A major problem for hospitals and health systems is revenue leakage, which has been exacerbated during the pandemic.
Legacy revenue cycle management strategies and technologies have added to this problem. By taking a more proactive approach, with strategies for revenue recovery, providers can recover lost revenue and improve their margins.
In a virtual session sponsored by ABILITY Network at Becker's 6th Annual Health IT + RCM Conference, Tom Schultz, senior vice president at ABILITY Network, discussed research about hospitals' revenue leakage challenges and offered strategies for improving revenue recovery.
Four takeaways:
1. Hospital executives consider finances to be their top challenge. Nearly three quarters of hospital leaders are moderately or extremely concerned about their organization's financial viability. During the pandemic's first quarter, 33 percent of hospitals reported a decline in operating margins of 100 percent or more, and nearly twice as many U.S. hospitals are expected to operate with negative margins in the wake of COVID-19, according to research cited by Mr. Schultz. "It's going to take us time to get back our bearings and move the industry forward," he said.
2. Insurance coverage and eligibility challenges drive bad debt. Claims denials have been rising steadily since 2016, topping 11 percent of claims in 2020. The leading reason for claim denials is incorrect eligibility information; 86 percent of initial denials are potentially avoidable. Eligibility challenges fall into three categories:
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- Underinsured or self-pay patients. Up to 40 percent of self-pay patients are misidentified and actually have coverage of which they are unaware, can't remember or don't want to disclose. Between 1 percent and 5 percent of self-pay accounts written off as bad debt have billable insurance coverage.
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- Incomplete insurance information. Among patients who present as insured, 15 percent may have additional coverage. Unfortunately, Mr. Schultz noted, "75 percent of providers stop seeking coverage after the first match."
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- Unplanned interactions. These interactions — which many Americans struggle to pay — carry significant financial risk and revenue uncertainty for providers.
Legacy RCM strategies contribute to the problem because of outdated technology and reactive, rather than proactive, denial management practices. "We can't use the old strategies to tackle these problems," Mr. Schultz said.
3. Strategies exist to eliminate coverage-based revenue leaks. These strategies include:
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- Start at the start. Hospitals should prioritize addressing eligibility in the first patient interaction. This reduces downstream denials and eliminates downstream administrative work. Electronic eligibility verification is the biggest savings opportunity to reduce administrative costs related to managing claim denials.
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- Rethink the denial management process. Robust insurance discovery ensures that every available payer is identified for a claim. Payer claims are four times less costly to pursue than chasing patient payments.
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- Increase efficiency by batching coverage checks. Batching is fast, as it provides a way of quickly finding all available payers for multiple patients. It also is more accurate, as replacing a human process with automation cuts down on errors, which are a major source of denials. Billing the appropriate payer from the start of a claim's life cycle keeps cash moving and reduces days in accounts receivable.
4. ABILITY Network helps providers recover lost revenue. ABILITY Network uses data to solve complex healthcare problems. ABILITY Network Insurance Discovery uses artificial intelligence and automation to search patient information against public and private payers to identify all available coverage. The result: ABILITY Network reveals an average of 39.5 percent insurance identification matches on uninsured accounts. "We turn more self-pay and bad debt accounts into payer claims," Mr. Schultz said. This significantly reduces costly manual insurance discovery work.
While improving the patient experience. ABILITY Network helps recover lost revenue and improves operating margins.
To learn more about the event, click here.