The “silent payer discount” can be defined as a margin of revenue opportunity (between 3% and 5% of the hospital’s annual net revenue1) that is lost due to the complexity of documenting and coding complex inpatient cases. At a mid-size health system, this could equate to $22 million to $38 million in lost revenue, according to research conducted by Accuity, a provider of physician-led clinical documentation review services. Even in organizations with topperforming clinical documentation improvement (CDI) programs, this margin often goes uncaptured, resulting in significant losses for health systems that are providing critical patient care.
To learn more, Becker’s Healthcare recently spoke with three leaders with experience reducing the silent payer discount. The panelists were:
- Hani Judeh, MD, Chief Medical Officer, Accuity
- Candice Daszewski, Chief Client Officer, Accuity
- Anne Robertucci, Vice President, Clinical Revenue Cycle, Prisma Health (Greenville, S.C.)
To reduce the silent payer discount, leaders must understand current market conditions
Although the negative margins experienced by hospitals in 2022 and 2023 are in the rear-view, gross revenue at hospitals is rising faster than net revenue. Two contributors to this trend are payer mix challenges and revenue growth that is driven primarily from the outpatient setting.
Patients with multiple comorbidities and procedures require complex care, complex documentation and complex claim submission to ensu 100% revenue integrity. The most complex cases also cost hospitals the most money in terms of clinicians’ time.
“With high-acuity and increasingly complex patients, the demand for hospital services is predicted to rise,” Dr. Judeh said. “These patients are resource-intensive, with longer lengths of stay, resulting in a higher cost of care. This population has increased morbidity and mortality, as well.”
Missed revenue has widespread impacts and contributes to hospital consolidations. The result is reduced access to maternity care, specialists and emergency departments. The impact is particularly acute in rural areas. In some cases, hospitals end up closing their doors.
Reimbursement for complex cases is challenging for a number of reasons. Staffing shortages are widespread for experienced clinical revenue cycle teams like multi-disciplinary physicians, coders and CDI specialists. Hospitals often don’t have the systems and resources necessary to capture all the details of complex cases consistently.
On the payer side, guidelines are constantly changing, clinical denials are on the rise and documentation criteria vary from payer to payer and from state to state. For example, a 2021 survey found that the healthcare industry saw a 20% increase in claim denial rates over the prior five years.
Clinical validation denials commonly result from discrepancies between documented diagnoses and the payer’s clinical criteria. Proposed rules, such as CMS’s requirement for insurers to streamline prior authorization processes, are one step toward addressing these complexities.
“Having a strong clinical mid-revenue cycle program to stop revenue leakage and to accurately reflect the acuity and complexity of patients is critical when managing the challenges that a hospital faces in providing quality care,” Dr. Judeh said.
Internal education is necessary to ensure accurate complex case documentation
Complex patient cases are associated with higher reimbursement because more complex care is necessary for these patients. In many instances, patients engage with multiple specialties during their clinical encounters.
Navigating the documentation for these cases requires multi-specialty clinical experience. Hospitals, while having general CDI and coding staff support, may not have the specialist expertise to navigate complex clinical scenarios. To navigate the clinical nuances and ensure that documentation is accurate, experts are needed. Proper documentation and adherence to clinical criteria are key to mitigating denials and ensuring appropriate reimbursement.
Education is also essential to address the root causes of denials, whether they stem from insufficient documentation, coding errors or process failures. Clinical programming and ongoing education for healthcare providers, CDI teams and coding personnel are crucial for improving the accuracy of documentation and reducing denials.
To minimize denials and optimize revenue cycle management, hospitals must understand payer contracting, including payer-specific criteria. With this knowledge, healthcare organizations are in a stronger position to negotiate more favorable contract terms.
Automation reduces the burden associated with documentation and the revenue cycle
Technology can augment the detailed and often tedious work of documenting complex cases. Automation streamlines and standardizes processes, reducing errors and costs. Both front- and back-end revenue cycle processes lend themselves well to automation.
“These processes are more standardized, involve structured data and have a linear workflow,” Dr. Judeh said. “Registration and coverage verification, as well as claims processing and payment submission, are examples where automation may work well.”
The middle stage of the revenue cycle, however, is a different animal. The data is unstructured and determinations demand critical thinking and clinical expertise. Augmented reviews and a human in the loop are needed to validate findings.
“The middle revenue cycle space is quite different and it’s so dependent on critical thinking,” Ms. Robertucci said. “Technology in this space should serve as a support or assistive device to those involved to ensure that claims are coded appropriately and comprehensively.”
In the mid-revenue cycle, technology can still assist with clinical and coding accuracy. Most providers utilize some sort of technology solution that pinpoints areas of the chart for potential leakage and prioritizes the workforce for those opportunities.
“Those tools do bridge some of the gaps,” Ms. Daszewski said. “But given the complexity of each diagnosis and varying payer requirements, providers still face a material increase in denials. Our clients are focused on how they can move any learnings upstream, as well as mitigate the denial from happening through the use of technology and/or analytics.”
