For a small homecare agency, one unpaid claim might mean delaying an important purchase or spending another evening catching up on billing. For a growing agency, a For a small homecare agency, one unpaid claim might mean delaying an important purchase or spending another evening catching up on billing. For a growing agency, a backlog of denied claims can mean hiring another administrative employee instead of investing in caregivers. And for a larger agency, even a small percentage of uncollected revenue can add up to hundreds of thousands of dollars.
The financial stakes change as an agency grows, but the underlying challenge remains the same: Providing care doesn’t guarantee getting paid for it.
That’s where revenue cycle management (RCM) comes in. From verifying authorizations and submitting claims to posting payments and resolving denials, RCM covers the work required to turn completed visits into collected revenue.
But how much can better RCM actually save an agency? And when does outsourcing make more financial sense than managing billing internally? Let’s look at three hypothetical homecare agencies to understand how the costs and benefits change with size.
Small Agencies: When Every Dollar and Every Hour Counts
Example: A homecare agency serving 30 clients
At a small agency, the person managing billing might also be responsible for scheduling, answering phones, handling caregiver questions, and supporting day-to-day operations. There’s rarely a dedicated employee who can spend all day following up on claims. When something goes wrong, billing gets added to an already full workload.
Consider a hypothetical agency generating $100,000 in monthly billable revenue. If the agency collects 94% of that revenue, it has a $6,000 gap between what it bills and what it collects. That’s potentially $72,000 annually in revenue that hasn’t been collected.
Not all of that money is necessarily non-recoverable. Some claims may still be pending, while others may require adjustments. But without consistent follow-up, it’s difficult to know how much could be collected.
And the financial impact isn’t limited to unpaid claims. If an administrator earning $25 per hour spends 15 hours each week managing billing, that’s approximately $19,500 annually in wages devoted to the task, before benefits and payroll taxes. If you add 20% in taxes and benefits, the gross cost is $23,400. For an agency operating on thin margins, those costs matter.
How RCM Services Can Help
For a small agency with recurring billing problems, outsourcing RCM can provide access to specialized billing support without having to build a full internal billing department.
HHAeXchange RCM Services can help with:
- Submitting claims accurately and on time
- Identifying and resolving rejected claims
- Following up on unpaid balances
- Posting payments and reconciling accounts
- Identifying recurring billing problems before they affect additional claims
The goal isn’t simply to reduce administrative work. It’s to help the agency collect more of the revenue it has earned while giving its staff more time for other responsibilities.
For very small agencies, the decision still comes down to cost. If billing volume is low and collections are strong, outsourcing may not be the most economical option. But when unpaid claims and administrative work begin affecting cash flow, it’s worth evaluating.
Growing Agencies: When Billing Can’t Keep Up With Business
Example: A homecare agency serving 85 clients
Growth is exciting, but it also introduces complexity. More clients mean more visits, authorizations, claims, and payments to track. Add new payer contracts or changing state requirements, and the billing process that worked for 30 clients may no longer be sufficient.
Imagine an agency generating $300,000 in monthly billable revenue. Its billing team is busy, claims are being submitted, and most payments are coming in. On the surface, things look relatively healthy. But a closer look reveals that the agency is collecting only 95% of its billed revenue. That 5% gap represents $15,000 each month, or $180,000 annually.
Now consider what happens if the agency improves collections from 95% to 97%. That’s an additional $6,000 per month, or $72,000 annually in potential additional collections, assuming the same billing volume and that the improvement represents genuinely recoverable revenue.
For a growing agency, that additional cash could make a meaningful difference. It could help support hiring, clinical resources, growth and technology investments, or the financial stability needed to accept more clients.
How RCM Services Can Help
At this stage, agencies often face a choice: hire additional billing staff, invest more time in training and oversight, or bring in outside expertise.
Hiring another employee introduces salary, benefits, training, and turnover costs. And because agencies need enough billing capacity to support growth, they may have to make that investment before the additional revenue comes in. Outsourcing introduces service fees but may also improve collections and reduce the burden on existing staff. And it’s scalable. The right comparison needs to account for both.
HHAeXchange RCM Services supports growing agencies by managing claims, addressing rejections and denials, posting payments, monitoring aging accounts receivable, and providing metrics and KPIs.
Just as importantly, the RCM team can help identify patterns. Are certain payers consistently rejecting claims? Are authorization or eligibility issues delaying reimbursement? Answering these questions helps agencies address the causes of payment delays rather than repeatedly correcting the same problems.
For agencies approaching 100 clients, stronger billing processes can also create a more stable foundation for continued growth.
