Jon Melling’s Interview: Revenue Cycle Management

Jon Melling's Interview: Revenue Cycle Management blog post

At the HIMSS 2016 Conference in Las Vegas, John Lynn, Founder and CEO of, interviewed Jon Melling about the future of revenue cycle management, and specifically how technology will impact business processes. This blog is part one of their time together.

John Lynn – Your expertise is in technology, and applying it to improve business processes. So I’m curious, what’s your view on the future of revenue cycle management and what role does technology play?

Jon Melling – With the introduction of ICD-10 and the Affordable Care Act, we need much more information for the patient referral process, eligibility checking, prior authorization, and medical necessity. Additionally, there will be a twilight period where we’re managing under fee for service and value-based reimbursement. Software systems may be unable to manage both models.

CMS has put a fairly tight timeframe on the move to value-based care. By 2020, CMS wants 90 percent of all hospitals billing to value rather than activity. This creates tremendous pressure on the industry in terms of EMRs, revenue cycle vendors, hospitals, and payer organizations. There are three specific areas to consider: clinical process, revenue cycle, and medical staff.

Clinical Impacts of Value Model

As an industry, we must clearly understand the outcome we are moving towards in a value model. This includes understanding new clinical protocols and what they mean to the patient care process, as well as managing risk around them. For example, if a provider contracts for five steps to get the patient better, but it actually takes tens steps, the provider only gets paid for five. To realize complete payments, providers will have to identify outlier patients early in the process and assign them to a risk-based contract.

Revenue Impacts of Value Model

Value-based reimbursement also puts enormous pressure on the entire revenue cycle, starting from first referral all the way through to final bill. It’s a complex process.

One challenge I foresee is that revenues will dip as we shift to value-based reimbursement. Organizations may not necessarily lose money, but must reconfigure the way they treat and manage patients in three ways:

  • Hold the patient as an active member of a fairly stable cohort
  • Estimate the cost of treating every patient, and group of patients
  • Shift from a curative organization to a true wellness organization

Physician Impacts of Value Model

Finally, going forward I believe physicians will no longer be the only critical resource in the process. I foresee a network of care providers (not all in the same Tax ID Number), perhaps including an LPN or a physician assistant, managing a patient’s care. The focus will be on collaborative care with the hospital or care coordinator responsible for ensuring care is provided by the most appropriate provider organization.

I predict the development of software applications and information systems to piggyback onto current EHRs. The focus will be on balancing both fee-for-service and value-based billing.  Organizations that get a handle on this quickly will be ahead of the curve.

For formulated plans to prepare EHRs for value-based reimbursement, click here.