Underpayments and Invisible Denials - The Silent Revenue KillersOn 11th Oct 2018
The central question for most healthcare organizations and physician practices is how to protect revenue. A small decline in reimbursements can have wide ranging implications. However, the complexities of today’s reimbursement and the costs of revenue cycle management can make it prohibitive to control every single dollar-generating detail. Financial losses may be recognized, but identifying the reasons are another matter. Automated processes are the best way to protect revenue, identify and rectify the causes, and guarantee that a dollar earned is a dollar reimbursed.
Hospitals, health systems, skilled nursing facilities and physician practices all lose revenue to the same silent revenue killers; underpayments and invisible denials. Money drips slowly and steadily out of the organization, much of it without detection. Often, providers post payer payments without knowing if the claim is paid 100% to the payer contractual agreement. As a result, underpayments and invisible denials can go undetected. Staff may collect some amount of the amount due on accounts, but are they also tracking and overturning denials? If not, denials and invisible denials are also pulling money out from the provider. This is the fiscal reality for many healthcare organizations and it is why silent revenue killers are alive and well - and regularly stealing revenue.
The high cost of invisible revenue loss
The American Academy of Family Physicians says “a 5 to 10 percent denial rate is the industry average”. That’s an expensive average to live with. Look at your base revenue and then subtract ten percent. Can you afford to lose that every year? Are you willing to accept that lost revenue to causes you can easily remedy like underpayments and invisible denials? They are an expensive proposition.Industry statistics show:
Underpaid claims average 7-11% or more
On average, it costs $25 per claim to re-work each 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
Accepting an industry average denial rate of 5 to 10 percent is even more difficult to accept in the face of systems that achieve 100 percent payer collectability. That’s a percentage that can bolster a bottom line and create a robust revenue stream.
It requires state-of-the-art healthcare contract management software that checks every single claim and make sure it is paid according to payer contracts. Those solutions include reimbursement calculators that automate the process and ensure identification and collection of underpaid or denied claims. When healthcare organizations are armed with the correct payer contractual allowable, underpayments and invisible denials are identified and revenue streams tend to swell.
Automated functionality protects revenue
The best way to prevent revenue losses is to implement automated claims management software. It can detect losses immediately, track the number and dollar amount of underpayments and the percentage of denials. It is the best way to control and maximize an organization’s revenue stream. It also protects against those silent revenue killers that sap viability and growth.
Healthcare organizations that are considering the purchase of contract management software for better healthcare contract modeling and management and to capture lost revenue should look for certain key features and functionality:
1: Easy-to-use interface and healthcare contract modeling calculators. All software should be user friendly. It should include a calculator functionality that pre-calculates the expected payer reimbursement and compares it to the amount of the payment processed by the payer. It should also be able to handle hospital, physician, SNF, LTAC and rehabilitation claims. In addition, the healthcare contract management software should be able to model functionality according to any payer contract type and reimbursement rate, regardless of its complexity.
2: One hundred percent payer collectability is the gold standard. The best healthcare contract management software provides insights with payment variance reporting that consolidates critical data into a single report. That means that the reports present the data in a way that is easy to use and evaluate by:
Patient, payer and billing information
Each claims contractual allowable calculation
Information needed to initiate the appeal process within the payer’s allowed window of time
3: Automated processes support reliable revenue forecasting. Healthcare organizations must be able to forecast, with a certain amount of reliability, net revenue at 30, 45 and 60 days. Detailed insights should deliver information on:
Claims billed with no payer activity
Outstanding denials and underpayments that have not been reviewed
All of these should be available for review by payer by plan, visit type, facility and physician. In addition, outstanding “aged” patient responsibility payments should be reviewable in 30, 60, 90, 120 and greater than 120 day buckets. Delinquency rates should be available for review in 10, 15 and greater than 20 day buckets.
This is the type of granular review and fiscal control that is necessary to squeeze every dime out of any organization’s complex payer mix. Anything less will result in leaking and lost revenue.
Digitizing revenue control
There is one more factor to be considered when gaining control over silent revenue killers, and that is digitizing the process. The more that one has instantaneous notification of, and control over, underpayments and invisible claims, the faster revenue can be recovered. That’s where mobile apps come in. The best ones put fiscal control in the palm of your hand, literally. Here’s what to look for in payer contract management software:
Healthcare underpayments and denials management modules
Displays of new claim volume for a selected period of time
Opportunity to customize data views by the year, month, or week
Dashboard that shows number of claims with a payment variance per selected time period
Shows number of variances are underpayments or denials
View total revenue outstanding
Monitor volume and revenue in appeal status
View total overall revenue received
Digital capability reduces gaps in notifications and gives RCM managers rapid control over potential losses.
Eradicating silent revenue killers from your organization will improve your revenue stream. Implementing the right automation software will improve productivity and reduce costs. It can create a productive revenue cycle management process that eliminates underpayments and invisible denials. Regardless of the size or type of healthcare organization, every dollar earned should be a dollar directly, and accurately reimbursed.
It’s time to get every dollar that is negotiated, SaaS software can save the day!
Revenue Masters is a leading provider of cloud revenue cycle 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 firstname.lastname@example.org to start modeling and managing your contract with ease.