"[Payers] know that the hospitals don't have the resources to catch and appeal everything."
How can provider's AI solutions work against payer technology? As part of HealthLeaders' AI and Finance MasterMind program, Bill Arneson, Director of Business Operational Transformation for Moffitt Cancer Center, explains how RCM solutions will level the playing field.
The HealthLeaders Mastermind series is an exclusive series of calls and events with healthcare executives. This Finance and AI Mastermind series features ideas, solutions, and insights on the current capabilities and future potential of RCM solutions in revenue cycle operations.
To inquire about participating in an upcoming Mastermind series or attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com
Payer updates and policy changes delay reimbursement; Leaders say automated solutions can help fight back.
The tug-of-war between providers and payers over prior authorizations is a consistent and costly issue.
While Illinois-based Carle Health System does a good job of managing this issue in the front-end, it takes 36.5 days to appeal a denied prior authorization request.
“Last year, we were somewhere around 46 days, so we’ve dedicated additional resources to that overall process,” says Aron Klein, vice president of finance operations and supply chain. “We’ve seen considerable growth in all denials, not just prior authorization denials.”
The system has seen a 22% increase in denials year-over year, the majority of which, Klein says, citing additional documentation requests or information needed, creating a mountain of administrative work.
Payer policies and requirements for prior authorizations are prone to changes, so being able to have forms populated with information from the system’s EHR and sent to the payer takes the administrative burden off staff.
According to Jessica Godbey, vice president of patient access services, the system’s prior authorization solutions save specialists 10 minutes per request and connects with 80% of the payer market.
Carle Health also uses technology to seamlessly map CPT codes for high-dollar surgical procedures to ensure more accurate authorization submissions.
“Our staff are so invaluable to us. It really allows them to focus on those more complex detailed accounts,” Godbey said.
However, she adds that solutions will not be able to replace the human connection with patients. She acknowledges that solving this challenge will take a mix of innovative technology and individual expertise.
“We are committed to offering the world-class experience possible for our patients both at the bedside and throughout their billing facilitation,” Godbey said. “We are bringing technologies and a patient-centered approach to alleviating the complexities of managing the care authorization process.”
While payers “express openness” to the system’s concerns, Klein says, they don’t move as quickly as the system would prefer towards a resolution.
“Payers rely on technology solutions just like we do to manage processes on their side,” he says. “Which ultimately if something [happens] on their side, it takes time to resolve, which ultimately delays processing or receipt of payment on our side.”
The revenue cycle partners meet every month to review prior authorizations and denials, monitoring progress to see if there’s a decline in denials and making note of any trends. Health system leadership is kept up to date on these findings, Klein says, so they and the operations teams can assist in their resolution.
Some denial trends they’ve seen have been interoperative CPT code changes, changes to CMS’s two midnight rule, and frequent change to the payers own rules and regulations.
Going forward, Carle Health is looking to continue expanding staff bandwidth through automation to reduce costs and administrative burden further and leveraging [staff] talents respond to more complicated denials.
A new report illustrates a widening financial gap between top performing and struggling providers.
Nonprofit hospitals are struggling to achieve financial sustainability.
According to a recent S&P Global Ratings report, the average days of cash on hand for nonprofit hospitals and health systems in 2023 was just below 200—the lowest in a decade.
The decline was attributed to inflation and limited strengthening of reserves. Despite this, the report also stated that systems increased their capital spending, with some taking on new debt.
Additionally, there doesn’t seem to be a middle ground for nonprofit hospital and health system performance. Median operating margins ranged from 2.5% to -2.7%, with very few organizations’ cash flow returning to pre-pandemic levels.
Nonprofits often struggle to cut services to lower expenses due to their missions, while for-profit facilities have seen positive results in doing so. Also, where some organizations would look to raise prices due to increasing expenses, many states are instituting benchmarks to cap cost increases.
Financial need has been the primary driver for merger and acquisition activity in the nonprofit space, with health systems like Ascension recently selling 13 of its facilities to Prime Healthcare.
An October 2023 report from Fitch Ratings found that median operating and operating EBITDA margins for nonprofit hospitals suffered a significant decline between fiscal year 2021 and 2022.
Before that, operating costs had been offset by stimulus funding; but as those initiatives have phased out, organizations are reevaluating their financial strategies and curbing spending.
Workforce remains a significant pain point for nonprofit and for-profit providers alike, and leaders could benefit from examining hiring strategies and shifting away from expensive agency labor.
So how can finance leaders start to dig out?
