How Do You Reduce Healthcare Revenue Leaks?

In this second blog in our Managing Revenue Risk series, Marcy Andersen, Director, Account Management at SAI360, discusses healthcare revenue leaks and how an automated workflow goes beyond simple work queues to support collaboration and effectiveness in payer audits and the denial appeal process.

Healthcare revenue leakage is a moving target, thanks to fluctuating payer rules and the complexity of the denial and audit processes. As this problem continues to put pressure on already shrinking margins, having the right tools and processes to reduce revenue leaks and retain legitimately earned revenue can make a huge difference.

In an environment of complex transactions managed by multiple IT systems and disparate teams spanning multiple departments, the potential for error is extremely high. To ensure that revenue continues to adequately cover the cost of care, healthcare organizations need to combine automated tools and collaborative people processes to identify issues when and where they occur.

Healthcare organizations that lack a focused strategy for denial management are more likely to see denials resolved unfavorably or, as is all too often the norm, left to languish and eventually written off as bad debt. Claim denials are a chief source of frustration for your billing department, they also put a damper on cash flow; failing to adequately resolve denials from insurers translates to lost revenue.

Without automation it can be difficult to identify, review and dispute in a timely manner inappropriate non-payments or underpayments that occur. Lack of a software automation tool results in a time-consuming and expensive process to manage.

Timeliness and Efficiency Are Crucial To Reduce Healthcare Revenue Leakage

Hospitals often have systems that will push denied claims into a work queue by payer, department or other user-defined criteria. This approach provides the revenue integrity team with a list of denied claims by a specific category. Individual team members pick up a claim to work based on dollar amount, days in the queue or by grouping similar denials to gain efficiency. While working in the queue, employees must use other time-consuming methods such as email, fax, or phone calls to gather documentation and input to work the denial. These work queues do very little to streamline the appeals process.

Appealing denials requires information and input from multiple parties in the organization, and such information is critical in deciding if an appeal is worth the effort. As the denial sits in the queue, the clock is ticking.

A more effective approach is to deploy a system that will monitor and automatically alert the revenue integrity team of a denial as soon as it occurs via the 835 transaction. These systems use automated workflows for managing the appeal process, including tasks such as routing the claim to the appropriate stakeholders for review and collecting input and documentation. In addition, workflow rules can be established to notify individuals of approaching appeal timelines to ensure denials don’t fall through the cracks or fall to the bottom of a work queue.

Workflow Tools are Not All the Same in Healthcare

Different types of denials – such as clinical, administrative and coding, will dictate distinct processes for review and analysis. Moreover, the timeframe for appeals varies by the payer. Flexibility and configurability coupled with a workflow engine are therefore critical. Best-in-class automated workflow facilitates the communication and collaboration process among team members and functional areas, routing denied claims to the responsible parties, assigning tasks, monitoring deadlines, sending reminders, escalation notices, and tracking updates.

With contract agreements, timelines, internal processes, and staff changing frequently, many organizations lack agility due to software systems that require either the software vendor or an IT department to make changes. This is costly and slow and as you wait for the changes to be made, claims and appeals continue to fall through the cracks due to out-of-date processes. An easily configurable no-code software system is invaluable as it allows organizations to adjust their workflow rapidly to ensure claims, audits and denials are always being routed through the most up-to-date process.

How Does Automation Address Healthcare Revenue Leaks?

Let’s look at a typical example of a claim that has been denied for clinical reasons.

The system will automatically highlight the denial from the 835 transaction and notify the designated patient financial services staff member via an email alert. The employee will review the claim and add any additional information required. When complete the system will automatically move the claim to the next stakeholder in the review process, such as the case manager.

The case manager will receive a task assignment notification with a due date for completing the task, such as providing clinical notes. As the due date for this task approaches, the system will automatically send reminders to the case manager and patient financial services. The case manager may call the payer to obtain more details regarding the reasons for the denial and will add conversation notes to the claim in the system. They will then recommend whether to accept the denial or pursue an appeal.

Based on this decision, the system will then route the claim to the appropriate stakeholder or department to manage the next steps. For example, if the decision is made to appeal the health information management department will receive a task message requesting that supporting documentation be attached to the claim. Once complete the claim will then automatically move to the appropriate team member for processing. Along the way, the system creates an audit trail of activities, documenting each step.

Gathering Important Metrics

Metrics are an incredibly valuable tool in optimizing revenue risk, but they can be difficult to obtain with work queue-based software systems. In contrast, as claims progress through a workflow-based system, critical information is automatically gathered along the way. This data provides critical insights such as the volume and revenue associated with the types of claims that are audited or denied, the appeal success rate at each level, and the services, codes, departments and even practitioners that represent highest denial risk. Metrics are critical to understanding an approach to maximizing revenue.

Analysis of this information provides awareness and allows organizations to make decisions based on data, enabling the organization to more effectively and efficiently use valuable and limited resources when it comes to audits and denials. These metrics give an understanding of the work effort organizations are taking to protect legitimate revenue. Additionally, for contracted payers it is valuable information to bring to the contracting team when negotiating with the payer. It can help demonstrate that unwarranted audits and inappropriate denials cost both providers and insurers dollars and resources.

Workflow Automation is the Best Medicine

There is strong evidence of significant ROI (return on investment) and benefits for healthcare organizations that have invested in comprehensive revenue integrity programs. When considering the potential benefits, organizations should focus first on the value offered by automated tools for preventing avoidable loss of revenue.

An advanced, flexible, and user-configurable workflow system that alerts you immediately when a denial occurs can significantly reduce manual workload for healthcare organizations by facilitating collaboration, and tracking the status of tasks and deadlines.

Such a platform also facilitates efficient and timely gathering of important metrics and responses for appeals, ensuring that processes are consistently followed by all participants. In turn, this allows a healthcare organization to quickly appeal denials before the claims are considered ineligible for appeal due to timeliness.

In the third piece of the Managing Revenue Risk blog series, Marcy discusses ways to conduct proactive mitigation to avoid potential non-compliance.