Prior authorizations are a critical part of the revenue cycle as they impact both reimbursement and patient access to care, and automation may help simplify the process.
Many prior authorization denials occur due to insufficient documentation and an inability to match information that is spread across different systems. By having proactive protocols in place, revenue cycle leaders can ensure better denials management processes.
To help alleviate these prior authorization denials, many revenue cycle leaders have turned to automation, and as a new report from KLAS highlights, leaders are seeing positive outcomes.
According to the new report titled “Automated Prior Authorization 2023,” nearly all interviewed organizations have seen improved financial outcomes and/or staff efficiency from using automated prior authorization.
For the 78% of respondents who report improved financial performance, the report found a few key outcomes including:
A more efficient, streamlined authorization process
Decreased time to approval (within 24 hours)
Fewer denials being sent back to provider organizations
While no respondents feel their financial performance has worsened, the remaining 22% have seen no impact and have not achieved outcomes, citing authorizations being returned, not all cases being processed, and the vendor and payer failing to work together to get authorizations approved, the report said.
The report also cited a few negatives to implementing automation for prior authorizations including long implementation times, issues with electronic medical record (EMR) integration, and clunky workflows.
HealthLeaders recently touched base with Seth Katz, vice president of health information management and revenue cycle at University Health, on newly implemented technology at the organization, and Katz agreed prior authorizations are a great place to apply automation.
“Within about two months of kicking off implementation, [the program] started going to payer websites and logging requests for prior authorizations by taking that information out of our EMR. It's going very well. We're happy and we're looking to continue to expand it,” Katz said.
“You've to get creative with this. Prior authorization is a big one that a lot of people start with. It's a repetitive task. It's taking discrete data from your EMR and putting it out to a payer portal, so it's very systemic.”
And while the prior authorization process can be fairly easy to automate, it will never be a one-size-fits-all experience, he says.
“[Automation] is not a plug-and-play and it's also not one-size-fits-all. Meaning you might have a couple of different automation companies. The company you choose to help automate prior authorizations will not be the same company that we're looking at to do artificial-intelligent medical coding. You might have multiple automation vendors working at the same time too,” Katz said.
As with most things in revenue cycle, leaders must always weigh both the benefits and the risks in implementing automation.
For this report, KLAS interviewed 30 respondents from 26 unique organizations to understand their experiences using prior authorization solutions.
The average health system saw 110,000 claim denials due to prior authorization and other factors in 2022, a recent study says.
HealthLeaders has dubbed 2023 as the year of reducing denials for revenue cycle. More and more studies are pointing to the growing concern of denials for revenue cycle leaders as more pressure is put on these leaders to help increase their bottom lines.
Now, one more study is shedding light on the burden denials have had in the revenue cycle in 2022, and one type in particular—prior authorization denials.
Denials rose to 11% of all claims last year, up nearly 8% from 2021 according to the recent Crowe RCA benchmarking analysis. That 11% rate translates into 110,000 unpaid claims for an average-sized health system, according to the report.
According to the report, prior-authorization denials were at the heart of the cost increase.
Prior authorization denials on inpatient accounts in particular were a key driver behind the dollar value of denials increasing to 2.5% of gross revenue in August 2022 up from 1.5% of gross revenue in January 2021—an increase of 67%, according to the report.
"When healthcare providers are supplying around-the-clock care for the sickest and most vulnerable patients, a denial by the payer implies that the care provided was not warranted and that its necessity must be proved by appeal. Often, these appeals take months to resolve and cost healthcare facilities thousands of dollars. Even then, the payer still might claim that the care was not warranted and not pay the provider," the report said.
According to a previous survey, the top three reasons for an increase in claims denials were insufficient data analytics (62%), lack of automation in claims/denials process (61%), and lack of thorough training (46%).
Those who reported denials increasing pointed to operational challenges such as insufficient data and analytics to identify submission issues, lack of automation in claim submission/denials prevention process, lack of staff training, and lack of in-house expertise, among others.
Unfortunately, a retrospective medical record review recently published in JAMA Network Open is showing a gap in this data.
The study found that 28% of intentional firearm injuries resulting in emergency department admissions were inaccurately coded as accidents.
An expert panel recently characterized this coding problem as a glaring gap in the US firearms data infrastructure, the study said.
To better understand the nature of this problem, researchers reviewed electronic health records for firearm injury encounters at three level I trauma centers and compared researcher-adjudicated intent for each incident with the intent indicated by the diagnosis code assigned by the revenue cycle.
They reviewed 1,227 medical records for patients who presented to the emergency department with a firearm injury of any severity between October 1, 2015, and December 31, 2019.
Researchers determined that 837 (68.2%) reviewed cases were intentional assaults, but of these assaults, 234 (28%) were coded as unintentional injuries in hospital discharge data.
