by Heather Richards, Chief Revenue Optimization Officer
Since healthcare remains turbulent, it’s best to have the right balance and strategy in executing revenue cycle management (RCM). This means proving the right value for every dollar spent.
Healthcare is an industry unlike any other: It is the only industry I know of where the seller (i.e., hospital/health system/ASC) isn’t guaranteed payment under a contractual agreement. Furthermore, the buyer (i.e., the patient) has no predictability in what service will be delivered or how much it will cost them.
Everybody wants value every time they spend a dollar, which is quality and cost effectiveness. When it comes to revenue optimization, the challenge that keeps me up at night is RCM efficiency and capturing as much revenue as possible as efficiently as possible.
When considering the pace of technology from a clinical perspective – such as robotic surgery or gene therapy – healthcare is seen as being extremely innovative in its ability to deliver care. But when we consider the administration of healthcare (processing of claims and revenue capture), it is highly inefficient. It is one of the most inefficient industries out there.
How do we close the gap on that?
Pre-authorization: RCM’s seven-headed hydra
Revenue optimization for a healthcare provider like an ASC is not about negotiating daily with payers for every patient and for every fee. It is about locked-in, fixed pricing; a provider contracts with a payer for a period of time.
An ASC’s revenue optimization team wants to drive efficiency so we can submit a claim that is hands-free. That means the claim goes from our ASC to the payer and comes back fully adjudicated – accurately as per our agreement – and is paid. Since it’s common to have 5% of claim volume denied (it varies payer to payer), how can we find efficiencies and build systems within our organization, so we get reimbursed in a timely fashion, reduce Days Sales Outstanding (DSO), decrease the cost of collecting revenue, and increase our revenue?
Data Builds Bridges, and Relationships, and Kills Hydras
One way to show the benefit of efficiencies is through providing data insights that benefit both parties. It’s saying to a payer, “Did you know that of the last 500 claims for this procedure (a colonoscopy with biopsy for example), you denied them 10% of the time? We went through a ping-pong match over and over but, in the end, you paid the claim.”
All of these touches and the back and forth strain their resources as well as ours and then impact patients because – six months or more after their procedure when we’ve finally settled – the patient has some residual amount.
That’s not efficient, nor is it a good patient experience. It’s a backwards way of doing business. Do you know of any entity delivering a service that hopes to get paid the right amount, someday, in the future?
It’s just not reality. But it is in healthcare.
Playing Chess with Data
Atlas Healthcare Partners is putting technology and processes in place to gather data to bridge gaps with our payers, so we can better negotiate and partner with them. We work to make a case that we’ve done a great job returning authorization denials, playing by the rules, and achieving great clinical and quality outcomes. Then we work to consider waiving pre-cert or authorization requirements for specific procedures (i.e., colonoscopies) at specific locations. Then we’ll have a retrospective look back to make sure everybody’s still playing by the rules.
That’s the goal. To automate that process of claims for certain procedures. To be able to predict the probability of a claim being kicked back by one of the payers.
Why? To what end? Because…
- For every claim that goes out the door, the minute it requires any human intervention, the cost to settle that claim goes up exponentially.
- The longer claims sit unpaid, the bigger the impact to the ASC cash flow and bottom line.
We can do better.
The “Auto Repair” Analogy and the 80/20 Rule
But what if we can come to an agreement with a payer where there are no pre-auth or pre-cert requirements, for a majority of the routine (approximately 25) procedures done at an ASC?
Let’s use an analogy of car repair—ASCs do a lot of tire rotations and oil changes, so to speak (colonoscopies and pain injections). We do delicate “engine work” too. But let’s follow the 80/20 rule and mainstream what makes sense. Let’s not hold up payment on 80% of our procedures that are really straightforward, quick, and simple.
Now there are 20% that require a higher calibre of talent to manage the process for a one-off complex medical procedure (a total joint replacement or spinal procedure), where we coordinate with the surgeon’s office to ensure we have the proper documentation to support billing for a high-acuity, complex surgery. In such cases, the review process is extremely manual and dependent on human intervention – sharing records or a more complete patient history.
The hope is that there is more value in this high-touch work because of the nature of the procedure and the associated cost. The notion of a partnership—with our payers, physicians, clinical staff – is how we can provide the best quality patient care the most efficiently. Patients may not see these behind-the-scenes efforts, but they benefit from the work we do to be efficient in RCM.
And they see the value they get when they spend a dollar.
As Chief Revenue Optimization Officer with more than 20 years’ experience as a transformational and results-oriented leader, Heather leads Payer Strategy and Operations and centralized revenue cycle management services with a focus on developing value-based arrangements, optimizing revenue with managed care contracts, and delivering best-in-class revenue cycle results.