Avoid 3 of the Top RCM Pitfalls with Automation

July 08, 2020 By: Ken Magness

Using different systems for RCM may be holding back productivity and hitting your bottom line.

The 2019 CAQH Index reported that the healthcare industry is spending approximately $350 billion annually for administration due to its complexity, and that about one-third of that amount could be saved by automating administrative transactions. For many, the mind-boggling $13.3 billion in available cost savings cited in the study begs this question: If healthcare revenue cycle management (RCM) technology has been evolving for over two decades, and the point of most technology is to help processes run more efficiently, what is causing administration costs to be sky-high with such an enormous opportunity for savings? 

The answer: Redundancies and manual processes in the revenue cycle, which are the by-products of trying to fit disparate systems together, are creating costly inefficiencies.

Many organizations have developed their billing processes over time to accommodate arising needs. As a result, the systems that support these billing processes have also been assembled piecemeal. Individually, each system may be good at operating a particular RCM function, such as claims submission, but together they cannot act as a cohesive unit. These separate systems silo information, and the overall lack of integration hinders workflows and drives up administration costs. In fact, three of the top RCM pitfalls can usually be traced back to manual processes and lack of systems integration.


Common RCM pitfalls

Pitfall #1: Eligibility rejections and denials

The average cost per transaction for manual eligibility checks by providers is $5.30.1

Eligibility issues are the number one reason for claim denials. Staff can spend a lot of time logging in and out of websites (and making phone calls) to retrieve information if access is not centralized or automated. Transferring information by hand into software systems can lead to accuracy errors that cause rejections and denials. Because insurance information can change between the time the appointment is made and the time the visit occurs, something as simple as the timing of the eligibility check can result in rejections and denials. When you depend on time-consuming manual checks or partially automated checks that require manual intervention of any kind, other billing priorities often take precedence over eligibility inquiries, leading to denials.


Pitfall #2: Lack of cost estimation

50% of consumers have received an unexpected medical bill.

Patients are in a consumer mindset and cost matters. High deductibles mean that many office visits are now coming out-of-pocket. Eighty-eight percent of patients want to know their payment responsibility upfront. Healthcare organizations know that estimates may sound easy in theory but are difficult in practice because they usually involve a tedious, manual process with a lot of room for error due to varying reimbursement rates and individual deductibles, copays and coinsurance. Unfortunately, many practices are forced to forgo estimates because of their complexity, and patients are often surprised by bills they are unable to pay.  A recent poll found that more than one third of Americans said they could not pay an unexpected medical bill of more than $100. That startling statistic highlights how important it is to understand patient financial responsibility before the visit or procedure.

 

Pitfall #3: Slow denial recognition and resolution

Studies show the average cost to rework a claim is $25, and up to 65% of denials are never reworked.

Often, organizations that rely on predominately manual processes for denial recognition and resolution don’t recognize a problem with new denials until there is a backlog. Even if automated systems are used, non-integration often requires consolidating and analyzing multiple spreadsheets and reports, which is time-consuming and can distort performance. Submitting documentation via fax or mail further delays the adjudication process and drives up administration costs. According to CAQH, the average cost per transaction for manual claim attachments is $4.50.1

Automation: The key to avoiding common RCM pitfalls

Eligibility: Increase clean claims with accurate patient information

Automated eligibility can save providers up to $4.12 per transaction.1

Eligibility claim rejections and denials are preventable. The right automated eligibility system can help reduce costs by accessing patient information in real-time when you need it, and as often as you need it with scheduled batches. In addition to correct patient demographics, eligibility automation can deliver payer coverage and benefits, including copays, coinsurance, and deductibles, so expected amounts due can be collected at time-of-service.


Cost estimation: Improve patient satisfaction and collect more revenue

Automated cost estimation increases patient satisfaction and boosts the bottom line.

Configurable software quickly estimates out-of-pocket costs for patients according to their outstanding deductible and a payer’s fee schedule, saving time and increasing time-of-service collections. Automated systems can also determine a patient’s propensity to pay, which can be a starting point for discussing options for payment before the office visit or procedure, reducing the likelihood of the account falling into bad debt. A study by the Advisory Board found that prepayments at time of service can reduce a typical organization’s bad debt level to less than 4% of net patient revenue.


Denial identification and resolution: React quickly and keep claims moving

Automated denials management can increase billing productivity and save up to $2.17 per attachment transaction.1

Automated denial management provides timely identification of denials and quick action to resolve them. Denial types trigger the appropriate action for the next steps, such as claim correction, appeals, workflow queues, or write-offs. Automatic, customizable responses to denial types increase staff productivity and increase net revenue. Electronic attachments reduce days in A/R and cut administrative costs. 


Organizations that have integrated, automated billing workflows avoid the most common RCM pitfalls to save labor, enhance revenue and accelerate their RCM. Quadax has the complete revenue cycle solution to ensure optimized billing productivity and profitability for your organization. Find out how
Quadax works for you! 

1Conducting Electronic Business Transactions: Why Greater Harmonization Across the Industry is Needed, 2019 CAQH INDEX®, https://www.caqh.org/sites/default/files/explorations/index/report/2019-caqh-index.pdf?token=SP6YxT4u

 

 

Ken MagnessKen Magness is a focused healthcare professional with more than a decade of experience in helping clients understand the true value of automation in the revenue cycle management process. As the Strategic Initiatives Leader at Quadax, Ken and his team are passionate about connecting with healthcare providers to help them create and leverage the appropriate technology solutions to optimize the revenue cycle process and improve the experience of their patients and staff.

 

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