Misclassification was substantial even for patient cases described explicitly as assaults in clinical notes, the study found.
Firearm injury intent coding would likely improve if hospital records included unambiguous and explicit intent-related language, and if there were more coding instructions linked to assault, as opposed to “accident,” according to the researchers.
Making sure your revenue cycle is capturing this information correctly is the first step in ensuring an accurate firearms data infrastructure.
The independent dispute resolution (IDR) process has gotten more expensive for healthcare organizations—by 600%.
The No Surprises Act may be preventing unexpected bills, but it will now be adding to yours.
CMS recently announced that the nonrefundable administrative fee due from each party involved in any payment dispute that goes to arbitration increased from $50 to $350. This price change became affective January 1.
This news is coupled with the recent revelation that IDR disputes totaled 90,078 between April and September 2022, which far exceeded the estimated 17,333 claims annually by the federal government.
As revenue cycle leaders are trying to find ways to increase their bottom lines for 2023, this news is a step in the wrong direction, especially for smaller healthcare organizations. This huge price hike may put organizations in a losing situation as they consider whether to formally dispute a payer’s proposed out-of-network payment amount.
This is coming as a not-so-happy surprise to healthcare organizations since in prior guidance, CMS said the administrative fee for the IDR process would remain $50 in 2023.
So why the enormous change? CMS blames the mass influx of filed disputes.
CMS says the case load of disputes is nearly ten times greater than initially estimated it would be over the course of a full calendar year, requiring certified IDR entities to expend considerable time and resources to the disputes.
“Of the disputes initiated between April 15, 2022, and December 5, 2022, certified IDR entities rendered payment determinations for over 11,000 disputes but found over 23,000 disputes ineligible for the Federal IDR process,” the announcement said.
This, CMS says, has resulted in low collections of the administrative fee relative to both the volume of disputes processed in the portal and to the Departments’ expenditures in the first two calendar quarters of IDR process operations.
“Independent dispute resolution fees should be minimal to protect the ability of medical groups to initiate the IDR process. MGMA supports clear implementation guidance from the Administration to ensure practices have the information necessary to protect patients,” the MGMA said in it’s 2023 Advocacy Agenda.
A recent survey highlighted how payment cuts are affecting denial strategies.
Healthcare organizations are on the verge of stepping up their denials management strategies in 2023 as rate cuts are expected to impact revenue.
On the delivery side, most practices plan to continue their telehealth operations in the new year, according to the 2023 Part B News Predictions Survey conducted in the first two weeks of December.
Asked how they would respond to the reduction to the payment conversion factor, more than half, or 51%, of respondents reported that they will be “more aggressive” in challenging denied claims.
About 46% of survey respondents also said they would increase their collections efforts with payers. One respondent added that “we will be more aggressive about authorizations for Medicare Advantage plans,” according to the survey results.
More drastic measures don’t appear to be on the agenda of most practices. Just 16% of respondents said they will add self-pay services; 15% reported that they would limit staff hours; and 11% said they would be forced to delay the purchase of office equipment or software. Less than 4% of practices said that staff lay-offs are on the table, according to Part B News.
These findings come on the heels of a similar survey by Experian Health that found that the nearly three out of four respondents reported that reducing denials is their highest priority, and 70% said that it is more important than prior to the pandemic.
Additionally, the top three reasons for an increase in claims denials in the Experian Health survey were insufficient data analytics (62%), lack of automation in claims/denials process (61%), and lack of thorough training (46%).
Within the independent dispute resolution (IDR) process of the No Surprises Act, one set of codes encompassed 66% of disputes.
Emergency department visits topped the list of services that triggered a request for an IDR during the second and third quarters of 2022, according to a new report.
The IDR process is a part of the No Surprises Act that allows out-of-network providers and payers to hash out payment for items or services if they aren’t satisfied with the outcome of the open negotiation period that is also mandated by the law.
According to the report, the most common CPT codes disputed were emergency department service codes (66% of disputes), radiology codes (9% of disputes), and anesthesia codes (7% of disputes).
In addition to emergency, radiology, and anesthesia services, “approximately 5% of disputes included surgery codes, such as removals of the appendix or gallbladder and treatment of broken bones, and 4% of disputes included codes for pathology and lab. Approximately 4% of disputes included codes for neurology and neuromuscular procedures such as monitoring of the nervous system during an operation,” according to the report.
The states with the most IDR disputes initiated during this reporting period were Texas, Florida, Georgia, Tennessee, and North Carolina.
The IDR portal was opened on April 15, 2022, just over 15 months after the No Surprises Act was signed into law to protect patients from surprises out-of-network bills. The Departments estimated that 17,333 claims would be submitted in the IDR process annually. In reality, the IDR process saw 90,078 disputes over the aforementioned period in the report, far and away outpacing expectations.
