Accurate Revenue Forecasting in the Value-Based Care Era

On 18th Jun 2018
revenue forecasting

Almost one-third of all U.S. healthcare reimbursements are now tied to outcomes, with alternative payment model spending totaling $355 billion annually, according to a study by the Health Care Payment Learning and Action Network. By its own tally, the Centers for Medicare & Medicaid Services expects to set aside $1.9 billion for its Medicare value-based care incentive payments in 2018. 

Understanding value-based contracting

With many providers unaware of how to accurately calculate reimbursements, value-based contracts are introducing more  challenges into an already complex healthcare system. As a  result, facilities often are unable or unaware of how to manage the risks or intricacies of these new contracts in their healthcare contract management processes.

The full transition from the fee-for-service payment model to one based on outcomes is expected to take years, so in the meantime, providers will need to manage several traditional and value-based contracts simultaneously. Juggling all of these various payment arrangements, however, means identifying the individual risks associated with each contract — an exercise that’s very difficult without the right contract modeling tools.

Finding the right strategy

What gives a healthcare chief financial officer heartburn? Undoubtedly, performing accurate revenue forecasting. Many provider CFOs, however, still utilize bucket-based forecasting based off of a historical net revenue projection, typically in the form of an overall percentage or a percentage of the facility’s gross charges.

In today’s fast-shifting healthcare landscape, this approach may yield an inaccurate financial picture by failing to capture incidents such as:

  • Underpayments: Although health plans underpay claims at the rate of seven to 11 percent or more, many facilities have difficulty identifying and overturning them. Healthcare contract management software can significantly reduce the time and cost associated with re-working claims. When payments come in, minus patient responsibility, software should be used to automatically identify exceptions, so that the necessary steps can be taken to adjudicate the accounts. Audit notes also should be used with each case to indicate the calculations and find the reasons for the underpayment. 
  • Invisible denials: Downcoding and other payer tactics also can affect a facility’s bottom line. Denied claims average five to 10 percent, yet 65 percent go unresolved every year, representing over three percent of net patient revenue. That’s millions of dollars in lost revenue for the typical hospital. Without healthcare contract management and modeling solutions in place, these incidents too often go undetected and must eventually be written off if they’re not properly identified, reviewed and appealed. Perhaps it’s no wonder that only 35 percent of medical groups even attempt to appeal wrongful denials.

Revenue Masters takes the guesswork out of revenue forecasting. Our proprietary healthcare contract management and modeling technology allows providers to look across multiple facilities, payers, plans and timeframes. It also enables facilities to drill down to the individual physician and service level and model an expected reimbursement to the claim level, based on multiple calculations. Our technology gives providers peace of mind by generating projected snapshots of expected net revenue within the next 30, 45 and 60 days.

Interested in learning more about how our technology can help you accurately forecast revenue in the value-based care era? Call us today at (877) 591-2590 or email us at to book an introductory call with one of our senior reimbursement experts. Revenue Masters is dedicated to combining cloud contract modeling and management with fast and efficient payment recovery workflows to create the most advanced platform that enables 100 percent collections across all payers. Our team has decades of experience in managed care, as well as commercial and government payer strategies, providing our partners with unique insights on healthcare market dynamics.

Revenue Masters also helps facilities improve efficiency and workflows. We offer the most modern, powerful, accurate and affordable healthcare contract management software, all while being the undisputed price performance leader — providing the best value for the best price. Our software increases efficiency and revenues, provides all necessary reports and can help you ensure 100 percent payer collections.