There is a trifecta at work in revenue cycle today. Technology, teams, and time are all factors that impact a provider’s ability to achieve their revenue cycle goals. When one or more of these elements is weak, a provider may struggle to weather the current healthcare crisis storm. Poor revenue cycle management can cause quality to suffer or lead to a discontinuation of services, the closing of hospital units or the shuttering of facilities altogether. Ensuring strength and stability in the revenue cycle trifecta can help hospitals and healthcare systems overcome barriers to financial health so providers can focus on patient care.
Technology
As we all know, artificial intelligence (AI) is finding its way into every nook and cranny of healthcare. Payers have already embraced its technology and the results can be detrimental to both patients and providers. Nearly gone are the days of humans applying nuance to understand the unique condition of each patient and provider. Insurance companies have implemented AI to process claims at break-neck speed using algorithms, which has led to a significant uptick in claims denials. According to a recent Crowe RCA benchmarking analysis, denials rose from 8% in 2021 to 11% in 2022. That means the average healthcare system was saddled with approximately 110,000 unpaid claims last year alone.
For providers, technology can play a key role in improving revenue cycle performance. Optimizing this technology may involve implementing new systems and processes, integrating existing systems and improving staff proficiency with technology. But revenue cycle technology can be complex, costly and constantly evolving. Identifying and implementing the right technology solutions as well as managing and maintaining these systems can be daunting.
Team
While the pandemic may have waned, the impacts are long lasting, notably in the healthcare industry. Staffing shortages and reduced operating revenue have led to increased workloads and employee burnout, and revenue cycle staffing is not immune. Recruiting and retaining staff with the knowledge and expertise to successfully navigate the revenue cycle complexity is becoming increasingly difficult and costly.
An analysis published by CWH Advisors2 revealed that 63% of providers were experiencing revenue cycle staffing shortages and that accelerating cash flow and improving predictability of revenue streams were top goals. Without adequate revenue cycle staffing to mitigate claims denials and manage the backlog of unpaid claims, healthcare systems will continue to see the claims denial rate skyrocket, contributing further to cash flow challenges.
Time
Without the proper technology and team in place, time becomes a rare commodity. The increase in workloads means less time to recruit and train revenue cycle staff and less time to implement and maintain technology. It’s a vicious circle where each element of the trifecta directly impacts the other elements. With less time to identify and correct claim errors, analyze contracts and reimbursement issues, and appeal denials, providers are left with a growing number of open claims or inappropriately closed claims, which ultimately leads to increased revenue loss and patient debt.
Data released by the Centers for Medicare and Medicaid Services3 reveal that only a miniscule 0.2% of denied claims are appealed. That leaves the patients carrying the burden of paying out-of-pocket for services that should have been covered through their insurance. And when patients experience financial hardships, they often avoid adding to their debt by abstaining from or postponing necessary healthcare services. Even worse, more patients are being denied medical care because of existing debt. It is a compounding problem that adds to the crisis.
So, what can providers do to stop the vicious circle and strengthen their revenue cycle trifecta?
For one large urban hospital system in the Midwest, conducting zero balance reviews helped to identify $5.5 million in potential underpayments over just a few months, of which $3.9 million made the cutoff for appeal. Most of the underpayments and cash collections came from Medicare and Medicaid managed care plans and a large commercial plan. In many cases, the denial was related to eligibility, and correct coverage updates resulted in the hospital receiving retroactive payments.
Another 10-hospital health system was able to identify and recover $10 million in the first year of outsourcing its zero balance reviews. By leveraging the revenue cycle service provider’s advanced tools and tactical teams, the health system not only recouped lost revenue, but they were also able to fix issues to prevent future losses. As each system hospital was added, a review of coding, billing and write-offs fixed a host of broken processes.
Instead of focusing on reducing expenses, providers should turn to zero balance reviews to find a new source of revenue. However, it takes a lot of sophistication to figure out if money has been left on the table, and providers need technology, time, and the right team to manage this process effectively.
For some healthcare systems, recovering funds through zero balances reviews is just the first step. When broken processes continue to plague the revenue cycle, additional help with coding and accounts receivable may be required to bridge the gap and help improve processes to avert future revenue losses. Providers may find outsourcing to be their best option as they can leverage the advanced technology, expert team, and dedicated time that revenue cycle service providers can offer.
1https://www.crowe.com/-/media/crowe/llp/widen-media-files-folder/h/hospital-double-whammy-less-cash-in-more-cash-out-chc2305-001b.pdf
2https://www.prnewswire.com/news-releases/study-finds-healthcare-providers-looking-to-outsource-revenue-cycle-management-processes-301791790.html
3https://download.cms.gov/marketplace-puf/2023/transparency-in-coverage-puf.zip