Topics including payer compliance and surprise billing will lead the way for revenue cycle leaders in 2023.
2022 was hardly easy for revenue cycle leaders—between declining operating revenue for health systems, payers squeezing even harder on denials, and a fundamental shift in the workforce—last year was complex, to say the least.
2023 won’t see much of a change, as these trends will still be headache-inducing for revenue cycle leaders.
From February 15 to 17, the members of the HealthLeaders Revenue Cycle Exchange will be meeting in Carlsbad, California, to talk strategy and find workarounds and solutions to the following six trends for 2023 in hopes of remedying the headaches.
Payer compliance
There is a lot of confusion in the industry about what a commercial or managed care payer would want in order to approve a claim.
Much of this confusion comes from the timing of requirements to ensure reimbursement. The bottom line should be the same for all payers: The documentation must show a plan of care based on the working diagnosis and then progress to the goal of the plan and when the patient can expect to reach the goal. But what if payers frequently change requirements? How do revenue cycle leaders keep up?
During the event, we will talk about how revenue cycle leaders are handling payers that are increasingly more difficult to work with. Many leaders are finding that payers are pushing back on reimbursement, requesting more authorizations and medical records, and increasing denials.
Price transparency and surprise billing
The No Surprises Act, which became effective in 2021, requires hospitals to post the prices for their most common procedures as well as offer a patient-friendly tool to help shop for 300 common services.
The various nuances of the No Surprises Act are complicated. So what tools are revenue cycle leaders using? How are they using combined estimates and partnering with physician groups? How do they get estimated costs to patients at the time outlined?
Improving the patient financial experience
How patients are billed plays a large role in the overall patient financial experience and satisfaction. Because of this, revenue cycle leaders said that helping patients navigate the billing process is essential in creating a positive patient financial experience.
Paper statements work, but the digital age has pushed organizations into not only wanting to add in that digital billing experience, but they are needing to. Patients are now expecting both digital and automated options when it comes time to pay their bill.
On top of this, balances are getting larger, so how do revenue cycle leaders inform patients without scaring them off? How are they creating a seamless experience for the patient?
Leadership development and succession planning
Maintaining the revenue cycle operations of an organization comes with a unique set of challenges. Labor shortages have been plaguing the healthcare industry for years, forcing revenue cycle leaders to reevaluate the way they remedy staff burnout and responsibility. Part of dealing with labor shortages is having a solid staff development and succession plan.
How do revenue cycle leaders identify rising talent if you don’t interact with them in person? How do they guide and give opportunities for staff members to grow their career and get noticed?
Securing champions in your ring
Although the revenue cycle encompasses a large amount of a health systems' staff, we need to remember that everyone at the organization plays a role. Revenue cycle operations are the ultimate team sport and requires physician champions, IT support, compliance, and even legal teams to back everything you do.
How are revenue cycle leaders working with all entities across the organization to improve optimization?
Workforce
Like most of healthcare, the revenue cycle workforce has changed dramatically within the last several years. An entire office floor that previously housed a revenue cycle department is now silent and desolate as most staff have been working remotely for years at this point.
While working remotely has been a success for most organizations and is now a permanent work model, measuring productivity has moved to the forefront of concerns since staff are no longer under physical, constant supervision.
How are revenue cycle leaders managing remote staff effectively, ensuring their work effort, and making sure management is staying on top of issues? Are you hiring outside higher-priced markets to save labor costs? How are you fostering networking, bonding, culture, and loyalty to minimize turnover?
Join us in February to talk through all of these questions and more.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
Knowing the cost of care ahead of time tops the list of items consumers are excited about.
According to a recent OnePoll survey conducted on behalf of Ribbon Healthcare, 48% of healthcare consumers said improved insight into how much care will cost ahead of time was the top item they were most excited about with respect to innovation in healthcare.
When looking for care online, 49% of respondents said accurate, up-to-date information is most important to them, while 46% said understanding how much care will cost before being billed is most important.
These are important numbers for revenue cycle leaders as adherence to the No Surprises Act would remedy these patients' concerns.
As revenue cycle leaders toy with the idea of adding in automation to help streamline processes, it seems patients are on the same page. According to the poll, 20% of respondents said they are also excited about artificial intelligence that will improve processes so doctors can spend more time with patients.
According to the report, technology and digital transformation play a critical role in creating a positive experience for patients. “Consumers expect a trustworthy and seamless front-end experience when finding a provider,” the report said.
This data comes from 1,000 consumers across the United States that were surveyed on their experience receiving healthcare, what’s most important to them when searching for and choosing care, and which factors they view as key to a more personalized and inclusive care experience.
