Mergers and acquisitions are on the mind of every CEO and CFO as leaders need to develop a strategic path to a financially sustainable future.
As CFOs and CEOs fight against poor operating margins, reduced reimbursement, and inflated expenses, developing and executing a strategic path to a financially sustainable future is essential. For some, this can mean an acquisition or merger.
Hospitals and health systems of every type are feeling the financial pressure—even nonprofits will continue to grapple with existential questions about their strategy and structure moving forward.
Realizing the fundamental differences between for-profit and nonprofit hospitals will play a large part in a leader’s decision making.
For-profit and nonprofit hospitals are fundamentally similar organizations with subtly different cultural approaches to managing the economics of healthcare. All acute care hospitals serve patients, employ physicians and nurses as their primary personnel, and operate in the same regulatory framework for delivery of clinical services.
There are, however, a few primary differences between for-profit and nonprofit hospitals, which could potentially impact ROI. Read on about these differences, updated from our previous coverage.
Tax Status
The most obvious difference between nonprofit and for-profit hospitals is tax status, and it has a major impact financially on hospitals and the communities they serve.
Hospital payment of local and state taxes is a significant benefit for municipal and state governments, said Gary D. Willis, a former for-profit health system CFO said. The taxes that for-profit hospitals pay support "local schools, development of roads, recruitment of business and industry, and other needed services," he said.
The financial burden of paying taxes influences corporate culture—emphasizing cost consciousness and operational discipline. For example, for-profit hospitals generally have to be more cost-efficient because of the financial hurdles they have to clear.
Operational Discipline
With positive financial performance among the primary goals of shareholders and the top executive leadership, operational discipline is one of the distinguishing characteristics of for-profit hospitals, said Neville Zar, the former senior vice president of revenue operations at Steward Health Care System, a for-profit that includes 3,500 physicians and 18 hospital campuses in four states.
When Zar was at the system, a revenue-cycle dashboard report was circulated at Steward every Monday morning at 7 a.m., including point-of-service cash collections, patient coverage eligibility for government programs such as Medicaid, and productivity metrics.
A high level of accountability fuels operational discipline at for-profits, Zar said.
Financial pressure
Accountability for financial performance flows from the top of for-profit health systems and hospitals, said Dick Escue, senior vice president and CIO at the Hawaii Medical Service Association in Honolulu.
Escue worked for many years at a rehabilitation services organization that for-profit Kindred Healthcare of Louisville, Kentucky, acquired in 2011. "We were a publicly traded company. At a high level, quarterly, our CEO and CFO were going to New York to report to analysts. You never want to go there and disappoint. … You're not going to keep your job as the CEO or CFO of a publicly traded company if you produce results that disappoint."
Finance team members at for-profits must be willing to push themselves to meet performance goals, Zar said.
For-profit hospitals also routinely utilize monetary incentives in the compensation packages of the C-Suite leadership, said Brian B. Sanderson, managing principal of healthcare services at Crowe.
"The compensation structures in the for-profits tend to be much more incentive-based than compensation at not-for-profits," he said. "Senior executive compensation is tied to similar elements as found in other for-profit environments, including stock price and margin on operations."
In contrast to offering generous incentives that reward robust financial performance, for-profits do not hesitate to cut costs in lean times, Escue says.
"The rigor around spending, whether it's capital spending, operating spending, or payroll, is more intense at for-profits. The things that got cut when I worked in the back office of a for-profit were overhead. There was constant pressure to reduce overhead," he says. "Contractors and consultants are let go, at least temporarily. Hiring is frozen, with budgeted openings going unfilled. Any other budgeted, but not committed, spending is frozen."
Scale
The for-profit hospital sector is highly concentrated. For 2023, there are 5,157 community hospitals in the country, according to the American Hospital Association. Nongovernmental not-for-profit hospitals account for the largest number of facilities at 2,978. There are 1,235 for-profit hospitals, and 944 state and local government hospitals.
On the other hand, the country's for-profit hospital trade association, the Federation of American Hospitals, represents 1,000 tax-paying community hospitals and health systems throughout the U.S., accounting for nearly 20% of U.S. hospitals.
