RCM Capabilities Creating Greater Payer-Provider Alignment

AUG 10
According to many experts, wasteful healthcare spending has exceeded over $900 billion.  This, by any measure, is a significant amount borne by the entire landscape of providers, government and commercial payers as well as patients and their families.  To a large degree, the waste is created by inefficient processes, complex payment and/or contractual dynamics, and outright “friction” between providers and payers.  In fact, $210 billion of the total annual waste alone is spent on excessive administrative costs that support the business-related interactions among providers and payers.  Another $170 billion is spent annually on managing inaccurate payments related to clinical appropriateness, contract compliance, and increased coding complexity, among other factors.  As a result of all this excessive spending, there have been entire multi-billion sub-industries that have emerged as well as a range of new initiatives that aim to enhance existing levels of automation and solve for payer-provider alignment challenges that continue to persist.
Moving Away from Manual and Paper-based Processes
From a Revenue Cycle Management (RCM) perspective, a significant amount of the negative financial impact stemming from manual workarounds and errors is a function of the high volume of often costly business transactions among payers and providers.  Specific industry pain points where innovative RCM companies are deploying robotic process automation (RPA) and other advanced technology solutions to greatly enhance these common RCM processes include:
  • Prior authorizations are typically handled with a much higher degree of manual intervention.  According to a study by CAQH, a non-profit alliance focused on “streamlining the business of healthcare,” only 18% of prior authorizations are fully electronic and the average manual prior authorization costs $11.18 and takes as much as 27 minutes to complete.  In contrast, 94% of claim submissions and 76% of eligibility verification transactions are fully electronic.
  • Claim status checks and attachments are increasingly automated, but the information and specificity required to proactively avoid denials and/or delayed reimbursement is still pervasive across the provider market.
  • Paper-based processes, particularly mailed explanation of benefits (EOBs), payments in the form of printed checks, and printed/mailed patient statements, are emerging areas where increased automation can improve the process and deliver cost savings.
  • Payment inefficiencies are another area where RCM companies are making an impact.  Onerous paper-based processes resulting from shifts in payers and coverage options, such as Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA) enrollment are being automated to address different payer and Third-Party Administrator (TPA) requirements.  Security and compliance, patient payment facilitation, intelligent payment routing, and auto-settling and reconciliation are among the other critical factors that can greatly enhance existing levels of automation.
Adoption of Standards and Electronic Transactions
Friction between payers and providers oftentimes stems from a lack of transparency and frustration caused by navigating variable processes and requirements specific to each organization.  In this respect, while providers may blame payers universally, standard EDI formats are limited in terms of the depth and granularity available to help providers properly fix a claim prior to submission or remediate denials in an efficient, straightforward manner.  Payers may certainly be at fault for a lack of transparency, but typically the level of detail providers need can be found with the proper access, expertise, and capabilities – particularly with regard to navigating and extracting the necessary data from payer-specific portals and systems.   This process includes gaining access to and normalizing Claim Adjustment Reason Codes (CARCs), Remittance Advice Remark Codes (RARCs), and other payer-specific reason codes that provide a more comprehensive view.  A lack of context often results in costly, time-consuming manual workarounds as well as increased denial risk, write-offs, A/R days, payment delays and errors, among other issues.  In this regard, in the absence of detailed reason codes, asking the “right” question is paramount to selecting the correct path forward and remediating the issue in an efficient, automated manner. Enhanced context around the following transactions can meaningfully mitigate RCM issues and foster greater alignment between payers and providers:
  • Eligibility verification at the point of patient registration is critical to avoiding errors and denied claims further downstream.  Sorting out coverage among primary and secondary payers, patient pay responsibility, and whether there has been a registration error made (e.g., wrong plan code, policy number discrepancy, etc.) in real-time can go a long way in reducing one of the most frequent causes of avoidable denials.
