Healthcare Financial Success Ideas
In an earlier blog, we wrote about growth inhibitors in healthcare. They are numerous but not all are insurmountable. In that blog we discussed consolidation, adding specialties, utilizing less expensive, more flexible, and more efficient technology, outsourcing and automation.
In an article in Yale News (Feb. 10, 2021 by Mike Cummings), Zack Cooper, PhD, an associate professor at the Yale School of Public Health, and Fiona Scott Morton, PhD, the Theodore Nierenberg Professor of Economics at the Yale University School of Management, examined what incremental healthcare reform could look like. This is an excerpt of what they said - "Rather than speaking about health spending via abstractions, we should view high U.S. health care costs as the result of a series of discrete problems that each incrementally raises health spending by a percent or 2. They referred to them as 1% problems. They wrote - "While each problem is unremarkable in isolation, the collective impact of a series of 1% problems can help explain why the U.S. spends more than other nations."
The authors said economists and policymakers should reframe healthcare spending as a series of 1% problems and use those problems as a road map for cost reduction. They outlined 16 steps that, if implemented, would decrease overall annual healthcare spending by 8.87%.
Number 3 on their list was claims adjudication efficiency. Here are the top 3 and the clear leaders (everything else was under 1%) as described in the study:
- Regulating healthcare provider prices: 1.89%
- Addressing surprise medical bills: 1.67%
- Increasing the efficiency of claims adjudication: 1.25%
Today there is more pressure than ever for hospitals and healthcare facilities to get reimbursed for all the services they provide. This increases revenue. Add to that processing the work accurately, quickly, and efficiently reduces cost. The combination of both is important for financial and thus overall success of any healthcare organization.
Some additional challenges can be supported and defined that also create obstacles to having successful revenue cycle operations that facilitate reimbursement of all owed money. Studies illustrate that the major payers return up to 29% of claims without any reimbursement, costing providers an estimated $118 per claim. But that’s not the worst of it. That estimate assumes that all claims denied are reworked and reports indicate that not to be true. Some 50% of rejects are reportedly never successfully resubmitted.
And as we all know, quality and quantity of patient care gets affected whenever there is revenue loss from payment denials. Not to mention additional causes of lack of care during this trying time of pandemic when many are not seeking care either out of fear of contracting the virus or potentially financially devastating self-pay expenses. And the doubling negative effect of that is more revenue lost to the healthcare organization. It’s almost like a vicious circle, making it more critical to maximize reimbursements and reduce processing costs for all the provided care.
Here are 3 major reasons for claim rejections:
Insurance Complexity With varying fee schedules and contracts, multiple combinations of payers and plans, changing regulations and laws concerning medical billing, and an increasing patient responsibility for bill payment, there is a lot of room for error and missed opportunities.
Inaccurate Patient Data Patients’ demographic data and insurance information, which are both critical for billing and claims adjudication success, are often inaccurate, changing, unavailable, or not captured at all. Significant manual processes and the lack of automation and intelligent error correction capabilities between provider and payer are often factors driving this issue.
Staffing Challenges In many healthcare facilities, staff and resources are lean. With that comes pressure on those involved to be as productive as possible while having deep health insurance knowledge and staying abreast of the ever-changing landscape. This is often a challenge, especially if there’s a small staff or turnover. Organizations are doing their best to combat these problems and keep up, but often find it almost impossible to manage and get ahead of reimbursements with their current processes.
There is a better approach. By finding and addressing these 3 root causes of rejections, you can maximize your reimbursements the first time, without rework. Ensuring that all your patient demographic and insurance information is accurate requires automated software with capabilities tailored to your patient population. For accurate eligibility/benefits investigation, software must have built-in connections to access the thousands of available data sources and the technology to not only obtain the information, but cross-check, and validate it. The software should also be interoperable with your patient records and billing system, without extensive systems integration and with flexible data format acceptance. User friendly access and real time, rules-based error correction can expedite payment and reduce costly rework or lack of rework. Having sufficient insurance expertise available for support is also a big plus. If an organization gets behind in accounts receivable, which happens frequently, outsourcing that project should create a revenue capture opportunity. Most vendors who provide that service will do the work on a contingency basis tied to a percentage of collections. There are countless stories about health providers doing just that, and in the end, find millions of additional dollars in otherwise forfeited revenue that was eligible for reimbursement. That makes for a remarkable success story with a happy ending!
Incremental reductions of costs combined with increases in collections of due payments is the answer to financial challenges in healthcare and are mostly very attainable. However, as the evidence indicates, those goals won’t be achieved without astute and supportive leadership, innovation, and concerted efforts of execution.