Software for automating revenue cycle tasks can help healthcare providers gird for value-based care. But hospital executives should also know that technology alone will not suffice.

Claims denials management tools: Big opportunity for hospitals to automate revenue cycle processes, says HIMSS Analytics

By Tom Sullivan
07:31 AM

More than half of hospitals are not currently using revenue cycle vendors claims denials management tools, according to a new survey from Healthcare IT News sister company HIMSS Analytics, and that reality presents a large opportunity for providers to get more expedient payment.  

Specifically, HIMSS Analytics found that 44 percent of participating hospital executives indicated they use a vendor solution while 31 percent have a manual process, 18 percent use a homegrown tool and 7 percent are unsure.

On the other hand, in the study sample HIMSS Analytics also determined that 60 percent of respondents without a vendor provided solution plan to purchase a claims denials management tool in the next 7-12 months. That means the industry is essentially on the cusp of all providers needing a modern and effective way to handle denied claims in lockstep with the transition to value-based care and, to a lesser extent, the upcoming Oct. 1, 2016 date after which the Centers for Medicare and Medicaid Services is poised to demand greater specificity in claims submitted using ICD-10 codes.

“Leading up to the changeover to value-based care, healthcare organizations should focus on fine-tuning the process of claims denials,” said Brendan FitzGerald, Research Director for Advisory Solutions at HIMSS Analytics. “There’s opportunity for both vendors and hospitals to really dial-in these processes.” 

Deploying technologies that help automate processes enables providers to identify a root cause of denial and fix that to resubmit the claim, more effectively track accounts receivable to both lower AR days and reduce the percentage of denial write-offs, FitzGerald explained.

Health systems that implement claims denials management software can also tap into the clearinghouse services that vendors offer with the relevant technology and relationship already in place.  That’s a common practice: of the respondents 67 percent use a clearinghouse, while 17 percent rely on their EHR or HIS vendor for claims denials management and the remaining 16 percent use a best-of-breed revenue cycle vendors tool.

HIMSS Analytics mentioned a number of prominent revenue cycle vendors in its report, including Availity, Cerner, Change Healthcare (formerly Emdeon), Epic, Experian, MedAssets, MedeAnalytics, OnBase by Hyland, RelayHealth, SSI, Trizetto and Zirmed, among several others.

“The solutions that are in use have a high-level of satisfaction among customers so the benefits outweigh the challenges when automating processes,” FitzGerald added.

But even the cutting-edge software tools do not get hospitals all the way to automated claims denials management and, in fact, as much as the technology can help Fitzgerald added that because the entire prospect is more about the process than it about IT, steep challenges remain. Notably: the labor spent on collections and dealing with payers to figure out went wrong and adjudicating claims takes time that not even technology care eradicate entirely.

That said, healthcare providers must simultaneously prepare for the expected uptick in claims denials after the CMS grace period for ICD-10 ends and the larger switch to value-based care and alternative payment models.

“The change from a fee-for-service system to value-based care is not going to occur overnight,” Fitzgerald said. “In the meantime, healthcare organizations need to ensure their revenue streams are protected.”

HIMSS Analytics polled 63 healthcare executives for the 2016 Essentials Brief RCM Denial Management Study in web-based research conducted during two weeks in June.  

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