On April 1, your revenue cycle will have additional diagnosis code options to further capture social determinants of health.
The CDC just released upcoming changes to both the ICD-10-CM diagnosis code set and the official coding guidelines.
The new changes include 42 diagnosis code additions, seven deletions, and one code revision. All changes will go into effect April 1, which should give revenue cycle leaders time to train staff and update their coding systems.
A new social determinants of health (SDOH) code for reporting problems related to education and literacy is among the code additions. As a reminder, SDOH are social factors, such as homelessness, illiteracy, a history of childhood trauma, and joblessness or underemployment, that can affect a person’s health.
Also added are codes to update the verbiage related to critical perpetrator of abuse external cause codes with that of current CDC core data collection elements and literature related to patient maltreatment and neglect — including elder abuse.
There is also a slate of new codes pertaining to “financial abuse” of adults and children. For example, the April update brings a code for adult financial abuse, confirmed, initial encounter and a code for child financial abuse, confirmed, initial encounter.
The ICD-10-CM Official Guidelines for Coding and Reporting have been expanded to provide more examples in the SDOH section.
For example, if a patient who lives alone suffers an injury that temporarily impacts their ability to perform activities of daily living, it would be appropriate to include a diagnosis code for problems related to living alone, the guidelines say.
The updated guidelines emphasize that the SDOH should connect directly to the episode of care.
These updates don’t come as a surprise as there has been a spotlight on reporting SDOH.
With increasing attention on population health and quality initiatives, organizations have turned their focus on SDOH and how capturing those ICD-10-CM codes impacts their patient population and their success in caring for that population.
As your middle revenue cycle works to report SDOH more accurately, a recent study is now showing what can be learned from reporting these diagnosis codes appropriately.
As HealthLeaders previously reported, a study published in JAMA Network Open found that coded housing instability is linked to higher hospital admission rates for mental disorders, longer inpatient stays, and substantial healthcare costs.
Because coding occurs mid-cycle, it provides an opportunity to catch errors introduced earlier in the process, as well as preventing similar errors in the future.
Staying abreast of these regulatory coding updates is important for revenue cycle leaders as coding—and its completeness and accuracy—has a profound impact on an organization's bottom line.
The 340B program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and other covered entities at significantly reduced prices.
340B payments are a lifeline for some organizations, so when payments were previously cut, hospital groups were not happy, to say the least.
What happened in 2022
Luckily for these organizations, in July, the Supreme Court unanimously ruled that cuts to hospital reimbursement under the 340B drug discount program were unlawful.
In the 2023 OPPS final rule, CMS solidified the payment policy for 2023 of average sales price of 6% for drugs and biologicals acquired through the 340B program because of that unanimous Supreme Court decision.
By the time November rolled around, HHS issued a new proposed rule revising the 2020 final rule that established the 340B administrative dispute resolution (ADR) process to better align with requirements found within the Affordable Care Act. The ADR process is an administrative process designed to assist these organizations and manufacturers in resolving disputes regarding overcharging, duplicate discounts, or diversion.
The most recent update however, came this week when a federal court ruled that HHS is able to determine how to repay hospitals enrolled in the 340B program--once again concerning hospital groups.
"Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. We're a big teaching institution, so a lot of these special payments that we do in order to teach the healthcare leaders of the future or make sure that we can take care of vulnerable patients are extremely important," Damschroder said.
"So that is an area that we and others are actively—in our advocacy—ensuring that these programs stay intact or evolve to a place that enhances the programs for the people that were trying to care for," said Damschroder.
Cheryl Sadro, the CFO for UC Davis Health, and Tammy Trovatten, the director of government reimbursement for UC Davis Health, also connected with HealthLeaders to discuss the financial issues hospitals and health systems have been dealing with over the course of the pandemic, one key area being 340B payments.
“One of the things we've been watching and will continue to watch through this process is where we go from here with 340B. We're the only level one trauma center in a multicounty area, and between 340B trauma and transplant, we've garnered a large portion of our bottom line,” Sadro said.
What does the future hold?
“As we think about changes in policy and things of that nature, we are paying attention to policy and how it impacts us long term. 340B going away would not only be devastating for us but incredibly devastating to our patients because it does fund some other things that we can do in our organization to serve that indigent population,” Sadro said.
Trovatten added, “It's been this ongoing saga for many years. CMS implemented a cut to 340B hospitals, which just recently got overturned, but we still are unsure how that's going to be reimbursed because it's trying to be made budget neutral. It doesn't matter who's in charge, this is just an overall problem that is concerning. All non-340B hospitals got an average wholesale cost plus 6%, where we were cut to an average wholesale price minus 22%. So, it was a weird thing that happened that got overturned, but we [are unsure] where we go in the future.”