Stopping Revenue Leakage – A Quick Start Guide
Revenue leakage – defined in this case as the loss of reimbursement due to revenue cycle management (RCM) issues or inefficiencies – has long been an issue in healthcare. McKinsey & Company reports that today these inefficiencies consume 15 cents of every healthcare dollar – $400 billion out of the $2.7 trillion spent on healthcare annually in America.
That’s a lot of money to lose under any circumstances but it’s even more troubling in this new era of healthcare delivery where providers are struggling just to maintain their razor thin margins. To remain financially viable, healthcare providers must find ways to increase the efficiency of their RCM operations and to eliminate or reduce the issues that cause revenue leakage.
Here are 7 things providers can do today to ensure they are receiving all the revenue they are owed.
1. Improve clean claim rates: In healthcare today, payers have become hypervigilant with claims. They are increasingly holding providers accountable for ensuring claims are accurate when they are received. Inaccurate claims are often a basic yet avoidable cause of denials, which means denials can be reduced significantly by ensuring claims are clean from the start.
According to the Centers for Medicare and Medicaid Services, only 70% of claims are paid the first time they’re submitted. The other 30% are either denied (20%), or lost/ignored (10%). Of those claims, 60% are never resubmitted, meaning the reimbursement is lost forever. The best way to avoid revenue leakage associated with denied claims is to do a better job of submitting clean claims that can be approved on the first pass.
2. Replace manual processes, workarounds, and misaligned workflows with automation: On average, each manual transaction costs providers and health plans approximately $3 more than electronic transactions according to the 2016 Council for Affordable Quality Healthcare (CAQH) Index. The report also states that healthcare providers spend an average of 8 and up to 30 more minutes processing each manual transaction compared to the time required for an electronic transaction. In 2015, this additional time resulted in a minimum of 1.1 million labor hours that could have been used more efficiently.
Then there is the 5% to 30% of reimbursement most practices leave on the table according to the Medical Group Management Association (MGMA) because they lack proper processes, staffing, training or technology. For example, manual processes can add 5-12 minutes (or more) per claim just to identify the claim status – only to discover that in many cases the claim is still processing. The time spent on this activity yields no value.
Technology can deliver nearly real-time visibility into claim location and status, reducing this unproductive time and enabling those resources to be utilized elsewhere in the revenue cycle.
Automation also enables providers to manage claims by exception to reduce denials. Rather than attempting to comb through all your claims to find errors before submitting them, it’s more efficient and productive to focus only on those claims that require attention.
Providers can then work through the (hopefully) few claim problems to fix any issues before they are submitted, reducing costly denials and resulting in quicker payment. This process also reduces the number of full time equivalents (FTEs) required to re-work denials on the back end as well, delivering additional revenue to the bottom line.
3. Manage claims within a holistic revenue cycle environment: Although claims management is the lifeblood of the reimbursement process, it should be addressed as just one element of the full revenue cycle. Claim rejections and denials are often caused by errors further upstream in the revenue cycle, so it’s important to manage claims within that context.
Inefficiencies and workflow issues become pervasive when professional and institutional claims, as well as other major revenue-related capabilities, are managed in separate systems. Having a single system for all claims delivers a holistic view that helps identify and manage revenue leakage wherever it is occurring.
4. Find a payer advocate: Many health plans offer online portals to make doing business with them easier. Sometimes, however, providers need to have a conversation with a payer representative to resolve issues or discuss denied claims in more detail.
Having a vendor advocate can save a tremendous amount of time normally spent holding on the phone or waiting for a response. The vendor advocate will also be aware of the root cause of certain problems due to their ability to see issues on a mass scale, and introduce changes before the provider is aware the issue exists.
5. File claims on time: Late claim filing is a common cause of claim revenue leakage. Each payer has its own specific rules on when claims must be filed for processing, and claims management teams must be aware of those rules to prevent missed billing opportunities. Providers should ensure they have proof of timely filing in case payers deny claims for not making the deadline.
6. Resolve claims management implementation inefficiencies: Providers implement new claims management systems with the intention of improving their workflows, lowering their accounts receivable (AR) and accelerating reimbursement overall. An inefficient and unwieldy payer enrollment process, however, can thwart these efforts.
Software vendors often require providers to complete the enrollment process themselves; this prospect can be so intimidating that it keeps providers from changing software. Selecting a system that automates the enrollment process helps providers avoid these issues, gaining the technology benefits they’re seeking faster, and without tying up internal resources.
7. Ensure HIS/PM and claims management integration: Full integration between these systems is a must for reducing revenue leakage. Special attention should be paid to data integrity, accuracy, and consistency while working claims in either system. In environments where a system operates as the single source of truth, true integration helps ensure data integrity while avoiding duplicate data entry that inhibits productivity.
Taking action to drive change today – and continued progress for tomorrow.
Revenue leakage is a challenge that can be tackled and savvy providers are already taking action. By understanding the root causes, and working smarter, not harder, to resolve them, providers can get paid faster, more completely, and with less effort.
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This article was originally published on ZirMed and is republished here with permission.