  • Prior Authorization, the verification and screening process providers are required to seek from payers for certain medical procedures, tests, equipment, and therapies prior to the patient receiving the prescribed treatment, are often criticized for its high cost, manual workflow burden, and negative impact on care delivery and patient satisfaction.  Fortunately, there are a number of innovative technology and RCM vendors that have begun to successfully address the problem through the use of real-time connectivity, rich content, workflow automation, and next generation artificial intelligence. 
  • Claim submission, or more precisely clean claim submission, requires an up-to-date maintenance of payer reimbursement rules and regulatory requirements that shift around and change frequently.  Incorporation of the proper edits and intelligent claim scrubbing tools – whether utilized at the encounter-level or during back-end claims editing – are essential in reducing costly clinical and administrative denials.
  • Claim status inquiries retrieve up-to-date status details on pending commercial or government claims.  The standard EDI claim status code that is returned, however, can be very limited and lack the specificity to avoid a denial or underpayment.  Specialized vendors with an ability to extract granular, payer-specific adjudication codes that reflect the full context of the claim’s status provide an opportunity to manage claim issues by priority or exception, rather than manually reviewing large volumes of claims pushed to a staff’s work queue.
  • Attachments, which are associated with approximately 5-10% of claims, are solicited by payers as a means of substantiating the adjudication and payment of the claim.  The attachments process – which provides the necessary supporting documentation, in some cases comprising the patient’s entire medical record – is typically very manual in nature (i.e., printed and mailed documents) and often disjointed from the claims submission process.  Automation in the way of secure, electronic delivery of attachments is a positive first step.  The opportunity, however, is in submitting the electronic claim and attachment simultaneously to create cohesiveness across the claims lifecycle, which in turn will reduce payment delays and possible denials.  HHS via the ACA legislation and CMS are supportive in moving in this general direction as a means of alleviating challenges associated with exchanging health information and creating efficiencies within the overall revenue cycle.
  • Remittances provide a source of information in determining why a claim was denied or paid out at an amount other than what was billed by the provider.  The detail, however, is often very limited in nature and often lacks the granularity required to substantially optimize provider billing and denial management processes.  Beyond extracting the necessary adjustment detail (i.e., CARCs, RARCs, and Claim Adjustment Group Codes (CAGCs)), it is important that denial and underpayment reason codes are normalized and mapped across all payers to ensure workflow prioritization and limit the potential for write-offs and/or issues that impact patient statements.  Providers have also experienced errors and insufficient adjustment code information when using standard lockbox services that use OCR scanning and paper explanations of payment (EOP).
An entire landscape of innovative RCM software and analytics companies have emerged that address these critical RCM workflows.  The leading organizations have competency around intelligently extracting data, analyzing that data in the proper context, and delivering actionable intelligence into the workflows of the providers’ staff or outsourced RCM service provider.  The combination of these capabilities (i.e., connectivity, context, and informed workflow automation) creates the greatest potential to optimize financial performance for the provider while helping accelerate the industry’s progress toward a more highly automated, “frictionless” environment.  For these reasons, it is important that providers select the right RCM technology partner to capture the full extent of potential benefits:
  1. Reduce costly manual or paper-based processes
  2. Improve payment accuracy (both under- and over-payments) through clean claim submission and rapid, proactive remediation, when warranted, prior to adjudication
  3. Advance denial management and prevention efforts
  4. Enhance internal RCM operations through the prioritization of errant claims and other issues as well as provide detailed drill-down capabilities specific to each payer by provider, location, and service type
  5. Improve existing levels of compliance, auditability, and oversight of relevant processes, systems, and personnel
  6. Tighten revenue cycle timelines overall, leading to more rapid reimbursement and cash flow
At TripleTree and TT Capital Partners, we continue to monitor the market and remain encouraged by the companies creating the next generation of RCM solutions that will improve efficiencies, automate processes, and reduce waste - that will help ultimately remove friction between payers and providers and support the delivery of better healthcare. In addition to a future research report on the next generation of RCM capabilities, TripleTree is a proud sponsor of the 2018 KLAS Digital Health Investment Symposium – where RCM and payer/provider alignment will be topics of discussion. In the meantime, let us know what you think!
Seth Kneller
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