Scale generates several operational benefits at for-profit hospitals.
"Scale is critically important," said Julie Soekoro, former CFO of a Community Health Systems (CHS)-owned hospital. And one benefit of being CHS-owned? The access to resources and expertise, Soekoro said at the time.
Best practices are shared and standardized across all CHS hospitals. "Best practices can have a direct impact on value," Soekoro says. "The infrastructure is there. For-profits are well-positioned for the consolidated healthcare market of the future… You can add a lot of individual hospitals without having to add expertise at the corporate office."
The High Reliability and Safety program at CHS is an example of how standardizing best practices across the health system's hospitals has generated significant performance gains, she says.
Scale also plays a crucial role in one of the most significant advantages of for-profit hospitals relative to their nonprofit counterparts: access to capital.
Ready access to capital gives for-profits the ability to move faster than their nonprofit counterparts, Sanderson says. "They're finding that their access to capital is a linchpin for them. … When a for-profit has better access to capital, it can make decisions rapidly and make investments rapidly. Many not-for-profits don't have that luxury."
Competitive edge
There are valuable lessons for nonprofits to draw from the for-profit business model as the healthcare industry shifts from volume to value.
When healthcare providers negotiate managed care contracts, for-profits have a bargaining advantage over nonprofits, Doran says. "In managed care contracts, for profits look for leverage and nonprofits look for partnership opportunities. The appetite for aggressive negotiations is much more palatable among for-profits."
UHC is pulling back on its controversial prior authorization mandate.
UHC was set to require added prior authorizations for nearly half (47%) of gastrointestinal endoscopies starting June 1, saying more prior authorizations were needed to curb costs related to alleged overuse of some of these procedures by physicians.
After intense pushback from large medical associations, UHC is pulling back.
“Physicians are overwhelmed with prior authorization requirements. The process of prior authorization is not transparent and denials and appeals for medically necessary services oftentimes result in patient harm,” Hennessy said.
Further, UHC was not transparent with evidence of over-utilization or geographic variation for the endoscopy services for which prior authorization would have been required, he said.
The day before the mandate was set to go live, UHC announced a refocused policy that relies on additional provider education rather than prior authorizations to address the insurer’s concerns about possible overutilization.
The refocused policy avoids potential care denials for patients, particularly vulnerable patients, and will not impact the coverage and payment of claims for these services, UHC said.
According to the payer, it will instead implement a pilot program to collect data that substitutes notification and submission of standard clinical data when services are delivered for prior authorization, removing the risk of potential care delays and claim denials.
The American Hospital Association (AHA), who was also strongly opposed to the mandate, said this refocused policy is a better approach and encourages UHC to implement the program in the most efficient way possible to avoid any duplication in the clinical information requested.
“We appreciate UHC refocusing its policy on provider education to address member concerns about potential care denials and additional preauthorization requirements,” said Rick Pollack, AHA’s president and CEO in a release. “We plan to collaborate with UHC to help ensure it meets its goal of providing meaningful education for providers while proactively addressing these concerns.”
This win for providers is similar to a recent change in policy we saw with Cigna.
Just days before it was to take effect, Cigna announced it would delay implementation of a strict new policy requiring submission of office notes with all claims including certain codes billed in conjunction with modifier -25.
The addition of new, burdensome mandates by payers is not new, but it has certainly been further straining the payer/provider relationship. Luckily, it seems that with some pushback from providers, concerns are being heard and changes are being implemented.
The VP of finance and revenue cycle at PMHA details the health system's quest to secure more revenue, reduce denials, and support better outcomes.
As finance and revenue cycle leaders fight against poor operating margins, reduced reimbursement, and inflated expenses, developing and executing a strategic path to a financially sustainable future is essential.
Nicole Clawson, VP of finance and revenue cycle at Pennsylvania Mountains Healthcare Alliance (PMHA), feels these same pressures at her health system—a collaborative network of independent community hospitals located primarily in Western and Central Pennsylvania.
When budgets are tight, leaders need to be strategic when investing in technology. Because cost efficiency is so important, healthcare systems and hospitals alike need to get a lot of bang for their buck when considering technology—ROI is always key.
