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Not only does editing cut back on the revenue, but it eats into margins further by requiring more labor on the back end to make sure claims get through the first time, Barlow says. "It's a very labor intensive deal to identify the problem, investigate it, and try to get restitution."

Payers not evil

The problem doesn't just lie with insurance companies, says Christopher Baron, director of patient financial services at 161-staffed-bed Our Lady of Lourdes Memorial Hospital in Binghamton, NY.

"Commercial payers will come out with a new rule, and it extends the time it takes to get the claim cleared," he says. "But they're dealing with multiple customers, and a lot of the self-funded customers can customize what they give to their members."

For example, some pay for an annual physical and others don't. Self-funded customers are just using insurance companies to adjudicate claims. In general, payers have gotten much better in paying claims more quickly, Baron says, and days AR have dropped as a result.

"A lot of that has to do with the electronic billing and paying of claims, but it hasn't lessened the amount of follow-up we have to do to get problem claims paid and make sure when they do pay a claim they're paying it correctly."

Solutions

Many hospitals and physician practices rely on customizable software or Web-based programs to help them navigate through claims that may not pass muster with the multitude of payers they have to deal with. Adding such solutions is important not only to get paid promptly for services and to help determine the patient's liability for care, but also to ensure compliance with Medicare rules.

"Bolt-on applications are critical in this day and age from a compliance perspective," says Lynn Sanne, assistant vice president of revenue services with Lourdes. "They can ensure you're compliant with Medicare and Medicaid, and they're systematically adding new edits as new bulletins come out. That's how we stay compliant."

But decreasing the amount of labor that billing departments undertake to ensure correct payment is a key component in adding value to such systems, say many who are in charge of revenue at hospitals and physician practices.

For instance, a claim comes out of Lourdes' legacy system and is filtered through a bolt-on "claim scrubbing" system from SSI Group Inc. "It will flag us that it's not going to pass Medicare's muster" or that of a commercial payer, whose payment rules the hospital is constantly updating to prevent the need for a lot of "phone tag," Baron says, between Lourdes billing staff and the payer. "It creates a flag to cause us to look into the claim before it's filed," he says.

Central Utah Clinic uses technology from MedSynergies to scrub claims prior to submission to check on payment changes that it's discovered over time.

"They have a tool that enables us to better aggregate our data sets and try to pick up on those changes quick, and if it turns out they will be ongoing, to build that into our data sets so we don't have to worry about it and refight that fight over and over again."

Further, the tool allows CUC to forecast the impact of such changes on its bottom line, so that Barlow can plan on the impact and adjust with payer partners.

Another tool helps save labor in the patient collections arena, which is "a growing part of healthcare as HSAs take hold in our market," Barlow says. CUC handles patients' collections with letters and phone calls from its staff, but the MedSynergies tool has automated that process.

At one time, CUC's AR days had been down to 52, but with increased changes in payable services from commercial payers over the past few years, days AR had inched back up to 79. Barlow expects that through better automation in billing and collections, he can get that back down into the low 40s.

"If we can do that, it will exceed $6 million of ROI in a year,' he says. "I'm a little more pessimistic, but I still expect strong ROI. My estimates would still bring us a good 7 percent return on our dollar."