Thirty percent of healthcare spending could be considered waste, a recent study found—and up to one-third of wasteful spending is tied to administrative complexity, including billing challenges.
How does revenue cycle contribute to administrative complexity in healthcare? Consider the number of payers with which healthcare organizations contract, each with their own procedures and forms. One estimate found 80 percent of medical billing costs stem from multiplicity of payers.
Then there are the components of billing activities that require attention from physicians, clinicians, and staff. One study estimated total processing time and costs for medical billing, plus overhead, by specialty (both professional billing and hospital billing):
- Primary care visits: 13 minutes and $20.49 in costs
- Emergency department (ED) visit: 32 minutes and $61.54
- General inpatient stay: 73 minutes and $124.26
- Ambulatory surgery procedure: 75 minutes and $170.40
- Inpatient surgical procedures: 100 minutes and $215.10
Perhaps it’s no surprise, then, that for every 10 physicians who provide care, seven additional people provide billing support.
Diagnosis: Inefficiency. Rx: Streamlined Processes.
How can healthcare revenue cycle leaders decrease the complexity and waste that is tied to medical billing? One option is to streamline processes to ensure the right person is touching the right claim at the right time. It’s an approach that is similar to the “right care, right patient, right time” model on the clinical side—a model that is proven to improve outcomes and reduce costs.
To achieve this state, consider the following four approaches.
Strengthen coordination of benefits. One of the biggest stumbling blocks healthcare organizations face in processing Medicare Advantage claims for patients with dual coverage—both Medicare Advantage and commercial coverage—is ensuring the right health plan is billed on first submission. During an HFMA seminar in December 2019, providers discussed the challenges their teams face in determining primacy order of benefits. When revenue cycle staff get this wrong, it’s a major dissatisfier for patients, who typically are left to clean up the mess. It’s also an error that increases days in accounts receivable (A/R) and the number of touches staff make to a claim.
Issues with coordination of benefits are primarily caused by an inability to decipher payment policies and apply them to dual-coverage scenarios. They also occur when revenue cycle staff lack real-time visibility into patient coverage. To avoid instances such as this, providers should invest in tools that deconstruct payment policies into business rules, supporting a standard, systematic approach. They should also adopt electronic eligibility and benefits verification—a move estimated to save the medical and dental industries $4.8 billion—and run eligibility checks at the point of service and just prior to claim submission. This process helps avoid instances where claims are denied because the patient’s insurance has changed since the patient was scheduled for service.
Use data analytics to uncover hidden inefficiencies in claim handling and shore up processes. For example, by analyzing claim processing by claim type, DRG and CPT code, revenue cycle leaders can gain detailed information around the amount of touches per claim—both human touches and machine touches. With this information in hand, revenue cycle leaders can then make informed decisions around which staff should work specific types of claims and whether staff-wide training is needed to support a more streamlined, standardized approach.
At Nebraska Medicine, detailed claims analysis showed some billers were bypassing claim edits, submitting claims before corrections were made, impacting the system’s clean claim rate. Leaders developed scorecards that showed employees their rate of bypassed edits and reiterated expectations for revenue cycle processes. Within three months, the percentage of bypassed edits significantly decreased. Today, Nebraska Medicine’s clean claims rate averages 93.78 percent, well above the industry standard.
Look for opportunities to involve clinical specialists in denials prevention and management. Assess the challenges that result in higher-than-desired denials rates, such as denials that stem from breakdowns in precertification processes, incorrect modifiers, charge bundling, or medical necessity. Then, identify clinical process changes that could strengthen your organizations ability to submit clean claims and successfully appeal denied claims. With this data, revenue cycle leaders can evaluate the business case for increased clinical involvement in denials management, such as giving utilization review nurses greater responsibility around writing appeals.
In 2017, Anderson Regional Health System of Meridian, Miss., experienced a spike in denials stemming from more complex billing requirements. The health system hired a nurse to serve as its denials coordinator. Then, Anderson Regional created a denials management team composed completely of clinicians to manage the health system’s most complex denials. The impact: a 92 percent appeals win rate and a $1 million reduction in oncology denials.
A Proactive Approach to RCM Improvement
The administrative costs associated with hospital and physician billing are steep, but data make the difference. By analyzing claim processes to determine where process inefficiencies exist, providers will strengthen their ability to reduce waste, improve revenue, and enhance the patient financial experience.