Clawson has the same thoughts since the PMHA mission is to enhance the ability of its member hospitals to provide patient-centered community-based care and to maintain their status as independent community hospitals.
To help ensure financial stability, the revenue cycle division at PMHA includes an overall approach to standardization and process efficiencies focusing on people, process, and technology, Clawson explained to HealthLeaders.
“Our core revenue cycle model includes its shared service management division along with the technology in the systems it uses to gain efficiencies, best practices, and create an overall increase in cash collections and a reduction in denials and bad debt,” Clawson said.
PMHA has extension divisions that can be utilized independently of its shared service management, Clawson said. Included in this is its:
Revenue integrity/charge master division
Contract management and payer relations division
Retainer services within its revenue cycle
“The revenue cycle divisions provide overall revenue cycle management using best practice, efficiency, workflow standards, and reporting to enhance the entire revenue cycle process. A key function within hospital operations, our best-in-class experts work to optimize the financial process used to manage administrative and clinical functions associated with capture, management, claims, payment, and collection of patient service revenue,” Clawson said.
When a hospital system has such a multifaceted operation such as this—while also needing to count every penny—streamlining processes while staying cost effective is critical.
Because of this, Clawson says PMHA is in the process of implementing a combination of technology and operational expertise to monitor revenue cycle data flow from beginning to end with four of its member hospitals.
Read on to hear what Clawson had to say about the system’s pain points, implementation strategy, and lessons learned so far.
HealthLeaders:What sort of pain points were you seeing in your revenue cycle that made you realize you needed to implement a change?
Nicole Clawson: Healthcare is ever changing, this is known. Our divisions are strong and while we are in a good place within each service line we offer, a strategy to optimize revenue and stay compliant is very important in this environment and looking out 5-10 years and beyond is important.
Our current systems wouldn’t allow us to dive deep enough into the issues each of our member hospitals were and are facing. I wanted one database that could give me an ‘at a glance’ snapshot of each member hospital as well as the alliance as a whole.
We started with an evaluation of our current technology and found it to be inadequate for what our vision and needs were. It was very important for me to find not just a vendor but a partner that understood our model.
We are complex at PMHA, we have member hospitals with different operating systems and staff. While we are the constant in revenue cycle management within the shared service hospitals we needed a way to merge and loop the data to provide analysis and identify trends per hospital and across the membership of hospitals in order to rectify and create process around each identified item.
PMHA spent years developing our current system with best practice rules for eligibility, some general and others very specific for our region (PA/NY) and payers. This was to ensure we were capturing and meeting the needs of our members, putting stops in place to provide clean claims with accuracy in patient demographics, patient insurance information, and all-around front end, point of service, or preservice access points.
PMHA also designed algorithms for back-end billing workflow to optimize biller functions for cash acceleration and appropriate reimbursement.
Dashboards at the combined member level is important as we spend a great deal of time manually compiling reports daily, weekly, and monthly at the facility level and with members in totality. I was looking for automation from a PMHA ‘control center’ level to be able to drill down to the specific detail where leaders can review by hospital and all intervals through PMHA. This automation is something we didn’t have, due to multiple databases.
HealthLeaders: Since PMHA has such complex databases, would you say that was your main driver for considering new technology?
Clawson: Yes, we found one vendor that could provide everything we were looking for in the capability for us at PMHA to continue to maintain our custom rules, management of the systems provided with that automation and dashboard functionality that would set our member hospitals apart from others. FinThrive, our vendor for this project, also has an understanding our model at PMHA, one that involves complete oversight of the systems we use.
Aside from the technical ‘boxes’ the vendor checked off for us, an equally driving force that made it stand out above the rest was the partnership. We felt in the vendor review, they came out as best in class, that partner or ally, with a willingness to give us the ability to continue our expertise that we provide to our members in systems and operations to continue to be the administrators over the technology, filtering any requests through PMHA from our members for approvals and processing.
They provided that level of advanced technology, customer service, and collaboration. We have been a long-standing customer in their claims management and charge master product lines, so expanding into an end-to-end solution was our end goal.
