Increasingly, software designers are turning their attentions to non-clinical operations, where automation in billing and collections functions can dramatically improve the rate of clean claims, lower costs and help improve a practice’s financial footing.
Why is this so important now? A healthy, profitable back office enables excellence in patient care. You can’t treat patients if you can’t stay in business.
The importance of automation
Understanding what it costs practices to collect and perform other administrative functions, then leveraging automation to better perform those functions, delivers almost immediate ROI improvement.
The beginning of any new calendar year can be especially stressful financially for practices. The days of $5 patient co-pays are gone. With the growth in high deductible health plans, practices are essentially collecting most of their income from patients rather than plans early in the year, requiring many practices to alter their billing and collection procedures
According to the nonprofit healthcare business processes alliance Council for Affordable Quality Healthcare, Inc (CAQH), automating claims-related business transactions could save the medical industry $9.8 billion a year. The industry has made strides in transitioning from manual to fully electronic administrative transactions, but there is still work to be done.
“The results highlighted in the 2018 Index are encouraging,” said Kristine Burnaska, director of research and measurement at CAQH. “Both providers and health plans are saving time and reducing administrative costs, but more effort is needed to significantly reduce the volume of expensive, time consuming manual processing.”
The CAQH Index is the industry resource for tracking the adoption of HIPAA-mandated and other electronic administrative transactions between healthcare providers and health plans in the medical and dental industries. Data submitted by medical and dental plans covers roughly half of the insured population in the United States and providers represent a range of specialties.
Key findings
One type of transaction that could perhaps deliver the most ROI to practices – prior authorizations – has the lowest level of overall automation adoption of the areas tracked by CAQH.
Other key findings from CAQH’s latest report:
- On average, each manual transaction costs the medical industry $4.55 more than each electronic transaction.
- The medical industry could save as much as $27.31 for a single patient encounter by conducting all associated transactions electronically: $14.64 for providers; $12.67 for plans.
- As well, manual transactions require five minutes more to accomplish than electronic ones. A provider practice could save 30 minutes on average per patient if all the transactions typically done for each patient – such as eligibility verification, prior authorization and claims status – were done electronically.
ROI improvement
So where is the most potential ROI for practices when it comes to managing transactions electronically vs. manually? A focus on automating prior authorizations and billing processes may provide some of the most immediate gains in time and resources.
Prior authorizations: Obtaining real-time information about what the patient owes and what the estimated costs will be is essential to provider practice financial health.
This is where a combination of the systems and policies can make a real positive improvement in practice health.
According to CAQH’s survey, nearly half of all prior authorization transactions are being conducted manually, meaning a staff member is making a phone call, sending a FAX or sending an email to obtain the information.
Automating just this one type of transaction can save the industry $7.28 per transaction: $3.81 for the practice and $3.47 for plans, according to CAQH.
Billing automation: In a traditional practice management solution, many of the steps in the billing process are manual. When you think about reducing cognitive burden for users, focusing on reducing manual steps and automating areas like financial posting, validating claims, preparing electronic claims, adjusting small balances, processing finance charges and statement processing can help significantly.
Billing automation can also have a positive impact on ensuring you have a high first-pass clean claims rate and a low rate of denials. An industry benchmark goal is to have less than 4 percent denials on first pass claims, so that gives you a place to target. The more rework required, the more it will cost you. Imagine the improvements in cost to rework denials and time for your staff if you can increase the denial rate by 2 percent, so that 98 percent of the claims processed are approved the first time through.
Revenue cycle management systems now enable more automation than ever. Some of the daily tasks you’ve performed manually – if automated – can give you almost immediate bottom line improvement.
“The industry is making progress,” said April Todd, Senior Vice President, CORE and Explorations at CAQH. “We are at an inflection point where processes and technology must adapt to a healthcare system that is transitioning to value-based payment and becoming increasingly complex.”
Download the 2018 CAQH Index report here. A webinar discussing CAQH’s findings is available here.
