nearly half (47%) of gastrointestinal endoscopies starting June 1, saying more prior authorizations were needed to curb costs related to alleged overuse of some of these procedures by physicians.

But, after intense pushback from large medical associations, UHC pulled back.

When it comes to improving patient billing and payment processes, there's a bright future for vendor consolidation.

For years now, the revenue cycle has been seeing a boom in automation and technology, giving patients better access to patient portals, digital front doors, and payment options.

In fact, revenue cycle leaders are constantly in search of ways to better secure revenue by bolstering their technology and streamlining processes—especially when it comes to patient billing and payments.

While patients may be getting an information overload through their bills and statements, once this information is paired down and streamlined, the advancement of technology can make the patient financial experience easier and more transparent.

But at a time when technology in the billing and payment space is king and almost all executives that plan to purchase rev cycle technology are willing to consider "bolt-on" vendors, can there be too much of a good thing? Some leaders say yes—especially since every individual tech solution needs to be meticulously monitored and maintained.

The ultimate goal is to give the patient the ability to make payments and to interact with an organization on financial issues in any manner that they see fit, but is throwing new tech in at every step really the right decision?

Better yet, does your revenue cycle staff even have the bandwidth, or cash, to manage multiple vendors in one space?

Tonie Bayman, director of revenue recovery at Memorial Hermann Healthcare System, says that this is why the industry will likely see more vendor consolidation in the next five years as providers invest even more on all-encompassing options for improving patient payment processes.

“[Revenue cycle leaders] have a lot to manage now, and it’s better for them if they can pair down to one or two vendors,” she says. “There’s going to be more consolidation and newer technology that’s going to help manage some of this complexity,” says Bayman.

Joann Ferguson, vice president of revenue cycle at Henry Ford Health, told HealthLeaders that her advice to other health systems considering investing in technology is to do their due diligence and find the right fit for your organization—which for some, might not be yet another bolt-on option.

"Going for the quick fix or using last year’s technology because it's cheaper will only make change more painful in the future," Ferguson said. "That means finding a partner who understands rev cycle operations and AI, and what your team needs to be successful.”

Revenue cycle leaders need to keep up with ever-evolving technology while keeping staff workloads streamlined and budgets tight.

So, while technology is a necessity in the revenue cycle, it’s never been a set it and forget it option. Having a mixed-bag of bolt-on vendors in back end may seem like the right decision, but the complexity of vendor management may not be worth it for some—especially as the industry trends toward larger, all-encompassing options.

Is it possible to make technology management less complex while still improving the patient experience? Leaders are hopeful.

CFOs are considering expanding their outpatient footprint to ward off incessant inflation and inadequate payment rates.

CMS recently released its fiscal year (FY) 2024 inpatient prospective payment system (IPPS) final rule increasing payment rates by a net 3.1%. Overall, this will increase hospital payments by $2.2 billion compared to FY 2023.

The AHA, unsurprisingly, was quick to strike back at the “woefully inadequate” payment rate increase for FY 2024.

In a statement shared with the media, Ashley Thompson, AHA’s senior vice president for public policy analysis and development, said, “The AHA is deeply concerned with CMS’ woefully inadequate inpatient and long-term care hospital payment updates. The agency continues to finalize rate increases that are not commensurate with the near decades-high inflation and increased costs for labor, equipment, drugs and supplies that hospitals across the country are experiencing.”

While a $2.2 billion increase seems significant, hospitals are facing historic financial challenges, meaning CFOs are digging deep to find ways to ensure financial stability.

Most hospitals underperformed in June of this year, even as the median year-to-date operating margin index increased to 1.4%, compared to 0.7% in May.

These challenges highlight the fact that leaders can’t depend on payment rate increases to keep them afloat.

"This 'new normal' is an incredibly challenging environment for hospitals," Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said in a press release regarding its market analysis.

"It's time for hospital and health system leaders to begin developing and implementing a strategy for long-term sustainability, including expanding their outpatient footprint and re-evaluating where finite resources are being utilized," Swanson said.

And some CFOs have been planning just that.

The key to warding off challenges caused by rising inflation and poor reimbursement rates is reassessing any plans for growth and major capital, Matthew Arsenault, CFO at Baptist Health South Florida, recently told HealthLeaders.  

“We are in a community and a service area that is growing through people continuously moving into South Florida. So, we want to make sure that we provide care, but deciding which projects happen when and evaluating the cost of those projects and inflationary environment is something that we're constantly doing more of now, and more frequently than we have been historically because of the current inflationary environment,” he said.

When planning growth and investments in order to maintain financial stability, Arsenault said the system looks toward expanding outpatient footprints.

“We've always had a very large outpatient footprint throughout the community, and I think that really served us and our patients well. It's all about how you provide easy access to care for patients, whether it be in a virtual setting, whether it be in an outpatient clinic, or whether it be in an urgent care center,” he said.

Growing and increasing revenue is about continuing to build upon that footprint, Arsenault said. “I think that shift to outpatient is a big part of [financial stability].”

To ensure financial success, hospital leaders need to expand their outpatient footprint.

As the financial boost during the pandemic from federal relief funds has officially dried up, rural health and critical access hospitals are fighting to keep their doors open.

Losses on patient services, low financial reserves, rising labor costs, and increasing inflation are all contributing factors to the financial challenges facing these providers.

These challenges are leaving the CFOs of these smaller organizations to dig deep to find ways to ensure financial stability. One way to address this new normal? Leaders need to develop and implement a strategy to expand their outpatient footprint. Stacy Taylor, CFO at Nemaha County Hospital, a top 100 a critical access hospital located in Nebraska, has done just that.

The hospital, which sits in the south-east corner of Nebraska, is a small critical access hospital that sees about 2,000 ER patients a year. On top of this, roughly 25,000 outpatients come through the facility in a year.

If you’re a smaller, critical access hospital, you need to capitalize on those outpatient services, Taylor said.

“As a critical access hospital, one thing that we have done to maintain financial stability is to make ourselves true to the critical access model of reimbursement. We've stayed true to that outpatient business,” Taylor said.

This is why roughly 80% if Nemaha’s business is through outpatient services, Taylor says.

“We try to stay in the market by bringing in as many outpatient doctors that we can from the bigger cities so that they can see patients here. This way, patients are not driving an hour to get to the city, and we can see them here at the hospital in a rural setting,” Taylor said.

While shifting its focus to outpatient services has helped maintain Nemaha’s financial stability, it’s not without its challenges.

“As for other challenges, labor shortage has been the biggest challenge we've had. In the last couple of years, we've tried really hard to stay true to that core and work with hiring staff locally, but we did make the decision to start working with some contract agencies as far as getting some nursing staff coverage,” she says.

Keeping pace with the changing healthcare financial landscape is also key, Taylor says.

“We need to be able to adapt to changes that are coming to us,” Taylor said.

In order to save more money and streamline efficiency, Taylor made the decision to merge its medical records and business office into one space.

“When it comes to working with one another, we've got coders sitting right next to the billers so that way we can get our claims out the door a little more quickly,” she said.

“We've cross trained a lot of people within the business office. With having them cross trained, everyone knows how to answer the phone. Everyone knows how to cover our front desk. Everyone knows how to set up a patient and complete an admission for them. That way, we can help each other out when we were short staffed,” Taylor said.