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  • by Jonathan Farr

Optimize your RCM and reduce claim denials

Updated: Oct 13, 2020

Many, if not most, health systems are undergoing expansions that result in massive sets of disparate data to be reconciled and reviewed. This often means facing significant complexities to the health system’s RCM processes throughout the enterprise. 

To give one example, healthcare facilities frequently struggle with challenges related to claims denials management, appeals and Medicare local market rules. When this happens, it’s important to select the right Revenue Cycle Management auditing (RCM) solution – one that will ensure clinical and operational excellence while supporting the financial viability of the organization. 

Identifying the issues 

Specific issues regarding treatment authorizations can be particularly confounding, impacting an organization’s ability to mitigate claim denials for treatments provided. This can occur when there is a deviation in the plan of care, burdening clinical and operational teams to secure authorizations for treatment necessitated by a change in the patient’s health status. As a result, the claims might be denied, even though the care was rendered and the expense incurred, which causes a hospital system to bear the burden and file a write off. Even if the screens on a health system’s existing operating system register that the charges for treatment would be dropping on the claim, those systems can also fail to confirm re-authorization and there goes another missed billing opportunity. 

Another area of deep concern is documenting medical necessity in order to ensure reimbursement. Here again, the current system may be burdened with claim denials resulting from documentation failure.

Finding a solution 

Hospital leaders responsible for revenue cycle are now tasked with having to evaluate numerous competing vendor solutions with all promising to deliver big results. Since many health systems have already invested significant funds in their overall operating system, and perhaps some analytic tools, the idea of discarding and replacing their current system with a different and equally expensive transaction-based model just isn’t feasible. 

What to keep in mind when shopping for a RCM vendor solution: 

  • Choose an actionable RCM solution powered by an end-to-end software platform. The solution’s efficiency platform should overlay existing systems to help healthcare organizations compare massive amounts of data across their total enterprise, detect exceptions and problems, and guide actions and interventions to improve efficiency. 

  • Seek an actionable RCM solution that has reconciliation and analytical tools that can help gather and compare data enterprise-wide, detect deviations, issue alerts and offer an integrated workflow to guide the ‘fixes’ you will need to make. 

Results and ROI 

By sticking to those goals when seeking a solution, hospitals can eliminate the need for large up- front acquisition costs and make a financial transaction that falls within budget. In fact, it may even over-perform. One large hospital system’s outpatient infusion center carefully selected an RCM solution that could deliver those objectives mentioned above. Here’s what they’ve achieved so far: 

  • They initially identified seven rules that governed authorizations for infusion treatments and then tasked the RCM solution to begin monitoring CPT changes. The solution- generated alarms were so critical to diagnosing problems with the authorization process, and provided immediate opportunities to initiate corrective action, that hospital leaders quickly expanded the rule set to 10. 

  • Savings related to denials and write-offs continue to accrue and were upwards of $800,000 in the first six months of operation in this clinical area. 

  • Back-end processes have been streamlined, relieving stress and time constraints imposed on the clinical staff. 

  • Inadequate or missing documentation of medical necessity have been addressed, allowing the hospital to transition charges to patient self-pay or to initiating a change in the course of treatment. 

The bottom line is, an effective data analytics RCM solution should help hospitals increase net revenue by 3 percent to 4 percent, with ROI multiples of between 8 and 10 by adding a real-time or near real-time data analytics platform. This will allow a hospital to use any data from any operational system to set up sophisticated validations that detect issues immediately. By simply overlaying an actionable real-time data analytics system, managers can quickly gain control of aggregated data, and detect and resolve issues that impact revenue integrity and clinical and operational performance in the most cost-effective way. 


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