Challenges For Healthcare Providers and How to Address Them Every medical practitioner has two crucial responsibilities towards ensuring the long term sustenance of his/her practice. One, deliver the standard of care and healthcare outcomes that patients seek from him/her. Two, earn sufficient revenue to keep the practice financially viable and ensure cash flow to meet expenses. The two are strongly connected, but clearly the second aspect is outside the scope of a typical medical professional’s primary area of expertise. There are a number of potential challenges that may crop up and negatively impact a practice, unless the revenue cycle is actively managed and optimized. And these are a significant portion of the 25% of US national healthcare expenditure that goes to overhead costs, as reported by the Journal of the American Medical Association. Let us explore some of them:
- Insurance verification and patient eligibility issues
Eligibility verification is a foundational step for a doctor-patient encounter, and any errors that are made at this stage can impact the whole transaction. Verifying the status of a patient’s insurance contract and their eligibility for treatment (from a financial point of view) begins with the collection of accurate information. A mis-spelling, a wrong digit being noted down, not having the insurance card details on file, and even neglecting to check on any secondary coverage available to the patient can cause problems in billing the payer for the care delivered. Yet, eligibility-based denials represent a preventable loss of revenue for most practices! As much as 62% of prior authorization denials and 50% of initial claim denials are overturned upon appealing, according to data from the American Hospitals Association. Regular training and the use of an appropriate technology-platform to support the agents can significantly reduce the likelihood of errors at this stage and free up the revenue flow. - Errors in the coding process
The coding process is crucial to the revenue cycle because it is practically the core channel of communication between the medical practitioner who delivers the care and the payer who decides how to pay for the service rendered. There are several aspects in this process that have a high risk of error, and each of these points of failure can lead to a rejected or denied claim despite a positive healthcare outcome. Some of the most common issues are lack of coding specificity, low quality coding (high error rate), use of outdated code sets, incorrect use of modifiers, undercoding (failure to include codes for all aspects of the treatment rendered) and not accounting for NCCI (National Correct Coding Initiative) edits. Inadequately trained or overloaded coders and policy gaps are usually seen as the cause for these issues. Considering the fact that every coding error could directly translate into lost revenue, it is a worthwhile investment to continually upgrade your practice’s coding team, or to entrust the coding process with a capable external specialist. - Necessity denials and rejections
It is not surprising that payers and providers have fundamentally different goals in a typical healthcare transaction. The provider wants to deliver a high standard of care to ensure that the patient has the ideal outcome. The payer wants to optimize spending, and eliminate financial risk, in both a micro and a macro sense. The thin gray line between these two territories often trips up some of the medical practitioner’s treatment decisions in the name of medical necessity. In other words, the payer’s idea of whether a certain treatment/procedure is necessary for a patient doesn’t depend entirely on the provider’s opinion. And this puts a lot of pressure on the whole system because a medical practitioner has to review treatment decisions from the point of view of coverage under the contract, which leads to increased administrative burden and often revenue loss for service rendered. Preventable causes of necessity denials include inaccurate patient information, coding errors, and lack of medical necessity documentation to thoroughly illustrate the need for the treatment. Robust processes for claims scrubbing and denial management can help minimize the impact. - Losing Control of Aging Claims in Accounts Receivable
The American Hospital Association reports that 50% of hospitals have claims worth $100 million aged more than 6 months in AR. Around 35% of hospitals have given up on $50 million or more out of that. If those numbers seem disturbing and significant for your practice’s financial health, then the good news is that most of these are preventable with the right strategic approach. This includes timely follow up on aging claims as well technology-based decision making that can prioritize claims based on age and likelihood of reimbursement. - Patient financial responsibility and effective collections
As insurance contracts become more and more complicated, there is a surprisingly large number of patients across the United States who are blissfully unaware of the fine print, or even the major clauses pertaining to their coverage. Many patients struggle with understanding high deductibles, copayments, etc. and this causes friction when they are at a medical practitioner’s office seeking care. Healthcare providers have to address this challenge through a proactive approach and procedures for ensuring clear, upfront communication to patients. Giving patients a clear estimate of their out-of-pocket expenses at the beginning of the encounter, and offering flexible payment options during the billing stage would help in effectively realizing the revenue due.
You can clearly see that a recurring theme in all the solutions proposed is the integration of advanced technology into the practice operations. While this is a significant investment, and Provider organizations may still need to overcome challenges such as interoperability of their systems with the entire spectrum of payers, the returns are encouraging as well. Another major priority is the continuous training and development of billing and coding staff, who need to be constantly updated with the revenue cycle trends (both internal and external) and take steps to address visible gaps in the process before it grows out of control. Fostering a culture of such continuous improvement and innovation is key.
So the question is, what is the best strategy? Should a healthcare provider invest money in creating his/her own team of revenue cycle experts and then diligently follow their evolution and development? Or is it easier to outsource it to a team of experts who can hit the ground running and start delivering measurable gains swiftly? HFMA cites a Kaufman Hall report stating that 63% of health system leaders surveyed have deployed at least one solution based on outsourcing, and revenue cycle management clearly tops the priority list. Based on the nature of your practice, and the scale of revenue leakage you are seeking to plug, you need to make the right decision for your business.
