Mitigating the Financial Consequences of COVID-19

July 24, 2020 By: Ken Magness

Is it time to automate your RCM? Learn more about the advantages and how to evaluate if it would benefit your organization.

The tsunami of COVID-19 hit healthcare with little warning. Elective surgeries, the financial lifeblood of many healthcare institutions, suddenly stopped. Critical supplies of protective gear and medications are in high demand and short supply, inflating prices. Labor costs have skyrocketed as staff work overtime to accommodate the influx of patients and covered shifts of colleagues who became ill.

The American Hospital Association (AHA) estimates hospitals and health systems lost $202.6 billion from March 1, 2020, to June 30, 2020, due to COVID-19, which translates into $50.7 billion per month.

Large institutions are not the only ones affected. A recent survey of primary care physicians captured the financial fallout on front-line providers. Fewer than 50% of practices have enough cash to remain open and over one-third have laid off or furloughed workers. Well visits and routine visits for chronic disease care are down 53% — concerning news for providers that depend on fee-for-service reimbursement.

And of course, there is a toll on patients. According to the Kaiser Family Foundation, treating a patient with COVID-19 could total over $88,000 if ventilator support is required. Another study estimates the average cost of treating commercially covered patients at $38,221 per episode. Covered California, the state of California’s health insurance marketplace, recently announced that premium increases for 2021 could be as high as 40% or more due to COVID-19.

Everyone – from the CEO of a multi-facility system to the patients visiting their local primary care physician – feels the pandemic's financial consequences. The question moving forward is, how can we mitigate lost revenue and still provide the best care possible? One way is to maximize returns from the existing revenue sources by automating claims cycle management. Revenue cycle management (RCM) automation saves money and increases efficiency for the provider. It also increases accuracy, which can save patients the stress of denied claims and prepare them for upcoming medical bills.

The top four ways to mitigate financial strain with automation

Eligibility checks

Depending on manual eligibility checks is initially expensive (the estimated cost to providers is $5.30 per transaction), but it can also lead to high rejection and denial rates due to inaccurate information, which adds cost beyond the initial inquiry. Integrated, automated systems can check eligibility during appointment setting, several days before an appointment and again on the day of the visit, ensuring patient coverage, so there is a lower chance of a claim denial or a surprise medical bill later.

Cost estimation

Preparing cost estimations is a complicated process that pulls together individualized insurance plan data with payer fee schedules and expected treatments and procedures. As with other methods that depend on manual labor, cost estimations are time-consuming and run the risk of errors and inaccuracy. Automated estimates produce comprehensive quotes in seconds, allowing for the patient to prepare for future costs or discuss payment options before treatment is rendered.

Denial management

All denials are not created equal. Systems that cannot differentiate between routine and unexpected denials delay reimbursement and cause frustration for staff trying to resolve the issue (as well as the patient who is worried about his or her financial responsibility.) Automated denial management takes advantage of known resolution next-steps to resolve claims quickly and organizes the claims that need a human touch into time-saving workflows.

Business intelligence

Monthly reporting is not enough to keep your RCM on-track. Automated systems condense claims information into easy-to-understand reporting and analytics that reveal actionable opportunities and are available 24/7. Denials, payment delays and underpayments can be recognized immediately and rectified.

 

Is it time to consider automating?

Given the financial pinch many providers are experiencing, there has never been a more critical time to collect every penny of revenue to which they are entitled. But how do you know if your organization would benefit from automated systems? Evaluate your current performance by asking these questions:

1. Is the labor required for claims corrections due to eligibility one of your highest RCM costs?

If the answer is yes, automated systems can drastically reduce time spent on eligibility and insurance verification while producing a high clean-claim rate. For example, the average clean claims rate for Quadax clients is 99.6 % or more.

2.  Is patient accounts receivable (A/R) one of your top revenue concerns?

Patient A/R aging that increases after the 60-day mark is usually a sign that patients are finding payment difficult – and that is typically due to unexpected medical bills and denials. Automating estimation can increase overall collections by improving vital communication between patient and provider about upcoming medical bills and how they can be paid.

3. Does your billing department struggle to work through backlogs of denials? 

If payer days in A/R are slowly but steadily increasing, it can indicate a denial backlog. Automated systems quickly route denials to actionable work queues that accelerate resolution. Institutional knowledge of payer rules is stored in a central location, ensuring that staffing changes will not affect your bottom line.

4. Do your monthly reports repeatedly show the same issues?

Having challenges with your RCM is normal. But, if problems are not resolved, it may be time to take a different approach. Business analytics can pinpoint discrepancies and outliers before they snowball into laborious corrections and resubmittals.

Organizations that have integrated, automated billing workflows will be in the best position to mitigate the financial repercussions of COVID-19. Quadax has the complete revenue cycle solution to ensure optimized billing productivity and profitability for your organization. Let’s take on the revenue cycle together!

 

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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