Diversifying revenue sources would provide opportunities to expand into more lucrative service lines, like outpatient care. Nemaha County Hospital, located in Nebraska, saw the opportunity to place more emphasis on outpatient care after noting how many more outpatients the hospital treated than ER patients.
“As a critical access hospital, one thing that we have done to maintain financial stability is to make ourselves true to the critical access model of reimbursement,” the hospital’s CFO, Stacy Taylor, said. “We’ve stayed true to that outpatient business.”
"People sometimes assume that just cause you've automated it, you kinda can look away."
In revenue cycle management, there's little room for error by staff or solutions they work with. Seth Katz of University Health KC spoke with us as part of HealthLeaders' AI and Finance MasterMind program about the importance of checking behind RCM solutions to ensure accuracy and efficiency.
The HealthLeaders Mastermind series is an exclusive series of calls and events with healthcare executives. This Finance and AI Mastermind series features ideas, solutions, and insights on the current capabilities and future potential of RCM solutions in revenue cycle operations.
To inquire about participating in an upcoming Mastermind series or attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com
While progress at the federal level is slow, state legislatures are passing bills aimed at improving the prior authorizations process for healthcare providers.
State legislatures are taking action to alleviate providers’ prior authorization struggles.
So far this year, Vermont, Minnesota, Wyoming, Colorado, Illinois, Mississippi, Maine, Maryland, Oklahoma, and Virgina have passed legislation addressing persistent issues with prior authorization. These include reducing the volume of prior authorization requirements and care delays, increasing the data that has to be publicly reported, and improving transparency about which services need prior authorization.
In addition to the administrative burden of appealing denied claims, the delay in care means that hospitals and health systems don’t get paid, further exacerbating their financial health.
“We’re in a crisis. We’re delaying care because we can’t get prior authorization, so therefore we have to get something in place,” Shanda Richards, revenue cycle director of Central Peninsula Hospital in Alaska, previously told HealthLeaders.
This issue isn’t new. In 2023, nine states, along with the District of Columbia, passed legislation for prior authorization reform.
In Minnesota, all insurers and utilization-review organizations are required to report how often they use prior authorization and the frequency at which they’re approved or denied each year.
“This standardizes the data and allows it to be analyzed,” Dave Renner, the Minnesota Medical Association’s director of advocacy, said in a statement. “We will have a better understanding of how and when prior authorization is being used and whether that makes sense.”
The state has also passed legislation preventing the use of prior authorization for nonmedication services related to cancer care and mental healthcare, which will go into effect in January 2026.
At the federal level, meanwhile, progress has been slow.
In January, the Centers for Medicare and Medicaid Services (CMS) finalized the Interoperability and Prior Authorization Final Rule. The increased transparency provisions, similar to Minnesota’s, will require insurers to explain the reasoning for a denial and publicly report prior authorization data annually.
According to the U.S. Department of Health and Human Services, the rule will result in $15 billion in savings over ten years.
Organizations are becoming more discerning in their implementation or revenue cycle technology solutions.
Now that AI has established its presence in revenue cycle management operations, leaders are eager to see the capabilities of the technology evolve.
Being able to aggregate information, automate tasks, and cross-reference data across different sources will foster the optimization and efficiency that executives want—and need—for their organization.
This is something Bill Arneson, director of business operational transformation at Moffitt Cancer Center and a member of the HealthLeaders Mastermind program on AI in Rev Cycle and Finance operations, is looking forward to seeing.
“I think this is going to amplify every person because the amount of time to do you work is just going to reduce,” he says.
This is something he’s seen in robotic process automation, where the tool is given a problem, the data, and guidelines to solve it.
“Crossing referencing and compiling all the information in such a short amount of time, that appeal would take someone hours to complete,” he said. “Whereas [we could] have someone review it, do a [quality analysis], ensure it’s accurate, and then submit it.”
AI and automation are used interchangeably in conversations around RCM, despite having different capabilities. For leaders, becoming more knowledgeable as the solution market continues to grow will help them know the difference and be able to specify what their organization needs.
It’s important for organizations to be specific in their conversations with vendors to make sure the technology has the capabilities they’re looking for.
“Get someone on your team or an advocate for you that understands the technology and let them question the vendors,” Arneson says. “Have an open technical conversation with no salespeople to get to the meat of the technology.”
Payers are equally interested in this technology, with even more resources to invest in them. As a result, they’re currently outpacing hospitals and health systems in digital expansion.
However, RCM executives are able to leverage different strategies alongside their RCM solutions, staff, and additional support from vendors.
