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Why Invisible and Remit Denials are a big threat to hospitals revenue

On 4th Jan 2019
denials

Welcome to 2019 - a year when hospitals are still going to have to fight for revenue. It’s a swamp out there, but the right healthcare contract management system is like an airboat in the Everglades - it will add speed to your revenue stream and prevent it from being sucked underwater by unseen hazards like invisible and remit denials.

There are 5,534 registered hospitals1 in the United States and 4,480 of them are community hospitals. It’s fair to say that every single one of them struggle with issues related to revenue. There are many reasons; too many to list here. But key among them are the legacy systems embedded in far too many hospitals that drag revenue capture and denial tracking. These antiquated platforms lack the functionalities necessary to address today’s complex RCM issues. When technology lags, revenue lags right along with it.

Endless changes in reimbursement policies are bad enough; multiple payer mixes, varying contract terms, MACRA, ICD-10, accountable care, and the shift to value based reimbursements only add to them. It’s enough to make an Revenue Cycle Managers head spin. The only solution is to have an aggressive, comprehensive RCM system in place that can accommodate rapid changes in reimbursement contracting and regulation, notify staff and protect revenue.

Invisible and remit denials are the biggest alligators in the RCM swamp, and they are very, very hungry. They waste a lot of revenue:

  • Healthcare underpaid claims2 average 7-11% or more

  • On average, it costs $25 per claim to re-work each healthcare underpayment and/or denial

  • Denied claims average 5-10% or more

  • Approximately 65% of denied claims go unresolved

  • Only 35% of medical groups appeal denied claims

Acute care and critical access hospitals can benefit from curtailing, and eliminating, invisible and remit denials that sap revenue from the bottom line. It can improve revenue capture that is an essential underpinning of care delivery. 2019 is the year to make it happen.

As the saying goes, “The more things change the more they stay the same.” The author of a blog in Healthcare Finance4 in 2011 said automation and expert rules engines could, “reduce the need to spend scarce time and money on the back-end trying to collect revenue (or contest denials) with a low probability of return”. Here we are eight years later and hospitals are still wrangling with the issue of revenue collection, and improving returns.

Technology and automation are on your side.

The only way to avoid these costs and increase the percentage of successful claims is to automate the process. When validation of every single claim is automated against the contracted rate, costly staff time spent on manual tasks is reduced and money is saved.  Overturning denials and underpayments is faster and more successful. Invisible denials become a thing of the past because every single payment is checked before being posted and deficiencies are detected immediately, not weeks or months later.

It’s costly and inefficient3 for hospitals to check claims manually:

  • It’s estimated that it takes 5 to 12 minutes to check one claim with simple reimbursement

  • It costs an average of $5.40 to check the status of each claim

Contract modeling can achieve 100% collectability

Healthcare payer contract modeling and management can identify and overturn underpayments and denials, remedy inefficiencies and reduce costs. The best healthcare contract management & modeling systems support hospital revenue and achieve 100 percent payer collectability. That may seem like a pipe dream but is achievable when every single claim is paid according to payer contracts.  The best systems also:

  • Ensure identification and collection of underpayments and wrongful denials by arming the hospital with the correct contractual data to appeal and overturn them.

  • Easily integrate with any patient system and can be set up quickly for fast implementation.

  • Support payer contract modeling and accurately calculate the expected plan allowable with Cloud first flexible technology.  

  • Check claims against contracts for both managed care and government payers for inpatient and outpatient care

Healthcare contract management and modeling is the solution to eradicating denials and underpayments. It can pre-calculate the contracted payer amount and compare it to the payment that is actually process by the payer. When custom contract calculators can be designed, it gives hospitals the functionality they need for complex reimbursement rates for all types of care and procedures.

Hospitals should look for contract modeling software that includes the following:

  • Ability to identify and build contract terms to calculate reimbursement rates based on combinations that can include place of service code, ICD-10 code, CPT code and more.

  • Ability to model Value Based Reimbursement services including Medicare value based programs like HVBP (hospital value-based purchasing) and HRA (hospital readmission adjustment)

  • Ability to calculate tiered allowances when multiple procedures or charges are performed as a single encounter  

There are other important functions that should be included in healthcare contract modeling as well including:

  • HIPAA compliant

  • HITRUST certified

  • Ability to assign effective dates to contracts and contract components

  • Calculate expected reimbursement for primary, secondary, and tertiary payers and patient responsibility

  • Ability to accommodate multiple plans for the same payer with unique reimbursement methodology.

  • Ability to store unlimited contract versions for historical, current, and future effective dates.

  • Ability to forecast expected reimbursement for claims submitted but not yet paid

Taming contract complexity  

The more complex contracts become, and the more payers a hospital contracts with, the more necessary healthcare contract management becomes. It’s no longer a luxury item or something that is purchased if there is a budget surplus. It becomes imperative. After all, to understand each contract is to understand reimbursements, underpayments, and denials.  

When a hospital Revenue Cycle Management staff understands all the details and provisions of a payer contract, it is easier to prevent invisible and remit denials. When reimbursement requirements are clearly understood, it is easier to fast track appeals of underpayments and denials. A comprehensive healthcare contract management system will not only make RCM staff acutely aware of contracted rates, but will also help staff to stay on top of:

  • Claim submission schedules: number of days a provide has to submit a claim

  • Payer schedules: the number of days a payer has to reimburse the hospital

  • Contract coverage: the scope of services, and a detailed list, that are covered by the contract

  • Procedures for disputing denials

  • Renegotiation and terminations notice periods

Managing hospital revenue is a Leviathan task. It requires all the knowledge, tools, and skill that chief financial officers and Revenue Cycle Management staff can muster. A system that offers rapid identification of invisible and remit denials is an indispensable tool that can unlock lost revenue and capture it for the organization.

Revenue Masters is a leading provider of cloud healthcare contract management technology and reimbursement services. With a state of the art payer contract modeling and management software aligned with an underpayments and denials as a service, Revenue Masters is helping providers bottom line and providing peace of mind that they are collecting every dollar they earned per their payer contracts. Contact Revenue Masters today at  (877) 591-2590 or email us at sales@revenuemasters.com to start modeling and managing your contract with ease.

 

1: https://www.aha.org/statistics/fast-facts-us-hospitals
2: Rmra brochure: Denials and Underpayments Facts Industry Averages:
3: Zir-Med infographic
4: https://www.healthcarefinancenews.com/blog/four-ways-improve-hospital-revenue