A Three-Pronged Approach Hospitals Should Follow
By Deepali Narula, Chief Operating Officer, Conifer Health Solutions
Three out of four hospitals in the U.S. have experienced revenue cycle issues since the COVID-19 pandemic. This includes an increase in payer denials and rising bad debt. According to the American Hospital Association, nearly nine out of ten hospitals are challenged with an increase in claim denials. It is not surprising that denials management has become a top priority of revenue cycle leaders across the country.
In 2022, more than 10% of claims were denied, an increase of nearly eight percent over the previous year. Automated payer reviews, more complex payer criteria, and increased contract variables are primarily to blame, according to Advisory Board research.
While the root of denied claims can vary, most originate in the patient access process. Issues with registration and eligibility verification, unmet prior authorization requirements, and coverage issues are at the top of the list. This is understandable due to the highly manual, error-prone nature of these processes.
The following is a three-pronged approach to mitigating the impact of denials in these challenging times.
Prevention Requires Technology
The good news is that 85% of denials are avoidable. One of the best ways to prevent them is to use technology to automate the manual processes that are most likely to lead to errors. RPA (robotic process automation) is one of the technologies garnering much attention. The way RPA works is that it mimics human tasks through rules-based actions, which allows the technology to perform transactions and complete repetitive processes—all without human intervention. RPA technology can conduct highly detailed chart analysis while improving clinical documentation and overall coding quality. In this way, hospitals benefit from improved efficiencies and productivity without adding more staff.
Another benefit of automation technology is its ability to streamline pre-service or real-time eligibility verification and coverage detection. The technology can also proactively identify requirements for prior authorizations and the need for additional documentation, which can reduce delays in care, delayed reimbursement, and denials.
More Effective Appeals
While two of every three denials are recoverable, 40% are never resubmitted. This is understandable, considering the effort and cost associated with the appeals process. Many hospitals rework only high-dollar denials, yet even small-balance denials add up throughout the year. This, along with the staffing shortages many organizations face, has led to significant backlogs in revenue cycle workflows, especially denial appeals.
According to the Journal of AHIMA, successful denial appeals require coding professionals to spend time researching to get to the root cause. This includes ensuring coding is accurate and that documentation is sufficient before beginning the appeal. “For example, supply the appropriate medical records and, if necessary, include articles, images, or even a letter from the provider to support the reason for the service.” AHIMA also suggests auditing workflows to identify opportunities for improvement. For example, if many of the denials are the result of coding errors, additional staff training and certification can help. Analytics is also beneficial in identifying systemic issues so they can be proactively addressed before denials have a chance to occur.
Improve Payer Relationships
Nearly eight in ten hospitals surveyed say their relationships with payers have deteriorated. This is unfortunate because the reality is that payers and providers want the same things: The best outcomes and patient experiences at the lowest costs.
Investing time and resources to build multichannel payer relationships is worth the effort. Understanding the pain points of the payer—those areas that cause the most friction—can help hospitals develop more effective workflows to ensure that payer requirements are met. At the very least, providers should try to conduct regular monthly meetings with their largest payers to discuss issues and come up with resolutions. In doing so, providers can see fewer denials or delays in care.
When to Outsource
Many hospitals simply do not have the resources to buy and implement technologies to streamline and automate processes. Nor do they have the ability to add additional staff to manage appeals more effectively or maintain payer relationships. In these instances, partnering with industry experts can help. In fact, hospitals can see a much faster return on investment by outsourcing all or a portion of the revenue cycle instead of trying to muscle through with limited resources.
Benefits of Outsourcing
- Increases productivity without additional overhead
- Improves coding/billing quality due to more experienced RCM professionals
- Eliminates recruitment, sign-on bonuses, and hiring costs
- Reduces the need for training and onboarding
- Higher quality work reduces errors and associated rejections and denials
- Facilitates faster reimbursement and improved cash flow
The following are four capabilities to look for when choosing a revenue cycle partner.
- They have global access to revenue cycle experts
The best outsourcers have access to both blended models of onshore and offshore teams with long-standing expertise in U.S. healthcare processes. These companies will have a broader network of resources, along with access to high-volume recruiting divisions. This means they not only have a larger pool of candidates to pull from, but also the ability to scale in order to fill vacancies more quickly.
- They emphasize the importance of training
One of the keys to successful revenue cycle outsourcing is to choose a partner that invests in training beyond the initial onboarding phase. The healthcare industry is not only highly complex, but it is also constantly changing. For example, ICD codes have increased exponentially over the last decade. Bringing new coders up to speed can take months and continued dedicated training time to keep up to date to ensure the highest quality work. Without these ongoing professional development programs, hospitals can experience an increase in denied claims or delayed reimbursement due to an increase in coding errors made by inexperienced staff. That’s not the case when outsourcing with a company that embraces rigorous and ongoing training.
- They invest in industry leading technology
Investments that might take a hospital years to see a return on can be achieved much more quickly with the right partner—a return that can benefit hospitals by way of lower fees. The most effective revenue cycle vendors are those that invest in automation technology to streamline processes and improve quality and productivity. Automation technologies can simplify the entire revenue cycle by removing manual, error-prone claim workflows. The result is more consistent, more effective management of processes and workflows.
- They have an advanced level of payer expertise
The best revenue cycle partners will have extensive, multichannel payer relationships, giving them greater insight into payer pain points and a unique ability to work with payers to the benefit of the hospital. When choosing a partner, it is important to find one that has the expertise necessary to manage payer relationships on the hospital’s behalf. This should include conducting regular monthly payer meetings to discuss issues and identify resolutions.
The Time to Act is Now
By the time a claim is denied, providers have already lost more than two weeks in accounts receivable. Today 50% of hospitals have more than $100 million in delayed or unpaid claims that are at least six months old or more. In these challenging times, hospitals cannot afford this type of lag in reimbursement. By implementing simple steps to prevent denials, more effectively manage appeals, and improve payer relationships, hospitals can be well on their way to post-pandemic recovery.