Midsized Agencies: When Small Problems Become Expensive
Example: A homecare agency serving 200 clients
At a midsized agency, billing is typically a more established function. There may be dedicated employees, defined processes, and software supporting claims management. But having a billing department doesn’t necessarily mean the revenue cycle is performing as well as it could.
Consider an agency generating $750,000 in monthly billable revenue. Even a relatively small 3% gap between billed and collected revenue represents $22,500 per month. Over a year, that’s $270,000. At this size, the challenge may be less about having enough people to submit claims and more about understanding where revenue is getting delayed or lost.
For example, an agency might have strong electronic visit verification (EVV) compliance and a high percentage of visits marked as billed. But those numbers don’t necessarily tell the whole story. What if the agency has 1,700 authorized and delivered hours that haven’t made it through to billing? At an illustrative reimbursement rate of $20 per hour, that’s $34,000 in potential monthly revenue that may not have been billed. If that same gap continued for 12 months, it would represent $408,000 in potential annual billing.
Of course, the agency would need to confirm that those hours were delivered, properly documented, eligible for reimbursement, and not already included in another claim. But the example demonstrates an important point: An agency can appear to have a healthy billing process while still missing opportunities to collect revenue.
How RCM Services Can Help
For midsized agencies, RCM support can be particularly valuable when billing performance isn’t keeping pace with operational complexity.
HHAeXchange RCM Services helps agencies examine the full revenue cycle, including claims submission, payment posting, denials, and aging receivables. The team can also help identify problems involving payer rates, authorizations, and reimbursement discrepancies.
For agencies with established billing teams, outsourcing deserves a careful financial evaluation. If internal processes are already performing well, replacing them may not produce meaningful savings. However, agencies with significant growth may experience scalability challenges that could be remedied by outsourced RCM.
But when claims are aging, collections are declining, or billing problems and staffing issues require significant management attention, outside support may provide a financial benefit that exceeds its cost.
The Real Cost of RCM Goes Beyond Staffing
When evaluating RCM, it’s tempting to compare the cost of an internal billing employee against the price of an outsourced service. But that comparison leaves out some of the most important expenses.
Consider what happens when a claim is denied. Someone needs to identify the problem, determine the reason for the denial, gather the necessary information, correct the issue, and resubmit or appeal the claim. Meanwhile, the agency is waiting to receive payment for care it has already delivered. Now multiply that process across dozens or hundreds of claims.
The cost includes the time spent correcting errors, the administrative work required to follow up, and the potential loss of revenue when claims aren’t resolved. Delayed payment also affects cash flow, even when the claim is eventually paid. And when billing staff or agency leaders are spending hours resolving old claims, they have less time to focus on current operations.
This is why evaluating RCM performance requires looking beyond salaries and service fees. Agencies should also consider their collection rates, denial rates, accounts receivable aging, payment-posting accuracy, and the amount of time spent managing billing problems.
How Does Your Agency’s Revenue Cycle Compare?
Regardless of agency size, there are a few questions worth asking:
- Are we collecting what we’re billing? Compare billed revenue, payments received, and outstanding receivables over time. A single month’s results may be misleading, so look for patterns across several months.
- Are we billing for all eligible care delivered? Compare completed visits and documented service hours against claims submitted. Strong EVV compliance doesn’t automatically mean every billable visit has been billed.
- How much time are we spending correcting problems? Consider how many hours your team devotes to rejected claims, denied claims, payment discrepancies, and follow-up.
- Are outstanding claims getting older? Review accounts receivable aging to understand how much revenue remains unpaid and whether balances are being resolved promptly.
- Would outside support improve our financial performance? Compare the full cost of managing billing internally with the potential cost and benefits of outsourcing.
These questions can help agencies determine whether their current RCM process is supporting their business or holding it back.
Better RCM Starts With Understanding Your Numbers
There’s no universal formula for deciding when to outsource revenue cycle management. A 30-client agency with consistent collections may have very different needs from an 85-client agency struggling with denials. A 200-client agency with an experienced billing department may have a staff turnover problem. Agency size matters, but billing performance matters more.
HHAeXchange RCM Services helps homecare agencies manage claims submission, payment posting, rejection and denial resolution, and accounts receivable. With a dedicated team focused on homecare billing, agencies can get support addressing payment delays, improving collections, and reducing the administrative burden of managing revenue. And because HHAeXchange works within your existing system, you maintain visibility into your billing and claims.
Whether you’re managing a small agency or preparing for your next stage of growth, understanding your revenue cycle is an important first step toward building a more financially stable business.
How much revenue could your agency be missing?
HHAeXchange can help you evaluate your current billing performance and explore whether RCM Services makes financial sense for your agency.
