As we near the end of 2024, the landscape of healthcare revenue cycle management (RCM) continues to evolve at a rapid pace. The first three quarters of the year have been marked by a mix of technological innovation, shifting payer policies, and increasing financial pressures on both patients and healthcare organizations. This article reviews the key trends observed in patient payments, insurance denials, and other relevant RCM areas, supported by available data.

1. Patient Payments: A Growing Challenge Amid Economic Pressures

Trend: Increase in Patient Responsibility and Payment Delays

One of the most prominent trends in 2024 has been the continued rise in patient financial responsibility. As high-deductible health plans (HDHPs) remain popular and out-of-pocket maximums increase, more patients are facing significant bills after receiving care. The National Health Expenditure Data shows that patient out-of-pocket costs increased by 8% year-over-year, further compounding financial strain on households.

This financial burden has led to a rise in delayed payments and increased payment plan enrollments:

• Patient collections have become slower, with healthcare providers reporting an average increase of 15 days in days receivable outstanding (DRO), up from the previous year.

• Providers offering flexible payment plans have seen a 20% increase in patient adoption rates in the first three quarters of 2024, as patients seek to manage their healthcare debt more effectively.

• Early-out services have also gained popularity, as hospitals and clinics attempt to reduce bad debt by engaging patients early in the billing cycle with proactive payment solutions.

2. Insurance Denials: An Unyielding Barrier to Revenue

Trend: Denials Continue to Rise, Reaching Record Levels

The rise in insurance denials remains a key pain point for providers in 2024. Data from several leading healthcare RCM firms indicate that denial rates have surged by 11% compared to the first three quarters of 2023. The most common causes of these denials include:

• Eligibility issues: Around 30% of denials are due to patients being ineligible for services at the time of care, often because of incorrect or outdated insurance information.

• Prior authorization requirements: The complex and shifting requirements of payers have caused a spike in authorization-related denials, which now account for 15% of total denials, a 5% increase from last year.

• Coding and documentation errors: These continue to contribute to denials, with inaccurate or insufficient documentation leading to 12% of all denials.

The rise in denial rates has forced providers to improve their denial management strategies. Hospitals with dedicated denial prevention teams have reported success in overturning approximately 35% of denied claims, although the administrative burden remains significant.

Denial Appeals: The cost to appeal denials has increased as well, with some estimates suggesting that it now costs providers an average of $25 per claim to resolve a denial, further eroding their margins.

3. Automation and AI in RCM: A Growing Role in Efficiency

Trend: Automation Reduces Human Error and Improves Collection Efficiency

To address the growing complexity of RCM processes and to combat rising denial rates, many healthcare providers have turned to automation and artificial intelligence (AI) tools. By the end of Q3 2024:

• Over 60% of large healthcare systems reported using AI to assist with claims processing, coding accuracy, and payment collections.

• Providers using AI-based claim scrubbing tools have seen an average reduction of 18% in initial claim denials, thanks to pre-submission reviews that catch errors before submission.

• Automated eligibility verification tools have improved eligibility accuracy by 25%, cutting down on eligibility-related denials significantly.

AI is also being used to prioritize claims likely to face rejection, allowing RCM teams to focus on those with the highest risk and ensure they meet payer requirements before submission. This approach has reduced overall denial rates by 7% in the hospitals adopting these tools.

4. The Rise of Value-Based Care and Its Impact on Revenue Cycles

Trend: Value-Based Payment Models Are Gaining Traction, Complicating Billing

As the healthcare industry continues to move toward value-based care, the revenue cycle has had to adapt to new payment structures. In the first three quarters of 2024:

• Value-based care arrangements accounted for 35% of total healthcare payments, with more payers and providers shifting to this model.

• These new payment models have introduced challenges for traditional fee-for-service (FFS) billing teams. Revenue cycle teams must now handle a hybrid approach, managing both outcomes-based payments and FFS, leading to operational complexity.

Providers operating in value-based care models have had to invest in data analytics to ensure they meet quality metrics and manage risk effectively. Revenue cycles now rely heavily on population health management platforms to track patient outcomes, which directly affect reimbursement rates.

5. Increased Compliance and Regulatory Pressures

Trend: Tightening Regulations and Transparency Requirements Impact Billing Practices

New regulations, such as the No Surprises Act and price transparency rules, have had a significant impact on RCM operations in 2024:

• Price transparency enforcement: Hospitals have been fined for non-compliance, and 80% of hospitals report increased administrative burden due to the need for comprehensive pricing disclosure on their websites.

• No Surprises Act: The legislation, aimed at protecting patients from unexpected out-of-network charges, has led to disputes between providers and payers, particularly regarding out-of-network payment calculations. This has slowed reimbursement timelines and increased the workload for RCM teams.

Hospitals are now investing in compliance solutions to ensure they remain in line with these new regulatory demands. Many are also educating patients upfront about costs to reduce the likelihood of surprise bills, which has improved patient satisfaction but has not yet fully alleviated operational challenges.

Conclusion: Navigating an Evolving Revenue Cycle Landscape

The first three quarters of 2024 have highlighted several key trends in healthcare revenue cycle management. Providers continue to face rising patient payment responsibility, higher insurance denials, and an increasing reliance on automation and AI to manage these challenges. As we move into the final quarter of the year, hospitals and healthcare organizations must focus on improving patient payment options, enhancing denial management, and adapting to the evolving regulatory environment.

Revenue cycle leaders should closely monitor these trends and continue to consult outsourced revenue cycle duties and invest in innovative tools and strategies to streamline operations and safeguard revenue integrity in an increasingly complex healthcare environment.

Sources:

• National Health Expenditure Data, 2024

• Healthcare Financial Management Association (HFMA) 2024 Denials Report

• Black Book Research, "RCM Automation in Healthcare"