The Covid-19 pandemic has further complicated the ability of healthcare providers to collect services provided, a process that is already a challenge. A November 2021 MGMA poll found that 49% of medical practice leaders reported that Accounts receivable aging increases.
According to the 2021 Pulse Survey of the Healthcare Financial Management Association (HFMA), The pandemic has caused:
- 50.5% increase in unstable/unpredictable jobs/claims
- 37% increase in workload due to confusion over Covid-19 codes and claims
- Rapid, unplanned shift to remote work leads to a 34.7% drop in employee productivity
While most state and federal regulations impose a 30- to 40-day limit on money transfers, many insurers now take more than 90 days to make payments.
Another factor increasing the aging of accounts receivable is the current shortage of healthcare personnel. Denied claims must be researched, reprocessed, and resubmitted to avoid write-offs, but overworked back-office workers don’t have time to be so tenacious.
The crisis has pushed an already dysfunctional healthcare revenue cycle to a tipping point, making it increasingly unfeasible to ignore larger potential inefficiencies. But it also creates an opportunity for suppliers to rethink and build better A/R strategies.
In this article, we’ll describe how to build an intelligent, analytics-driven A/R strategy to dramatically improve collection in today’s healthcare environment. This article describes the pillars of this approach, and the metrics you should focus on in your implementation. First, what are the limitations of the vendor’s current approach?
Limited data and data analytics lead to revenue recovery deficit
Currently, vendors often rely on several disconnected silos of data, leaving them with an incomplete and fragmented view of their overall revenue cycle operations. The packaged reports their EMR creates from these disparate data cannot provide complex or often even useful answers.
Additionally, downloading a data index style and then analyzing it using simple brute-force manual techniques (think Excel spreadsheets) leaves the vendor with only a few dimensions left to analyze it. Without a comprehensive understanding of the data, conclusions may be influenced by the subjective opinions of stakeholders.
This method is very limited. For example, when employees typically only deal with high claims, they are left with a slew of accounts that could have been recovered. When staff determine that the receivables are likely to be recovered, filing and field limitations have passed, and the debt must be written off. Decisions based on limited data result in lower recovery rates and overall cash flow.
1. Analytics is the backbone of an intelligent A/R strategy
On the other hand, powerful multidimensional analysis powered by artificial intelligence that can learn on its own has the potential to provide actionable information that translates into significant improvements to your collection.
2. Benchmark existing metrics and effectively prioritize tasks
Your first task is to benchmark existing analytics and build your metrics. Read about these metrics below. Good technology should be able to predict which A/Rs are recoverable, as well as prioritize tasks and realize revenue.
Machine learning is critical to doing this, as a simple set of rules won’t be able to predict this alone.
Next, you need an efficient way to prioritize recovery tasks that prioritize available resources. All A/R challenges are different. If you’re just prioritizing open accounts based on high claims, you’re not taking into account the complexities and possibilities of recovery.
For example, complex denials around prior authorization have a very low probability of recovery. So you have to be smart about which issues and recognize which ones aren’t worth your time. After all, claims resources are limited. Analytical efforts were made to determine which claims had the highest recovery potential.
3. Use analytics to monitor and improve your A/R workflow
Good analytics can also provide real, data-driven metrics on how efficiently your employees and workflows are pursuing and winning A/R reinstatements and denial appeals. Effective analysis relies on revealing metrics that change over time.
For maximum revenue, you need a good workflow solution that prioritizes tasks and guides agents to help perform recovery. Analysis can pinpoint bottlenecks in the recovery process; vendors need to know where experts stumble so they can troubleshoot.
Unfortunately, the EMR that most providers currently own and rely on for analytics does not provide useful insights. Was it a long call, a certain type of appeal, or did Cigna change its guidelines that caused the problem? Unfortunately, figuring this out from the comments section of EMR is quite challenging. But analytics-based workflow solutions can provide those answers so you can optimize the results of your accounts receivable collection process.
Best Metrics and Reporting to Reduce Receivables Aging
The first step in an effective analytics-based strategy is to benchmark existing metrics and compare them to industry averages. This will enable you to identify and delve into trends and challenges.
- Net collection rate – Focusing on the net collection rate rather than the gross collection rate will give you a clearer picture of the actual receivables that are being collected. In particular, you want these to match service dates so you know what you’ve collected during a given service date.
- Ageing – You want to know the percentage of your aging A/R over the 0 to 30, 30 to 60, and 60 to 90 day periods, and the trends you see there. For example, if you see trends causing lag or aging into old buckets.
- Rejection trends and ratios– Tracking rejection trends and rejection rates is critical to rejection management, so you can proactively ensure you don’t create rejections that cause A/R issues. Double-check denials so you can gain insight into what needs to be done to resolve them. Develop a rejection plan so that employees effectively follow the same protocol.
- over time– If you are looking at rejections, you also want to track overtime rates to see if your employees are successful in overturning rejections, if they are preventable. If not, what do you need to do to support them?
- employee productivity – Especially given the trend towards remote work, suppliers should implement metrics to measure employee productivity and efficiency. Healthcare services have long measured employee productivity through factors such as the number of claims. Experience tells us that this approach does not guarantee results in most cases. It is important to know how much effort was put into recovery so that you can better understand the intersection set. It is more accurate to redefine productivity as the net recovery rate per resource or A/R agent. If you can understand how much effort each claim goes into, then you can get a better idea of the entire set, rather than averaging the total. This also tells you which A/R to focus on. A/R-centric workflow technologies that can provide these metrics will support you in this regard.
For large backlogs, bring in partners to maximize collection
Many suppliers are already dealing with serious aging of accounts receivable. In these cases, the quickest way to control tax collection is to hire a third party. Partners will help you quickly scale your recovery efforts so you can collect as many aging A/Rs as possible.
Experienced revenue cycle staff understand payer guidelines and can negotiate A/R with payers. These experts help suppliers achieve faster cash flow, fewer rejections and higher recovery rates. However, especially in our current staffing environment, these professionals are difficult to find or train.
When working with partners, be sure to look for partners who can provide domain expertise and best practices from an A/R workflow perspective. When evaluating third-party partners, make sure they understand and are committed to measuring the metrics above, or work to implement these analytics capabilities themselves to make the most of your employees’ time.
Collecting Accounts Receivable in a Challenging Environment
Kaufman Hall report “The first month of 2022 will be devastating for hospitals and health systems across the country”. Real hospital margins are negative for the first time in 11 months due to Omicron’s wave of COVID-19 cases. At the same time, expenses will continue to rise, with labor shortages and supply chain disruptions adding to costs. Sales and revenue may continue to be unpredictable.
Suppliers cannot afford to lose revenue unnecessarily in 2022. But your hospital or healthcare center’s finances don’t have to face this turbulent prospect.
During times of increasing demand for healthcare services, providers can unleash artificial intelligence and machine-based analytics and workflow technologies to minimize losses. The inefficiencies of RCM are squeezing profits. Improve your A/R strategy now to generate cash flow and capital to propel your practice or center through the next decade.
Photo: Adventurer, Getty Images
