Financial clearance activities are critical to constructing a strong foundation for a high-performing revenue cycle. However, a provider organization’s ability to financially secure appointments in advance of a patient’s visit is often limited by a lack of staffing, technology, and operational processes.
These limitations result in initial denials – the average rate of which increased to almost 12% in the first half of 2022 compared to just 10% in 2020 and 9% in 2016 – as well as net revenue leakage via avoidable write-offs and impacts to patient experience scores.
More than 41% of denials can be traced back to front-end revenue cycle management (RCM) issues, including registration, eligibility, authorization, and non-covered services – issues that can be avoided with a robust integrated financial clearance (IFC) process. When correctly designed and implemented, IFC creates a seamless and cohesive approach to all facets of the long journey from scheduling to authorization and eventually to payment.
IFC and the Patient Experience
Consisting of insurance verification, prior authorization, out-of-pocket estimates, and pre-registration, financial clearance is the start of the patient’s journey through the healthcare ecosystem. Its significant and lasting impact on the overall experience would greatly benefit from an integrated approach, which would also support the healthcare industry’s trend toward a more consumer-minded market.
Achieving IFC requires an experienced and agile delivery model to keep pace with changing payer requirements and accountability through visibility in performance metrics that hold multiple parties responsible for improving results. It also requires technology integrated across financial clearance processes, which will enable collaboration and yield stronger results than stand-alone solutions.
Misalignment and Process Breakdowns
The revenue cycle can be impacted by a misalignment among any of the front-end RCM functions that create the IFC value chain, including demographic verification, insurance and benefits verification, and prior authorization validation.
For example, scheduling is one of the most significant outliers within IFC. Problems typically start in the organizational chart with failure to align scheduling under the purview of revenue cycle leadership and instead characterizing it as an operations role. This can lead to process breakdowns related to key financial checkpoints, such as ensuring the right information (e.g., minimum data set) is being collected to enable a seamless and, ideally, automated benefit check and authorization approach.
When the minimum data set is not captured at the time of scheduling, additional patient outreach is required to collect missing information before benefit verification can be initiated – a critical step on the financial clearance path. This extra step not only delays authorization, but it can also impact pricing transparency and the ability to fully understand out-of-pocket liabilities, which are important to providing good faith estimates and ensuring the right deductibles and co-pays are collected.
Thus, proper alignment among all patient access functions is crucial to ensuring appropriate controls are in place to mitigate revenue leakage – which is what an IFC approach accomplishes.
Executing the Strategy
Implementing IFC built upon a shared technology solution enables a seamless process that follows the patient journey from scheduling all the way through to authorization and preservice or point-of-service collections. IFC can also help reduce or eliminate the 82% of denials that are preventable – representing a significant opportunity to reduce A/R days and duplicate re-work – and supports the demands of an increasingly consumer-minded healthcare market where 81% of patients want to know the cost of their care prior to the time of service.
The foundation of a successful IFC strategy is built upon three pillars:
- High skill and experience across key financial checkpoints based on the organization’s specialties and payer network.
- Bespoke technology solutions from industry-leading partners or built for the purposes of automation that close the gaps between checkpoints and/or eliminate redundant tasks.
- Macro level visibility with downstream A/R feedback loops that provides analytics across financial checkpoints and accountability at all levels.
A proper IFC strategy will take advantage of multiple technology approaches, including artificial intelligence, collaboration tools, and robotic process automation, and will be tailored to the organization’s specific needs. The key is to work with industry leaders who have mastered the complex authorization process and can deliver an approach that streamlines rather than creates bottlenecks. This will ensure a smooth patient experience while allowing the organization to collect the appropriate level of net revenue.
Finally, monitor results of the IFC strategy with analytics and benchmarking, which brings accountability to both internal and external stakeholders. The first step is defining Key Performance Indicators (KPIs) and leading indicators. For any vendor partners, establish Service Level Agreements (SLAs), and embed performance reporting. Internal dashboards can ensure the effectiveness of the solution, improve accountability, and provide the data needed to identify and reach out to peer groups.
Setting the Stage
The patient’s first touchpoint on their healthcare journey is the provider organization’s best opportunity to set the stage for a positive patient experience and start constructing a solid foundation for a high-performing revenue cycle. Establishing an integrated approach to financial clearance that breakdowns silos and allows seamless transfer of information can optimize both.