How to use analytics and automation to build an intelligent A/R strategy

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provider venture capital, money


provider venture capital, money

The Covid-19 pandemic further complicated the ability of healthcare providers to collect on services rendered, a process that was already a challenge. A poll by MGMA in November 2021 poll found that 49% of medical practice leaders reported an increase in the aging of accounts receivable.

Healthcare Financial Management Association’s (HFMA) 2021 Pulse Survey reveals that the pandemic has caused:

  • A 50.5% increase in erratic/unpredictable work/claim volumes
  • A 37% increase in workload due to confusion over Covid-19 codes and claims
  • rapid, unplanned shift to remote work causing decreases in staff productivity by 34.7%

Many insurers are now taking more than 90 days to pay, despite most state and federal regulations mandating a 30- to 40-day remittance limit.

Another factor in lengthening the aging of accounts receivable is the current healthcare staffing shortage. Denied claims must be researched, reworked, and resubmitted to avoid write-offs, but overworked back-office staff doesn’t have the time to be this tenacious.

This crisis has pushed an already dysfunctional healthcare revenue cycle to the breaking point, making it increasingly unviable to ignore the greater underlying inefficiencies. But this also creates an opportunity for providers to rethink and build an even better A/R strategy.

In this article, we go over how to build an intelligent, analytics-driven A/R strategy to significantly improve collections in today’s healthcare environment. This article goes over the pillars of this approach as well as what metrics you should focus on in your implementation. First though, what are the limitations of providers’ current approaches?

Limited data and data analysis leads to revenue recovery deficits  

Currently, providers generally rely on several, disconnected silos of data, leaving them with an incomplete and fragmented picture of their overall revenue cycle operations. The packaged reports their EMRs create from this disparate data fail to render sophisticated or often, even helpful, answers.

In addition, downloading the data index style and then analyzing it with simplistic, brute force manual techniques (think Excel spreadsheets) leaves providers with only a few dimensions on which to analyze it. Without a comprehensive view of the data, conclusions can be swayed by stakeholders’ subjective opinions.

This approach is extremely limiting. For example, when staff often only goes after high-dollar claims, they leave a whole slew of accounts untouched that could have been recovered. By the time staff determines that A/R has the potential for recovery, filing and field limits have passed and the debt must be written off.  Decisions based on limited data lead to lower recovery and overall cash flow.   

1. Analytics is the backbone of an intelligent A/R strategy

Robust, multidimensional analytics driven by artificial intelligence that can learn from itself, on the other hand, has the potential to deliver actionable information that translates into significant improvements in your collections.   

2. Benchmark existing metrics and then effectively prioritize tasks 

Your first task is to benchmark existing analytics and establish your metrics. Read about these metrics below. Good technology should be able to predict what A/R is recoverable, as well as prioritize tasks and realize revenue.

Machine learning is essential to do this as a simple set of rules will not be able to predict this alone.

Next, you need an effective way to prioritize recovery tasks that factors in your available resources. All A/R challenges aren’t equal. If you merely prioritize your outstanding accounts based on high-dollar claims, you aren’t factoring in the complexity and probability of recovery.

For example, a complex denial around prior authorization has a very low probability of recovery. So you have to be smart about which ones to tackle and recognize which ones aren’t worth your time. Claims resources are limited, after all. Analytics works hard to determine which claims have the highest recovery potential.

3. Use analytics to monitor and improve your A/R workflow  

Good analytics can also provide real, data-informed metrics on how efficiently your staff and workflow are pursuing and winning A/R recovery and denials appeals. Efficient analytics depend on metrics that reveal changes over time.

To collect maximum revenue, you need a good workflow solution that’s prioritizing the tasks and providing guidance to agents to help execute the recovery. Analytics can pinpoint bottlenecks in your recovery process; providers need to know where specialists stumble so they can troubleshoot.

Unfortunately, the EMRs that most providers currently have and rely on for analytics can’t provide useful insights. Is it long phone times, particular kinds of appeals, or Cigna changing its guidelines that’s causing the issue? Figuring this out from the comments section of an EMR is unfortunately very challenging. But an analytics-based workflow solution can provide these answers so you can optimize the results of your A/R collections process.

Best metrics and reports to reduce A/R aging  

The first step to an effective analytics-based strategy is benchmarking existing metrics and comparing those to industry averages. This will allow you to identify and deep dive into trends and challenges.

Specific metrics and reports to focus on include:

  • Net collection ratios – Focusing on net collection ratios rather than gross collection ratios will give you a much clearer view of the actual A/R being collected. In particular, you want these matched to dates of service, so you know for a given date of service what you’ve collected.
  • Aging – You want to understand what percent of your aging A/R is in the zero to 30, 30 to 60, and 60 to 90-day buckets, and what trends you are seeing within this. For example, if you’re seeing a trend that is causing lags or aging to go in older buckets.
  • Denials trends and rates– Tracking denial trends and rates is essential for denial management so you can proactively ensure that you’re not creating the denials that lead to A/R issues. Examine the denials closely so you can dive into what needs to be done to solve them. Have a denial plan in place so staff follows the same protocol efficiently.
  • Overtime– If you’re looking at denials, you also want to track overtime rates to see if your staff are successful in overturning denials if they are preventable. And if not, what do you need to do to support them?
  • Staff productivity – Particularly given the trend toward remote work, providers should implement metrics to measure the productivity and effectiveness of staff. For too long, healthcare services have measured staff productivity by factors like how many touches on a claim. Experience has taught us that this approach does not guarantee outcomes in most cases. It’s important to understand how much effort went into the recovery so you can get a better view of cross collections. Reframing productivity as net recovery per resource or A/R agent is more accurate. If you can understand how much effort was put into each claim, that gives you a better view across the collections, rather than averaging against the total. This also tells you which A/R to focus on. An A/R-focused workflow technology that can provide these metrics will support you in this.

For significant backlogs, bring in a partner to maximize collections

Many providers are already in a situation where they are dealing with significant aging of accounts receivable. In these cases, the fastest way to get revenue collection under control is to bring on a third party. A partner will help you to scale your recovery efforts rapidly so you can collect as much of the aging A/R as possible.

Experienced revenue cycle staff understand payer guidelines and can negotiate with payers to resolve A/R. These experts help providers achieve faster cash flow, fewer denials, and higher recovery rates. Particularly in our current staffing environment, however, these professionals are hard to find or train.

When engaging a partner, be sure to look for one who can offer both domain expertise and best practices from a workflow perspective for A/R. As you evaluate your third-party partner, make sure they know of and are dedicated to measuring the above metrics or make an effort to implement these analytics capabilities on your own to best utilize your staff’s time.

A/R collections in a challenging environment

Kaufman Hall reported that the “first month of 2022 was devastating for hospitals and health systems nationwide”. As a result of the Omicron wave of COVID-19 cases, actual hospital margins were negative for the first time in 11 months. Meanwhile, expenses will continue to rise, with labor shortages and supply chain interruptions increasing costs. Volumes and revenue will likely continue to be unpredictable.

Providers cannot afford unnecessary revenue leakage in 2022. But your hospital or healthcare center’s financial health does not have to be a sitting duck for this turbulent outlook.

Providers can unleash AI and machine-based analytics and workflow technologies to minimize losses during a period where demand for healthcare services is increasing. RCM inefficiencies are straining margins. Improve your A/R strategy now to create the cash flow and capital that propels your practice or center through the next decade.

Photo: adventtr, Getty Images



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