As we explored in part 1 of this 4-part series, many companies in the independent diagnostic testing facilities (IDFT) business fail to recognize just how important and complex the RCM process is and how big the impact is to finances, cost, and valuation. It is important for IDTFs to understand claim processing, billing, and the payment collection process, as well as where things go wrong, or to hire a specialist firm that has expertise in these areas.
The Life of a Claim – Challenges and Strategies
In this post, we’re covering strategies for improving financial performance and valuation by moving beyond billing and adopting a patient-to-cash revenue cycle management (RCM) approach. Revenue cycle management is a term that many healthcare technology vendors use, but its meaning can vary substantially between technology providers. For some healthcare tech companies, it can mean as little as the process of submitting a claim. However, true RCM goes far beyond this. RCM is the process to manage the administrative and clinical functions associated with claims processing, payment, and revenue generation, including the identification, management, and collection of patient service revenue. Moving from a traditional billing focus and adopting a patient-to-cash RCM approach is one of the best mechanisms to improve valuation.
Moving from “client billing” to “payor/patient billing” adds a level of complexity that requires expertise in policy and program requirements beyond the scope of many IDTFs. It also requires as much automation as possible, as seen in the illustration below.
The first area of complexity is related to prior authorizations. Many XIFIN customers choose not to do prior authorizations (PAs) because PAs create a significant burden for the physicians’ offices. The American Medical Association (AMA) released survey results in 2019 regarding PAs, and 51% of those surveyed indicated the burdens associated with PAs have increased significantly.
Upon submission, providers may way wait from 5 days to up to 2 months to get a decision. The constant back and forth with payors prolongs the PA timeline and the patient is sometimes waiting for treatment or monitoring to begin. As a result, many IDTFs don’t even attempt PAs, but as volumes grow this will have a significant impact on financial results.
PAs and who can initiate them often varies by payor, making the process even more complicated. For those payors that allow a diagnostic provider to initiate a PA, there is PA software and services that automate the process that should be considered.
Ideally, obtaining the prior authorization upfront is preferred. Many providers that do not obtain authorization upfront have very minimal success on the back-end as most payors do not accept retrospective authorization requests. In many cases, these PA denials go to auto-write off, which can be a large hit to financial performance.
IDTFs face the same set of challenges that providers do, but they have an added layer of complexity in that they rely on clinical information from physicians before they can submit authorization requests. When they do receive clinical information, it may contain several pages of irrelevant information that they have to sift through to find the relevant information. Ultimately the goal should be to submit all the RELEVANT clinical information based on the payor’s policy upfront and in as automated a fashion as possible.
In short, IDTFs need a PA strategy, especially as your business grows. There are a few vendors such as Infinx and Glidian with the PA expertise to handle this.
Clean Claims Up-front
The next RCM complexity begins at the time the services are ordered and is dependent on the accurate patient demographic and insurance information provided by the physician. A huge challenge that many IDTFs experience is the lack of patient interaction. By being a step removed from the patient, IDTFs are dependent on the ordering physician to gather the most current patient information.
- Electronic interactions with providers for missing/invalid information through portals
- Integrated compliance flags
- Pricing based on contracts
- Automated eligibility checks
Front-end denials can be easily lost if not flagged as a denial needing further research. This can lead to missed filing deadlines. Appeals are standard in the IDTF billing cycle. The ability to load pre-populated letters and automate this process alleviates the need for additional staff to manually generate documentation.
- No prior authorization
- Not a covered benefit
- Not medically necessary
Eligibility is a challenge for IDTFs. There is no direct patient contact or often contact with the referring physician, so eligibility data can be difficult to complete without an automated solution such as client and patient portals to reach patients and providers directly.
Most of our customers appeal denials pertaining to medical necessity/experimental and investigational with appropriate medical records. We always suggest for customers to obtain the clinical/medical documentation upfront, during the registration/testing result phase and to be sent over once the claim is submitted through the billing system. It does require some engagement with the physician practices to get them on board with gathering and submitting the patient’s records when they are current and available at the time of order. It is much less work than trying to get the information later when they have to go back into a patient’s file 60-90 days after the date of service.
Denials related to “not a patient benefit” typically mean benefits are not covered or are excluded under the plan because there are other treatment options available at a lower cost, usually with known or proven results. In these cases, the payor refuses to consider another alternative treatment option.
As it relates to medical record documentation denials, again there is a strong dependency on providers, which is not something an IDTF usually has access to. As a result, having a focus on building physician engagement is key so that things such as clinical notes, treatment or therapy history, and lab results can be more easily obtained. In addition to why the device was ordered, the proposed treatment plan, how the results impact clinical decisions, and patient outcome data may prove valuable.
For optimal results, payment posting should be fully automated at the line-item level including reconciliation of payments using electronic remittance advice (ERA) and electronic funds transfer (EFT). This process matches the appropriate 835 file and ACH deposit for automated posting and balancing/reconciling. A solution that automates the resolution of discrepancies between actual and expected payments is also valuable. Bank reconciliation and the associated business intelligence reporting should summarize deposits and matching bank transactions as a “reconciled amount.” Any bank transactions without matching deposit information should also be summarized reported as “unreconciled amounts.”
It is essential to hold patients accountable for their share of the balance, and this is becoming more critical to overall revenue as well as being a compliance obligation. User-friendly patient portals where patients can make a payment, set up payment plans, and update insurance information are becoming an expectation of patients. XIFIN customers sometimes use outbound interactive voice response (IVR) calls and/or friendly text messages to facilitate payment reminders. Also, consider automation of collection agency assignment for consistency, efficiency, and compliance.
Look out next week for part 3 of this 4-part series, which covers the importance of Financial Reporting, and the valuable distinction between contractual allowance and bad debt.