Outsourcing Revenue Cycle Management — When to Call for Backup and What to Look For

Evolving trends, both external and internal, have significantly reshaped the revenue cycle for hospitals and health systems across the country. Major shifts toward patient payment responsibility and government plans have only served to drive up costs for providers, as more man-hours are dedicated to navigating increasingly detailed documentation, coding, and follow-up necessary for accurate claims processing. As a result of these shifts, hospitals continue to be faced with challenges from almost all aspects of the revenue cycle, from complex front-end operations and back-end account resolution.

This is not due to a lack of available solutions; healthcare-specific revenue cycle management methodologies and best practices have been around for decades, and there is a multitude of vendors available to assist hospitals in optimizing each step of the cycle, ranging from automated software to fully customized outsourcing solutions.

Rather, the sheer complexity and fluidity of the revenue cycle lead to hesitation and confusion at critical points in the decision-making process, specifically which aspects to outsource and when, what is contractually owed to them, the range of performance, and the steps involved in bringing on a new solution.

Front End or Back End Support?

The decision of which aspects of the revenue cycle to outsource has a lot to do with the size of your organization and the phase of growth it is in. Smaller, localized organizations without a robust billing pre-authorization system spend more of their time focused on front-end RCM, since the revenue cycle starts well before the patient even enters the hospital; claims submission, proper coding, and initial patient collections are all integral to maximizing revenue from the outset, and all of these are critical to the overall patient experience. As a result, many hospitals and healthcare systems may benefit more from front-end solutions like billing software upgrades or a review of their coding practices.

Larger healthcare organizations, on the other hand, tend to already have much of the front-end aspects of pre-authorization, screening, and patient billing systems already in place and struggle instead with back-end facets like denial management, eligibility detection, and data matching. In these cases, outsourcing RCM to a third party makes a lot of sense.

Level of Support

Back-end revenue cycle management is a complex process that requires an in-depth and thorough understanding of a hospital’s practices and procedures. This includes interpreting eligibility available across all payers, identifying and appropriately reacting to denials, determining billable services and analyzing all available patient information (service, payer, and medical records) to identify data anomalies. There is an element of customization necessary for any engagement, as no ready-made software solution can perfectly match the complexity of a hospital’s internal process.

Perhaps this sounds like an argument for keeping these tasks in-house, but the reality is that hospital resources are already stretched thin, and staff need to prioritize their time accordingly. The time administrative employees spend with the patient in front of them takes precedence and back-end tasks can fall into the “out of sight, out of mind” bucket, leaving collectible, earned revenue on the table.

These real-world issues require real-world solutions. That’s why, when it comes to partnering with a back-end eligibility detection specialist, it is important to remember that many software programs that can be very useful for front-end tasks, end up falling short when addressing back-end complexity. We may one day arrive at a time when artificial intelligence can out-think us (and indeed we are getting closer every day), but until then, smart people make the difference.

This makes the experience and background of their support team vital when assessing vendors. Companies such as Nemadji have teams with a deep understanding of the intricacies of the revenue cycle and can adapt to obstacles in a way software cannot. This experience also leads to an intimate working knowledge of governmental agencies such as Medicare and Medicaid, allowing them to adeptly navigate their policies and encourage positive outcomes.

Technology Matters

None of this is to say that software doesn’t matter. Indeed, the inner workings of a given company’s proprietary software can make or break the efficacy of the entire process, no matter how strong the team. Software must be dynamic, responsive, and customer-centric, designed to fit the needs of the client, not vice versa.

In addition to a team that makes all the necessary phone calls, talks to all the right people and finds the missing pieces, the ideal vendor should have complementary technology. A software program with a robust dataset is an invaluable tool, but the software is only as good as its data. Many healthcare databases can be incomplete or inaccurate, causing significant limitations when it comes to automated data matching, as accurate matching can still require labor intensive work that software can’t always resolve.

Cost Savings through Efficiency and Shared Risk

Taking such a meticulous approach to revenue cycle might sound slow and expensive, but this is not always the case. In fact, back-end revenue cycle management specialists with a solid appeals process, experience, and a strategy for overturning timely filing denials can save time by getting a head start on potential issues. This is especially important since the volume of authorization requests has risen significantly in the past decade, along with the demands of insurers for more detailed coding and explanations of medical necessity. The result of this additional oversight is a backlog of claims, with physicians and administrators spending an average of 16 hours per week on authorization requests alone.

A specialist trained in proper coding and denials management can notice trends and flag items before they time out, significantly reducing the time spent on such tasks. Nemadji takes it a step further than most, assisting in filing claims to the appropriate payors, providing billing support when needed and following up on denials. This speeds up reimbursement time significantly.

Companies such as Nemadji guarantee their performance by acting as contingency vendors for their clients. As a contingency vendor, client success is directly tied to their success, creating a team-oriented approach where all parties involved share responsibility in both timeliness and performance. Contingency vendors also pass no financial risk along to the client; they don’t get paid until the client does.


The hesitation in outsourcing any aspect of the revenue cycle is certainly understandable, but with collection rates deteriorating for private accounts in non-ACA expansion states, and with patients shouldering more and more of the cost burden, the need for eligibility detection specialists is becoming even more important than ever for both profitability and customer satisfaction.

Nemadji’s combination of personal service, technical expertise, and refined processes makes them a valuable partner in shoring up the complexities of this critical aspect of the revenue cycle and helping hospitals and healthcare systems in the United States meet their objectives and remain financially stable.

To learn more about how Nemadji can help your hospital, get in touch with us today.

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