Reduce claims underpayments and denials through integration

With a streamlined approach, organizations can decrease operational expenses through more efficient workflows.
By Bryan Hufnagle
08:47 AM

There is one constant in today’s healthcare climate: change. As hospitals and health systems navigate the shifting landscape of revenue cycle management (RCM), there is a unique opportunity to align strategies for the better by leveraging the right information, expertise and systems.

National initiatives, such as ICD-10 and accountable care, have the potential to improve care delivery in unprecedented ways. However, providers need a line of sight into infrastructures and workflows that proactively address clinical documentation, coding, billing and collections. Furthermore, reinventing RCM processes and adopting an integrated approach to billing reduces claims underpayments and denials. Ultimately, this integration will help eliminate avoidable statistics such as those pointing to 30 percent of claims being denied or ignored on first submission and claims underpayments by as much as an estimated average of seven percent to 11 percent.

Taking Hold of a Better RCM Strategy

The days of siloed revenue cycle systems are over. By leveraging an integrated approach to both the clinical and financial experience, healthcare organizations can more efficiently aggregate, assess and apply valuable data from disparate systems.

For instance, fluctuating regulations and policies have affected how some payers rewrite their contracts, making them much more complex than in the past, involving not only acceptable billing requirements, but also patient outcomes and severity of illness. For this reason, providers need a comprehensive system and processes that adequately identify areas of opportunity within the revenue cycle and equip healthcare providers with the ability to react in a timely manner to recover losses in net revenue and to improve processes to prevent reoccurrence. Enhanced RCM strategies that are built on a foundation of integrated health IT enable providers to achieve this by integrating systems, such as admissions, eligibility, patient payment, contract management, claims and accounts receivable management, into a single platform. Within this framework, associated workflows can be merged into one seamless process, allowing hospitals and health systems to view, manage, and quickly react to the financial obstacles in order to assure the appropriate reimbursement of each claim. They can also compare clinical documentation, coding and the services rendered to ensure they are adequately aligned with the payers’ respective contracted terms and rates, ensuring optimal reimbursement.

These integrated RCM infrastructures are helping the industry address incorrect payer payments and inappropriate denials, in addition to issues associated with warranting accurate billing to patients. When it costs providers an average of $25 to rework a single claim, it’s not surprising that as many as 65 percent of denied claims remain unresolved; they are simply too costly to rectify. These unpaid claims instead become lost revenue.

Healthcare providers who have successfully adopted integrated systems and utilized analytics to improve internal processes dramatically improved the trajectory of financial performance and financial sustainability. For example, a predominant $2.5 billion health system located on the East Coast was losing more than 5 percent in underpaid and denied claims. The health system decided to become proactive in focus and process integration. Through this multi-faceted and interdepartmental effort, they were able to deliver over $40 million to bottom line recoveries and add sustainable process improvements that led to over $15 million annually. 

With payer reimbursements declining, improved integration of systems and processes encompassing every aspect of the patient encounter, insight into reimbursement methodologies and disciplined focus on process improvement can help hospitals and health systems increase payment velocity and revenue collection accuracy. It can also decrease administrative costs and help organizations ensure long-term financial viability.

Bolstering the Bottom Line

As a whole, the healthcare industry spends $315 billion annually on claims processing, payments, billing, bad debt and other aspects of RCM. By leveraging integrated solutions, healthcare organizations can apply actionable data, analytics and operational insights that traditional siloed systems cannot deliver.

This comprehensive view can help hospitals and health systems reduce the number of denied or underpaid claims, maximizing collections and boosting revenue performance in the process. With a streamlined approach, these organizations can also decrease operational expenses through more efficient workflows—ultimately protecting the bottom line.