Jan 9
2025
RCM In Transition: Key Trends to Watch in 2025
By Ryan Chapin, executive director of strategic solutions, and Vijaya Krishna Veeravalli, senior vice president of cloud engineering, AGS Health.
As we head into 2025, several key trends are expected to significantly shape the future of healthcare revenue cycle management (RCM). From managing surging denial rates and evolving workforce dynamics to mitigating rising cybersecurity risks and integrating cutting-edge technologies, healthcare organizations are entering the new year while navigating a complex—often contentious—environment to enhance patient care and operational efficiency.
Navigating an Adverse RCM Environment
Denials, evolving payer relationships, and greater administrative burdens have come together to create what may best be described as an adverse RCM environment for healthcare organizations.
Climbing denial rates, prior authorization requirements, and the costs associated with managing both are among the most significant challenges confronting healthcare organizations going into 2025. According to an American Medical Association (AMA) survey, physicians reported spending nearly two business days per week completing an average of 43 prior authorizations—many of which end in denial.
In terms of denials, the surge is driven in large part by the growth in commercial and government third-party audits, including an increase in the volume of prepayment audits. According to MDaudit, external audit volume more than doubled between 2023 and 2024 and total at-risk dollars increased fivefold. The result was a sharp uptick in final denial dollars across professional (34%), hospital outpatient (84%), and hospital inpatient (148%) settings.
Healthcare providers participating in increasingly popular Medicare Advantage (MA) plans have been especially hard-hit. MDaudit reports that MA-related denials increased by 59% on average across professional and hospital settings in 2024, and the total denials amount for MA plans rose by 51%—a trend that has a growing number of providers reconsidering or dropping participation based on high denial rates and poor payments.
The impact of these trends goes deeper than financial. They add to already high administrative demands that in turn increase the strain on an overburdened—and increasingly costly—workforce that RCM leaders struggle to shore up in a tough recruitment and retention environment. To avoid staff burnout, healthcare leaders are continuing to adapt strategically, including exploring onshore, nearshore, and offshore outsourcing models.