According to a recent study performed by Change Healthcare, approximately 9 percent of hospital charges in 2016 were initially claim denials, resulting in a revenue loss of $262 billion from healthcare organizations nationwide.
Among the myriad of reasons for claim denials, including registration and eligibility issues, invalid data, medical necessity, and coding/billing issues, researchers discovered that the highest percentage of denials stemmed from front-end processes. Further, an increase in payer requirements (such as prior authorization) for claims reimbursement has put more pressure on front-end staff to ensure accurate claims reimbursement and minimal claim denials.
How can hospitals avoid both denials and the expensive, time-consuming appeals process that follows? By replacing manual processes with advanced analytics and RC tools, hospitals can reduce denial rates, improve success in the appealing process, and increase their recovered revenue.
Because they must ensure every step in the following revenue cycle is completed or risk losing healthcare provider money, front-end staff members are currently facing increased stress. Let’s start by breaking down the role of front-end staff in claims processing:
- Capture all of the patient’s insurance information.
- Verify the insurance and that it covers the patient’s procedure.
- Get prior authorization for the procedure and obtain necessary referrals.
- Collect the patient’s co-pay when service is provided.
With the need to ensure accuracy at all levels, front-end staff members often become bogged down in making certain that claims aren’t denied or working to appeal claims that have been denied. This can become a very time-consuming and expensive process. Fortunately, by using electronic systems, it’s possible to reduce the amount of time and money spent on this part of the claims cycle.
By automating as much of the process as possible through the use of electronic systems, it’s possible to decrease the time front-end staff spends on claims tasks, while also improving the number of claims that are approved without appeals.
This type of system needs to be implemented as a whole, however, for it to be truly effective. Much of the software and other technology related to reimbursement has been added on over time, creating a piecemeal system that isn’t always efficient and doesn’t always work as intended.
Electronic Adoption Can Save Money
While adopting electronic and automated systems for claim reimbursement could potentially save providers millions of dollars every year, the transition to automated processes can be slow. In 2015, electronic adoption in the healthcare industry grew at most by eight percent. Why? Some providers prefer to continue using the processes they have in place, even if they aren’t entirely efficient. Others may not fully trust automated electronic processes. No matter the reason, this slow growth has resulted in many missed opportunities to save money.
Besides helping to reduce the number of claims that are denied (and, thus, reducing lost revenue), electronic systems also actually cost less than manual systems. According to CAQH, manually managing claims can cost providers on average of $4 more per claim than electronic claims management.
While electronic claim management can reduce costs across the board, the greatest cost-saving potential lies in the area of prior authorization. Handling transactions manually can cost providers up to three times more than the amount they’d spend after switching to an electronic system, where they can lower their costs to under $2 per transaction. This provides an average savings of $5.61, which then can add up to savings of as much as $4.3 billion dollars every year.
These savings have not gone unnoticed by providers; in 2015 electronic authorization submission was the most-adopted process. By the end of that year, 18 percent of all healthcare organizations were using electronic prior authorization methods.
Other Areas where Electronic Claims Management Can Save Money
There are many other areas within which providers can save money by adopting electronic claims management systems. Claim remittance, for example, has slowly shifted from mail to electronic processes, saving providers an average of $4.74 per claim.
Claim submissions and sending additional attachments for claims are other areas in which providers can save by adopting electronic systems.
- In 2015, almost 94 percent of all documents submitted for claims, including discharge summaries, operative reports, and Certificates of Medical Necessity, were submitted manually.
- By moving to an electronic system, the cost per submission would drop from $5.25 to $1.17.
- This is a savings of more than $4 per transaction.
A healthcare provider who adopts electronic submission methods for these two areas, as well as prior authorization, will be able to save a significant amount of money every year. Electronic submission options are also available in other areas, including benefit verification, claim status inquiry and claim payments.
Electronic systems offer providers a chance to save money, reduce the amount of time spent on claims, and reduce the number of claims that are denied. By implementing these processes in areas such as prior authorization, claim remittance, and claim submissions, your front-end staff can work more efficiently, rather than simply working harder. Working with eReceivables can further help you increase the effectiveness of your claims process.