Providers and payers say they’re ready to reap potential administrative savings from automated electronic processing for both data exchange and fund transfers.
However, despite the widespread use of electronic data interchange for claims submission, the process often gets bogged down during the claims adjudication process, which is slow, inefficient and clogged with paper exchanges.
The survey, by PNC Financial Services Group, highlighted several inefficiencies in the claims adjudication process, including claims resubmissions and inefficient eligibility determination processes.
Results were presented at the Revenue Cycles Strategies Conference conducted recently by the Healthcare Financial Management Association in Las Vegas. However, attendees at the session expressed some skepticism about one conclusion – that banks could facilitate the electronic exchange of information between providers and payers.
Half of the 124 hospital executives surveyed, representing facilities with at least 250 beds, said their hospitals lose $1 million to $10 million a year as a result of unresolved covered claims.
Manually adjudicating claims gets expensive, said Paula Fryland, senior vice president for PNC Financial. Its data show that 46 percent of claims are for less than $100, 20 percent are for $100 to $499 and 34 percent are for more than $500.
Because of the cost of manual adjudication – estimated at about $28 by the Gartner Group – healthcare organizations are more likely to focus on big claims and give up on smaller claims. “There’s a point of diminishing return for the provider trying to get paid for a claim,” she said.
“This represents billions of dollars for the industry,” Fryland added. “Think about the full revenue cycle and what you could gain if you could get efficiency throughout.”
Two-thirds of hospital executives say they must resubmit or rework a claim two or more times before it is paid, Fryland said. On average, hospitals wait 52 days to receive payment for submitted claims.
Patient eligibility for services was most often cited as the reason behind claims denial and delays in payments, cited by 84 percent of providers and 80 percent of payers. Payers also mentioned incomplete patient or services information (77 percent), duplicate claims (71 percent), coding errors (71 percent) or claims submitted to the wrong payer (69 percent).
While both providers and payers believe widespread adoption of both EDI and EFT can streamline the claims process and save costs, most believe incentives or assistance will be necessary to gain widespread adoption.
Fryland suggested that the missing link in the process could be filled by financial services partners, which could provide claims remittance and payment solutions to link providers and payers.
Suzanne Lestina, an HFMA representative to the National Uniform Billing Committee, says more is needed. Payers have been reluctant to make investments in upgrading legacy claims processing systems to move to approaches that could handle automated processes. For example, even though patient eligibility is a critical factor in claims denials, 44 percent of payers and 32 percent of hospitals rely on paper processes to determine eligibility.
“There’s no repercussions for payers that don’t want to change their processes,” Lestina said. “Providers will have to drive a lot of the changes that they want to see take place.”
Still, banks can play a role in facilitating the claims process, says John Casillas, chairman of the Medical Banking Institute and executive director of the Medical Banking Project.
“This model, where a bank is used to transform remittance markets from paper to digital, is a highly credible approach for the industry,” he said.
“PNC and other banks have adopted what we call a ‘medical banking interorganizational system’ model. The model will provide a variety of opportunities to save money and can tie into the consumer-directed healthcare movement,” he added.