Seeing the forest for the trees: Institutional environment impacts on reimbursement processes and healthcare operations

Abstract

Healthcare reimbursement processes perform an annual multi-trillion dollar task to remunerate healthcare organizations, physicians, and patients. Healthcare reimbursement entails coding, billing, and payment processes based on care provided to patients. As this research note highlights, though often implicitly assumed to be independent of care delivery processes, reimbursement processes are distinctly connected to the efficacy of care delivery. Prior research tends to examine neither antecedents nor consequences of healthcare reimbursement processes and their operational implications, even though these issues can lead to unproductive externalities affecting healthcare systems and patients. Most extant literature tends to focus on medical task environments, with far less attention given to how institutional environment structures reimbursement and thus drives stakeholder incentives and behaviors. Because of a wide diversity of institutional environments, reimbursement processes differ on a nation-by-nation basis, and within nations on a state, province, city, or even within-city basis. The varied and complex reimbursement processes drive divergent stakeholder incentives, varying use of healthcare protocols and processes, and differing patient outcomes. Even within a single reimbursement regime, a multitude of reimbursement policies, required processes, and payer institutions creates operational complexity for physicians and their professional staff, which ultimately affects patient care delivery processes and outcomes. The task environment focus of extant healthcare OM research suggests a need to understand institutional environment antecedents, natures, and impacts of reimbursement processes. This research note illustrates the seemingly simple structural nature of reimbursement processes, yet also reminds researchers how diverse institutional environments, built to accomplish different healthcare aims, can lead to similar levels of enormous process complexity. The research note further motivates how such phenomena may affect research findings and the quest for operational solutions to healthcare dilemmas. By focusing on healthcare reimbursement and its operational implications, the note provides useful insights for continued studies of healthcare operations.

Revenue Cycle Management in the Wake of EMR Implementation: A Competing Logics Perspective

“…Internally, RCM involves coordination and exchange of information between departments focused on patient care and other supporting departments such as billing. Further, the documentation of care provision (e.g., determining which level of code to use for a particular encounter) amidst multi-year audits by different payers results in further uncertainty and complexity [6]. Externally, RCM-related departments routinely interact with payers (e.g., to request for prior authorizations for treatment or medication) as well as outsourced coding, billing, and other services.…”

“…IT-enabled RCM is critical to improving hospital performance [6]. For example, patient scheduling systems help optimize patient flow, registration systems capture insurance and demographic information needed for billing, and practice management systems improve the accuracy of medical charge entry, claim submission, and account reconciliation [7].…”

“…An equally important, yet understudied, research area includes the IT that supports the revenue cycle-a complex enterprisewide process that includes all activities related to delivering health-care services to patients and getting reimbursed for those services [5]. The revenue cycle-which includes activities such as patient registration, medical charge coding, billing, payment posting, and revenue recovery [6,7]-must function smoothly to generate stable cash flow [8]. As such, effective revenue cycle management (RCM) with appropriate IT support is critical to a healthcare organization's financial sustainability.…”

Revisiting the unholy alliance of health-care operations: payor–provider integration of occupational health services

“…2.1 Occupational health-care service system: multiple actors with diverse interests In most industrialized countries, at least some parts of health-care delivery systems are built upon insurance-based servicesin which the roles of service use, provision, and reimbursement are dedicated to different interlinked actors: patients, care providers, and payors (Lee et al, 2016). Diverse actors' varying interests and incentives may lead to conflicts when a health-care service system is managed through bilateral contracts between parties.…”

The Joint Use of RFID and EDI: Implications for Hospital Performance

“…As highlighted in this description of the charge capture-to-reimbursement processes example, as well as the associated graphical depiction, RFID and EDI technologies appear vital to efficient and accurate execution of these processes in hospitals. Hospitals jointly using RFID and EDI can potentially mitigate the complexity in reimbursement processes, which is confounded by inaccuracies of coding data and claims (Lee et al 2016), and streamline reimbursement processes. Such effective execution is particularly important, considering the increased focus on operational excellence due to regulations like VBP.…”