“This kind of levels the playing field of allowing even smaller hospitals that can get on board with the vendor to get things going for them,” Arneson says. “This pays for itself very quicky if you start turning around denials because that’s real money you’re putting in the bank.”
Moffitt develops its RCM solutions in-house, as well as using vendor technology. A perk of having in-house developers, Arneson says, is being able to develop the staff and having the internal knowledge, without having to depend on a vendor.
While it does require more time and energy, it ultimately leads to a more secure and scalable environment.
Considering the popularity and growing use of AI and automated solutions in revenue cycle operations, organizations are becoming more discerning in their implementation.
Moffitt has a robust information security team that thoroughly reviews every vendor they work with and annually reviews all of the organization’s automated solutions to ensure they’re up to date.
“I think it’s the same principles that have always been there about network security, data security, password security,” he explains. “It’s just so amplified because every single piece now has a magnifying glass to it.”
The HealthLeaders Mastermind series is an exclusive series of calls and events with healthcare executives. This Finance and AI Mastermind series features ideas, solutions, and insights on the current capabilities and future potential of RCM solutions in revenue cycle operations.
To inquire about participating in an upcoming Mastermind series or attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com
Will the vendor hold itself accountable if their solution makes a mistake?
It’s important to read the terms and conditions of any contract, and with RCM partnerships the stakes are that much higher. Seth Katz, vice president of revenue cycle and health information management for University Health KC recommended three questions that RCM executives should ask when considering a vendor partnership.
What’s the cost of maintenance?
RCM partnerships require a significant investment, so it’s important to consider future costs and staffing needs before signing on the dotted line.
“When considering automation, such as using RPA (robotic process automation) bots within your EMR or RCM platforms, it’s crucial to account for the additional licensing costs that may arise,” Katz said. “These bots require access to your core systems, which can increase your license counts and lead to significant cost implications.”
In addition to licensing, executives should consider the maintenance costs for smaller changes, like system updates. They should evaluate the full scope of costs, including support and maintenance for AI solutions.
“Without careful consideration, the cumulative costs—both up front and recurring—could easily outweigh the benefits,” Katz said. “Making it critical to thoroughly assess the financial impact as part of you decision-making process.”
Does the vendor have experience working with your organization’s core RCM platform?
In the revtech space, Katz explained that it’s good to be early but not first.
“Healthcare systems are inherently fragmented, often relying on a complex web of interfaces to keep data connected and synchronized,” he said. “The objective should be to move beyond mere integration and aim for solutions that are fully embedded within your core EMR or RCM platforms.”
In doing so, organizations can minimize the need to manage multiple data feeds and eliminate the inefficiencies of switching between different systems.
How will the vendor be held accountable?
AI and machine learning solutions are programmed to mimic human behaviors and complete complex tasks by picking up on patterns in data. But what happens if the solution makes a mistake? How hard is it to correct that mistake?
“In coding, for example, we only expect humans to be right 95% of the time, but if your AI coding vendor’s work leads to more and more denials, [the vendor] needs to be part of that conversation,” Katz said. “They need to take some level of ownership for what’s happening the same way a frontline coder would eventually have to take accountability.”
There’s also the question of how long it will take to get the solution back up and running. Business continuity plans have grown in importance as cyberattacks have become more prevalent, capable of shuttering revenue cycle operations for weeks at a time.
The HealthLeaders Mastermind series is an exclusive series of calls and events with healthcare executives. This Finance and AI Mastermind series features ideas, solutions, and insights on the current capabilities and future potential of RCM solutions in revenue cycle operations.
To inquire about participating in an upcoming Mastermind series or attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com
The standalone community hospital has been able to maintain a 8-9% operating margin against a 12.5% denials rate.
Like other hospitals and health systems, St. Tammany Health System is battling an influx of claim and prior authorization denials. However, they're doing so without the assistance of specific AI revenue cycle management solutions.
According to Sandra DiPietro, senior vice president and CFO, the Louisiana-based health system’s revenue cycle staff can sometimes spend up to half a day appealing a denied claim or prior authorization request.
St. Tammany relies on the automated tools within its EHR, which has helped with finding and resolving issues on the front end. Staff handle all appeals, prioritizing higher dollar claims.
The hospital receives some assistance with implementing processes and technology through its partnership with Ochsner Health, but largely functions as a standalone, community hospital.
“We’re diligent with getting processes and teams in place to help monitor and manage and try to address them as they arise,” DiPietro says. “We educate the staff for the issues that arise, but it’s a constant battle that we’re trying to stay on top of.”
The denials team meets every two weeks to shift through claims, identifying which ones to focus on, as well as understanding any trends and where they’re escalating.