One of the advantages of technology-enabled chart reviews is that the approach used for every case is uniform in terms of documentation findings. Each chart accurately represents the complexity of the clinical state of the patient, as well as the care delivered to support the patient encounter.
Clinical care and coding expertise are the keys to financial sustainability
Often hospitals let the fear of denials affect how they code patient encounters.
“It’s understandable that organizations may lean into a conservative mindset when it comes to self-selecting out of risky or high-frequency denials like sepsis or acute respiratory failure, and opting for a ‘safer’ DRG,” Ms. Daszewski said.
Representing the true clinical picture of each encounter, however, safeguards revenue long term and impacts quality outcomes for physicians and the hospital. Accurately reflecting the acuity and complexity of patients in documentation is critical for both quality care and reduced revenue leakage.
“This is where a strong marriage between domain expertise in clinical care and coding impacts financial performance and quality metrics,” Dr. Judeh said. “Documentation integrity is a huge factor. A strong team and thoughtful, judicious selection of technologies and the vendors supporting them is critical. There’s too much at stake.”
The journey to improved financial and patient outcomes: Insights from Prisma Health
Specialized support and proper education are essential for hospitals as they navigate complexity, mitigate denials and optimize revenues. This approach is exemplified by Prisma’s success, which has resulted in improved financial outcomes and improved quality metrics.
In the area of reimbursements, Prisma Health compared its capture rates to cohorts in the area and identified opportunities for improvement. One challenge was ensuring that documentation in the clinical record spoke to the complexity of patients that were receiving treatment. Prisma Health was also seeing more critically ill patients, which created complexity in coding.
“We started by analyzing our data using appropriate metrics for comparison,” Ms. Robertucci said. “This enabled us to identify opportunities. We also had the help of a strong vendor to take a deeper look at our cases and to identify clinical documentation opportunities.”
Like many healthcare organizations, Prisma Health’s coder population is aging and a strong pipeline doesn’t exist to fill positions as employees retire. This, along with multiple coder vacancies is creating a stronger dependency on contract coding. This can create cracks in coding that warrant a strong auditing process. Prisma’s partnership with Accuity directly addresses these issues and functions as a safety net, bolstering the work and capabilities of Prisma’s CDI team.
“Many hospitals and health systems are struggling with vacancies in their CDI teams or they may not have tenured experience,” Ms. Robertucci said. “Gaining assistance from a vendor with expertise in this space creates an extension of your team.”
Ongoing provider, coder and CDI education tailored to the specific needs of these roles was also a game changer for Prisma to drive continuous improvement around codifying the patient record. Using appropriate service line and deeper analytics drove improvement in the clinical documentation and coding space, which is key to focusing time and energy where it matters most for education.
A multi-disciplinary review approach that includes CDI, coders and physician assistants ensures that cases depict the true acuity of patients receiving treatment at Prisma Health. Technology assists end users in reviewing the right cases at the right time and ensures that all the relevant clinical information is captured.
“Technology also decreases the time spent capturing the codified story by finding all the hidden ‘Easter eggs’ in the expansive EMR data,” Ms. Robertucci said. “The right technology can identify a clinical diagnosis that has not yet been fully documented and prompt for a CDI review.”
By taking advantage of strong case review technology, Prisma Health has seen vast improvements in its capture rates. This has equated to a strong financial return, as well as indirect impacts to certain quality scores, like observed-to-expected mortality rates.
“As of today, we continue to score at top decile performance levels which have been enhanced, in part, due to our focus on ensuring that we are comprehensively capturing both acute and chronic diseases accurately,” Ms. Robertucci said.
With the continued shortage of seasoned coders and the need to drive down administrative costs, Prisma Health believes that now is the time to redefine the middle revenue cycle.
“I think it’s critical to re-evaluate the way we do business now and how we can reframe technology in the coding and CDI space,” Ms. Robertucci said. “With the speed of AI development, we will be able to re-create this workspace. I’m excited to be a part of a rebirth of an aged and legacy workflow. It’s time to think outside the box and gain better results with less cost and effort.”
Conclusion
The silent payer discount underscores the significant financial burden that hospitals face. Denials are one important contributor, but the more significant issue is the lost margin opportunity that often goes unnoticed in healthcare organizations.
Accuity has a unique lens into U.S. health systems due to its review of over four million inpatient charts. This work has revealed the impact that the silent payer discount has on hospitals and health systems nationwide. Accuity’s mission is to bring this issue to light and to help healthcare organizations compliantly capture this significant revenue that could otherwise slip away unnoticed.
“Leaning into a partner that can leverage technology to drive accurate, complete and compliant records, as well as clinically defend against denials, will be the strongest line of defense against the silent payer discount,” Ms. Daszewski said.
1Based on Accuity’s 4+ million chart reviews since 2016 for hundreds of hospitals across the U.S.
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