Most claims payments are now electronic, but providers can still realize millions in cost savings and reduce burden through true claims payment optimization.
Claim payment is one of the most important steps in the claims management process. Healthcare providers rely on this step to keep their operations running smoothly for patients. But while claim payment ensures cash flows into the organization, the healthcare industry is still leaving $426 million on the table.
That number is from the Council for Affordable Quality Healthcare, Inc., a non-profit organization that tracks electronic adoption of administrative functions across the healthcare and dental industries. The organization recently found that the majority of payments made to providers are made through an electronic fund transfer (EFT).
However, the remaining manual payments represent a major opportunity for providers.
Healthcare providers could reap the most savings from moving to electronic claim payment, the CAQH report indicates. They could save nearly $2.00 per manual payment by moving to an electronic solution versus savings of just $0.49 for payers. With claim volume growing significantly, that $2.00 translates to millions in potential cost savings for providers.
The time is now to leverage electronic claims payment. On top of potential savings, the cost of processing paper checks is increasing. CAQH reports that the healthcare industry spent 28 percent more processing claim payments in 2020, the most recent year for which the organization had complete data.
Providers need to overcome the challenges of electronic claims payment adoption and leverage secure solutions to save money, reduce administrative burden, and ultimately improve the patient experience.
Providers fall short of payment optimization
A lack of system in place to support the ingestion of electronic remittance advice (ERA) is the biggest barrier to realizing the cost savings from electronic claims payments, according to Alasdair Catton-Chastain, Senior Manager, Provider Experience at Zelis.
“The remittance comes back to the cash posting team, which is typically a different business unit to the claims submission team. This is typical for a lot of offices once the provider gets over a certain size, but there is no communication internally between patient access and point of care through claim submission,” says Catton-Chastain. “All of that is quite siloed in most provider organizations.”
Paper or other types of manual ERAs exacerbate the challenges created by a siloed claims management process, with claims payment being a major pain point in that process.
Healthcare providers may receive claims payment via EFT from most of their payer partners. However, they need ERAs to explain the payment, whether it was made electronically or by paper check. ERAs are key to ensuring providers get paid properly and completely and billing patients the correct amount once insurance has paid their portion for rendered services.
But when ERAs and claim payments are sent manually via mail or fax, it leaves room for human error.
“A common thing we see at provider billing offices is a check may come in and they’ll bring up a patient account to apply the balance,” Catton-Chastain explains. “Then, for whatever reason, that check never makes it to the bank. It gets misplaced or when they are typing in the amount that’s been paid, they mistype.”
“Those types of mistakes don’t typically come out until audit time or the end of the year,” Catton-Chastain continues. “That makes it very difficult when there’s a deficit in account receivable versus what the system is saying should be there.”
Providers oftentimes write off these errors, depending on the size of the payment. Consequently, this can create headaches for providers and their patients when the billing office sends off a patient bill.
“If you’ve ever received a bill from a provider that you’ve disagreed with, that’s a very time consuming and costly activity for providers,” Catton-Chastain says. “You have to communicate with the member who disagrees with the bill amount, then investigate what happened. All of this rework gets removed by having the digital feed coming in from the payer.”
“Having the control and knowing that your money is going straight into your bank account is definitely a value to finance teams and senior leaders,” Catton-Chastain emphasizes.
How to optimize the electronic claims payment process
Providers are faced with an opportunity to not only automate but also optimize the claim payment process.
“Most providers are starting to at least measure, if not attack, their residual paper payment volume,” Catton-Chastain says. “The word is out that the cost of processing paper comes in between $7 or $8 per check. A lot of providers are looking to streamline and automate that process to save resources, but also give them scalability and less rework.”
Providers normally enroll in electronic EFT and perhaps ERA with larger, high-volume payers in order to see a return on investment for taking the time to enroll. However, only targeting larger or higher volume payers leaves claim payments on the table. Additionally, this strategy leaves most providers managing dozens of portals every day to track payments and ERAs, if partial or fully electronic payment remittance is an option.
Oftentimes, a provider will have a staff member or members dedicated to just electronic enrollment since providers have to enroll with each of their payer partners separately. Providers are also frequently adding new partners or seeing patients with new insurance plans, meaning enrollment is a never-ending process, Catton-Chastain adds.
Providers can optimize the enrollment process through an aggregated payer EFT and ERA solution. Such technology solutions automate the enrollment process for additional payers, reducing the administrative burden on billing office staff.
Technology is also key to processing electronic claims payments the way providers want, whether it is through an ACH, virtual card, or check. Providers can then receive electronic ERAs in a consolidated format, which allows them to better track payments, including what they billed and what the payer reimbursed.
Claims payment optimization is a crucial step in streamlining the revenue cycle. Electronic solutions enable providers to get paid quicker and provide transparency into the payment process for improved reporting, tracking, and ultimately patient billing. With faster, more accurate payments, providers can focus on communicating financial responsibility to their patients—a major selling point in today’s consumer-driven environment.
For More Information: https://revcycleintelligence.com/news/why-claims-payment-optimization-is-crucial-for-providers