Within the appeals process, it isn’t enough to simply identify the reason for the denial. Stacie Doyle, director of revenue cycle integrity and reimbursement, says payers don’t all use the same denial codes, and the ones they do use may not be the exact code needed.
Some payers use third party vendors to manage prior authorizations, Doyle says, and vendor guidelines are often inconsistent, such as addressing a change in procedure. For example, a third-party vendor portal may say no authorization is required when there’s a change in procedure because it’s in the appropriate code range; however, the claim is still denied by the payer for not having the exact CPT code.
“We have monthly meetings with the payers, where we foster our professional working relationships, and then we get our Managed Care contracting director involved and meet at a higher level when there are prevalent problems in certain areas to address,” DiPietro said.
Sporadic updates to payer manuals throughout the year can add further strain to providers in the appeals process. In January, the Centers for Medicare and Medicaid Services (CMS) passed the Interoperability and Prior Authorization Final Rule to alleviate the administrative burden of prior authorizations from providers.
Doyle and DiPietro describe it as a double-edged sword, in that some are still denied on the back end for medical necessity.
These efforts, combined with supplemental payment programs offered by the state, have kept St. Tammany’s operating margins between an impressive 8% and 9%. However, the 12.5% denial rate is becoming more than they can manage without technology, so they’re looking to take the next step and implement an AI RCM solution.
“We’re developing a plan for the best place to put the money because we don’t have a plethora of dollars,” DiPietro says.
The hospital had just begun looking into AI technology when the COVID-19 pandemic began and plans were put on hold. The Change Healthcare ransomware attack in February set the hospital back further; they were unable to resume sending statements until last month.
When dealing with the insurance payors and denials, it seems like we’re always one step behind, DiPietro said.
Hospitals in both the Midwest and Northeast saw an operating margin of 15%.
A recent report from Kaufman Hall is taking stock of the profit margins of the nation's hospitals, comparing YTD 24 and YTD 23 data. While most regions saw positive margins, hosptials in the Great Plains were found to be in the red with a margin of -7%.
Southern hospitals came out on top with a margin of 28%, with the West right behind it with 25%. Hospitals in both the Midwest and Northeast saw an operating margin of 15%.
Seth Katz of University Health KC says healthcare organizations should train staff to take charge of their AI programs and understand what the technology can and can’t do.
Seth Katz is worried that misconceptions about AI will hurt adoption.
Katz, vice president of revenue cycle and health information management at University Health KC and a participant in the HealthLeaders Mastermind program on AI in revenue cycle and finance operations, says most current uses of the technology do address some critical pain points.
“If we can automate [redundant tasks], that’s still a win,” he says. “I want them to spend more time fighting a payer on an issue and not pulling information out of the EHR.”
But not everyone understands how to use AI properly.
One misconception, he says, is the belief that if a process is automated, it can be left alone. Accountability and oversight are still needed for these solutions, regardless of their capabilities.
“This is not about reducing headcount. In some ways, it’s about avoiding future expenses,” he explained. “It’s about avoiding the cost in the future of having to expand staff.”
Another misconception, he says, is that AI will eventually replace staff altogether. And that presents an opportunity that can benefit the organization and individual staff.
As more organizations implement these solutions into their revenue cycle operations, staff working alongside them will be empowered to take ownership of the technology, Katz says. With this strategy organizations won’t have to rely as much on outside support, and staff can increase their marketability with their knowledge and experience.
“The great thing about this [technological] revolution we’re going through is there are no real experts,” Katz said. “It absolutely makes staff marketable.”
Executives should also build on their knowledge of rev tech as they continue to evolve and grow in their capabilities, he says. Doing so will enable them to proactively develop strategies and a governance structure for future implementation and support of future solutions.
That being said, organizations shouldn’t rush into automating a process just to do so. These solutions are intended to supplement the processes already in place, and if those processes are broken, the investment will have been for nothing.
In the meantime, as more vendors join the marketplace, Katz says accountability should be front of mind for all organizations.
“[Vendors] need to take some level of ownership for what happens with their AI or automation,” he says.
“There has to be someone who at the end of the day, if [the solution] messes up, if it’s doing something wrong, if denials go up, they are accountable for it; and that should be the vendor.”
The HealthLeaders Mastermind series is an exclusive series of calls and events with healthcare executives. This Finance and AI Mastermind series features ideas, solutions, and insights on the current capabilities and future potential of RCM solutions in revenue cycle operations.
To inquire about participating in an upcoming Mastermind series or attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com
