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Payer Practices are Top Health System RCM Stressors. Here's What to Do

Analysis  |  By Delaney Rebernik  
   December 17, 2024

In a year rife with denials and discord, RCM execs say these three tactics may help turn the tide.

Payer practices, which have gripped public consciousness for much of December, are also the leading revenue cycle stressor for healthcare providers, according to recent research from HFMA and Guidehouse.

Among more than 130 system financial executives surveyed, nearly nine in 10 (85.8%) cite health plan patterns like denials and underpayments as one of their top three challenges; more than half (51.5%) finger a related pain point: prior authorization.

It's something RCM leaders have said time and again.

 "We're in a crisis," Shanda Richards, revenue cycle director of Central Peninsula Hospital in Alaska, previously told HealthLeaders. "We're delaying care because we can't get prior authorization."

The following tactics, sourced from RCM execs throughout a year rife with denials and discord, may help turn the tide as we roar toward 2025.

Watch the legislative landscape

In January, the Centers for Medicare and Medicaid Services finalized the Interoperability and Prior Authorization Rule, setting requirements to streamline the process for Medicare Advantage, the Children's Health Insurance Plan (CHIP), and Medicaid managed care plans, among others.

Provisions aim to increase data sharing and, in turn, reduce the administrative burden on providers, enabling them to spend more time delivering care. Payers must, for example, send prior authorization decisions within seven calendar days for standard requests and within 72 hours for expedited ones.

While the incoming administration's impact on these and other hot-button measures remains to be seen, state legislatures are likewise taking action to alleviate providers' prior authorization struggles. Nearly half of U.S. states have passed bills in the past two years to improve transparency over requirements, reduce care delays, and increase publicly reported data.

Talk the talk

Coming to the negotiating table prepared can make a huge difference, RCM execs say. It starts with regularly reviewing payer contracts, a task that 17% of providers admit to overlooking.

Other best practices, according to RCM and financial execs who participated in this year's HFMA conference, include:

  • Be transparent about challenges in managed care and look at ways to file litigation if necessary.
  • Consider creating a national payer scorecard to keep track of the reputations, strategies, and tactics of every payer your organization does business with. 
  • Stay diligent and in constant communication. Reinforce the need for patient care and partnership over profits. 

Scale solutions

When it comes to earmarking investments over the coming months, most HFMA-Guidehouse survey respondents (71.7%) are prioritizing RCM tech, including automation, AI, and machine learning.  

Proponents say such a focus can help providers counter tech-fueled upticks in denials. As an example, an October report by the U.S. Senate Permanent Subcommittee on Investigations highlighted UnitedHealthcare's use of AI to deny claims and found that the insurer's prior authorization denial rate for post-acute care jumped from 10.9% in 2020 to 22.7% in 2022.

"Payers rely on technology solutions just like we do to manage processes on their side," Aron Klein, vice president of finance operations and supply chain at Carle Health, previously told HealthLeaders. "If something [happens] on their side, it takes time to resolve, which ultimately delays processing or receipt of payment on our side."

The Illinois-based system has seen a 22% increase in denials year over year. The top culprits, according to staff research, include payer policy changes and issues with interoperative CPT codes. Additionally, most denials have come with a request for more documentation or information, creating a mountain of administrative work, Klein said.

To address such sticking points, his team has implemented a solution featuring forms populated with information from the system's EHR to send to payers. The intervention saves specialists 10 minutes per request, which has taken the timeline for appealing prior authorization–related denials from 46 days to 36.5 days.

Revenue cycle staff and leaders meet monthly to monitor progress and denial trends, updating system leadership on their findings so that they and the operations teams can assist in resolving them.

"We are bringing technologies and a patient-centered approach to alleviating the complexities of managing the care authorization process," Jessica Godbey, the system's vice president of patient access services, said.

Delaney Rebernik is a freelance editor for HealthLeaders.


KEY TAKEAWAYS

Payer denials and prior authorization requirements are top stressors among some 130 RCM and financial execs surveyed by HFMA and Guidehouse.

To alleviate the burden, revenue cycle leaders should keep an eye on the evolving legislative landscape, adopt a more strategic stance on negotiations, and invest in solutions that can help scale their response and strengthen patients' care access.

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