As the financial burden on patients increases, so too does the challenge healthcare organizations face in collecting payment.
Financial clearance mitigates the financial risk by securing payment agreements from both payers and patients, making it an integral component of a high-performing revenue cycle.
However, a provider organization’s ability to financially secure appointments in advance of a patient’s visit is often limited by a lack of staffing, technology, and operational processes. These limitations result in initial denials – which increased to 11% of all claims in 2022, up from nearly 8% in 2021 – as well as net revenue leakage via avoidable write-offs and impacts to patient experience scores.
About half of all denials are caused by front-end revenue cycle management (RCM) issues, including registration, eligibility, authorization, and non-covered services – issues that can be mitigated with a robust integrated financial clearance (IFC) process. When correctly designed and implemented, IFC creates a seamless and cohesive approach to all facets of the long journey from scheduling to authorization and eventually to payment.
The revenue cycle can be impacted by a misalignment among any of the front-end RCM functions that create the IFC value chain, including scheduling, demographic verification, insurance and benefits verification, and prior authorization validation.
For example, failing to capture the minimum data set at the time of scheduling creates the need for additional patient outreach to collect missing information before benefit verification can be initiated – an extra step that delays authorization and can impact pricing transparency. It also makes it more difficult to fully understand out-of-pocket liabilities, which are important to providing good faith estimates and ensuring the right deductibles and co-pays are collected.
Thus, proper alignment among all patient access functions is crucial to ensuring appropriate controls are in place to mitigate revenue leakage – which is what an IFC approach accomplishes by ensuring critical functions are properly undertaken in a timely manner.
An effective IFC program should focus on three key areas to reduce the likelihood of denied claims. These include:
- Timely completion of financial clearance activities. Clearance for scheduled appointments should be completed 14-30 days out from appointment dates and re-verified where appropriate for events such as changes in month or year.
- Strategically automating prior authorization processes: Because prior authorization technology is not fully mature nor is there a single solution to automate all types of authorizations, it is important to select a partner with flexible technology when piecing together automation for the authorization process, e.g., break down authorization determination vs authorization submission components.
- Closing the feedback loop with the denials team: Establish clear lines of communication and accountability to gain insight into top preventable denials. Consider partnering with a coding denials expert who not only resolves or appeals denials but can also provide documentation insight into providers and recommend upfront edits.
By addressing these key areas, IFC can help reduce or eliminate the 82% of denials that are preventable, which represents a significant opportunity to reduce A/R days and duplicate re-work.
Executing the IFC Strategy
A proper IFC strategy will take advantage of multiple technology approaches, including artificial intelligence, collaboration tools, and robotic process automation, and will be tailored to the organization’s specific needs. The key is to work with industry leaders who have mastered the complex authorization process and can deliver an approach that streamlines rather than creates bottlenecks. This will ensure a smooth patient experience while allowing the organization to collect the appropriate level of net revenue.
Finally, monitor the results of the IFC strategy with analytics and benchmarking, which brings accountability to both internal and external stakeholders. The first step is defining Key Performance Indicators (KPIs) and leading indicators. For any vendor partners, establish Service Level Agreements (SLAs) and embed performance reporting. Internal dashboards can ensure the effectiveness of the solution, improve accountability, and provide the data needed to identify and reach out to peer groups.
Setting the Stage
When properly designed and implemented, a strategic IFC program breaks down silos and allows the seamless transfer of information, thereby optimizing operations and workflows and reducing the burden on the Patient Financial Services team. It increases net revenues, reduces denials, A/R days, and bad debts, and avoids claim write-offs – all of which make IFC the cornerstone of a high-performing revenue cycle.
Matt Bridge is the SVP of Strategy and Services at AGS Health, overseeing Patient Access and Patient Financial Services divisions.