Many issues are challenging diagnostic providers’ ability to maximize payor reimbursements, such as the significant increase in required prior authorizations (PAs) and the high cost of appeals.
These issues are even more difficult for laboratories and remote patient monitoring device companies using traditional billing systems that have few or no automation tools. Hospital outreach programs and outpatient labs are also very challenged with the lack of front-end data capture by enterprise systems or restricted data flow through patient registration systems or referring physician offices to back in claim and bill processing software.
It is no longer sustainable for diagnostic providers of all specialties to continue to write off balances for PA related denied claims. It is possible and practical to automate much of the prior authorization and appeals process without negatively impacting physician and patient engagement.
Top-tier billing solutions use automation, specialty partners, portals, and in some cases, artificial intelligence (AI) to help increase cash collections, speed up billing, reduce clerical errors, and lower costs, especially when dealing with the growing numbers of PAs and appeals.
Increases in PAs
PA requirements create a time-insensitive burden that delays patient care and robs providers and staff of time needed for critical clinical activities. But issues don’t stop there.
PA processing has an enormous impact on laboratories and remote patient monitoring companies in reducing the ability to maximize revenue. XIFIN’s cross customer analysis has shown a 311% increase in PA-related denials across all customers, with a 92% increase specific to proprietary testing and a 52% increase for molecular testing.
Additionally, PA increases have affected diagnostic providers’ labor requirements and profitability:
In a 2019 survey from the American Medical Association, 51% of respondents said the burdens associated with PAs had increased significantly. With $31 billion spent on PAs each year, the survey also pointed out that nearly 90% of physicians said PA burdens have increased during the last five years, and 28% said PA delays have led to severe adverse events. More than 90% of physicians reported that PAs delayed patient care, and 75% said that PAs could lead to abandoned treatment. Physicians complete approximately 31 PAs each week, and more than 33% of respondents said they employ a staff that works exclusively on PAs.
Part of the issue is that 82% of authorizations don’t follow a fully electronic process. The average staff time spent per week to complete PAs is approximately 20 hours. But it doesn’t get much better from there. Providers can wait from five days to 12 months for a decision. The back and forth between providers and payors prolong the timeline, while patients can be waiting for treatment and monitoring to begin. This laborious PA process is why many independent diagnostic testing facilities (IDTFs) don’t do prior authorizations. But as volumes grow, disregarding PAs will affect them financially.
Perhaps the most labor-intensive aspect of the claim process is denials and appeals management, which can be costly. A 2017 statistic shows that hospitals alone paid as much as $8.6 billion in administrative costs to recover denied claims. In 2019, according to an analysis of XIFIN data, denials were significant contributors to delayed or completely lost revenue recognition. In 2019, 13% of claims were denied. Unsurprisingly, molecular testing experienced the highest denial rates of any segment:
Efforts to overturn denials have proven fruitful in many scenarios; however, appeals are not a one-size-fits-all process. The fastest growing denial types require a more strategic and diligent approach, leading to prior authorizations being among the potentially costliest to overturn. XIFIN leverages a first, second, and third level appeal approach within our automated processes, building a cumulative success rate on our most difficult denials:
The good news is a purpose-built revenue cycle management (RCM) system with automation and AI can improve the efficiency of denials and appeals management by up to 300% and significantly reduce the cost of the appeals process. Denials and appeals management workflow can be automated and is configurable with reason code-specific logic, payor-specific appeal forms, attachment of supporting documentation, and appeal letter generation.
Maximizing Revenue with Automation
An RCM solution that includes robust workflow automation, including PA specific capabilities is crucial to optimize billing and accounts receivables and facilitating medical claims filing and cash collections.
Here are five reasons why you should consider using a purpose-built RCM cloud-based system to automate your PA and appeal workflows.
Get faster PA approvals using a mix of automation, PA-specific services and software, portals, and AI when appropriate. For example, seek an RCM solution that uses web services to automate prior authorization processes and includes:
Use an RCM with technology that leverages custom edit capabilities so that the system can be empowered to catch accessions meeting specific PA criteria and hold them for review. Establishing system logic based on individual payor PA requirements prevents cases from being submitted before a prior authorization is attached, reducing denials and further impact to revenue.
Streamline PA workflow to better address the increasingly complicated tests that continue to enter the market. For many payors, the PA workflow must start at the physician’s office while other payors allow diagnostic providers to initiate PAs. It is critical that diagnostic providers can support both scenarios. For example, consider an LIS with multi-specialty workflows that captures PA information and transmits it electronically to the RCM. Even more ideal is having an LIS and RCM that share client-facing portals and support order entry and PA initiation. As you can see, securing PAs can be difficult and time-consuming if using disconnected systems and manual processes.
Enhance patient engagement and physician satisfaction by supplying tools that offer insight into costs and improve access to the diagnostic tests or health monitoring that their physicians recommend. Partially driven by claims that disregarded PA requirements and were subsequently denied, out-of-pocket patient expenses have skyrocketed, which in turn have driven up patient dissatisfaction. Seek out an RCM that lets diagnostic providers give their patients a better understanding of their out-of-pocket costs for ordered tests and provide a pre-payment option.
Leverage automation to reduce billing staff workloads. Automate much of the denials and appeals management, including the attachment of documentation (e.g., medical necessity, prior authorizations) and generation of appeal letters and the electronic completion of payor specific forms. Only the most complicated claims should be left to be handled by exception, which reduces the total cost of billing. A purpose-built RCM should automate the generation of appeal letters based on an American National Standards Institute (ANSI) denial code and can attach patient requisitions and lab results if the lab chooses to integrate those.
With the significant increases in PAs and appeals — and the cost burdens associated with them — hospitals, laboratories and remote patient monitoring companies must implement an PA focused RCM strategy. Maximizing your revenue and the effectiveness of your workflow depends on the use of automation, business intelligence and purpose-built PA software and services.
Interested in learning how XIFIN stacks up these suggestions and/or looking for an introduction to a prior authorization partner?