HealthLeaders: What about an end-to-end solution appealed to you versus taking a more granular approach to streamlining processes?
Clawson: The integration of data, the ability to loop the front end, data quality, and eligibility to the back end in payments, denials, collections, and everything in between made the difference. Being able to analyze that data and find the root cause for denials or payment issues and correct it going forward to eliminate the issue. I prioritize and focus on prevention.
It doesn’t matter if you are a large ‘mega’ system or an independent rural hospital, the issues are the same, it’s the scale that is different. Our community hospitals need every penny that is due to them based on the care provided to the patients in the communities we serve. Accurate reimbursement and timely reimbursement allow us to continue providing that care needed in the communities of Pennsylvania and New York.
Grouping the products we utilize in revenue cycle systems and technology with this end-to-end solution was important for premier pricing. Using the leverage of the membership as a whole when contracting is also important and a standard process in the revenue cycle divisions of PMHA.
HealthLeaders: Why did you choose this particular platform for your organization? What made it such a good fit?
Clawson: It was chosen due to its ability to provide a true end to end solution. We not only needed what I would call the standard products: data quality, eligibility, denials management, collections, and billing workflow but our other division, contract management and payer relations, was being manually managed and in need of a system.
We were able to get all the products and modules we needed within the platform with all of the functionality and capabilities desired and incorporate it with those products we already had.
HealthLeaders: What is the process of implementing this new platform like? Who is involved with the decision making and why?
Clawson: For myself and our organization, it was inclusiveness. What I mean by that is its important to include our members at different levels within our year-long system strategy task force. A committee that included our core PMHA leadership team and various member hospital employees for those within the shared service management division and member hospitals in general. We had members of managers, directors, and CFOs of our hospitals all involved in the decision making.
We wanted a partner who again understood our model at PMHA, so we did a deep dive into vendor selection that included interviews with over 15 companies, those we considered through research to be the highest ranking in revenue cycle technology. We wanted a company that invested in technology and provided the efficiencies we needed and were looking for.
Overall, it was methodical, we were not going to rush into making a selection. We narrowed it down to three vendors and included all levels of the revenue cycle staff at our shared service hospitals to demo each of the products.
The Office of Inspector General (OIG) is eyeing improper payments, over payments, and denied claims.
Regulatory burdens are top of mind for revenue cycle leaders as they work to increase reimbursement and improve their bottom lines. The OIG has been keeping its eye on improper payments, over payments, denied claims, and more, so staying abreast of the OIG’s work is essential in making sure your revenue cycle runs smoothly.
Check out some of the recent findings you may have missed:
OIG Audit Uncovers $580M in Improper Medicare Payments for Psych Services
More than half of the $1 billion in temporary pandemic-related psychotherapy services paid by Medicare in the first year of the public health emergency were incorrectly billed, federal auditors say.
The OIG examined the CMS’ mental health services records for both in-person and telehealth visits from March 2020 through February 2021 at the start of the public health emergency.
The audit covered approximately $1 billion in Part B payments for more than 13.5 million psychotherapy services during the period. The audit picked two random samples of psychotherapy services: one of 111 enrollee days for telehealth services, and the other of 105 enrollee days for in-person services.
Medicare Paid Providers $128M in Duplicate Payments for VA Care
Medicare overpaid providers about $128 million over five years for medical care that the Veterans Administration (VA) had already paid for, federal watchdogs report.
The OIG determined that the "duplicate payments occurred because the Centers for Medicare & Medicaid Services did not implement controls to address duplicate payments for services provided to individuals with Medicare and VHA benefits."
OIG: Identifying Denied Claims in Medicare Advantage Needed to Combat Fraud
Requiring MA organizations (MAOs) to identify when payment claims are denied would improve oversight of fraud and abuse, according to the OIG.
The HHS watchdog conducted a study to examine whether the lack of an indicator to identify payment denials in MA encounter data makes it harder for proper oversight of MAOs.
OIG IDs $216M in Possible Medicare Drug Testing Overpayments; CMS Rejects Claw Back
Federal watchdogs are recommending that the CMS claw back as much as $216 million for noncompliant definitive drug testing paid to at-risk Medicare providers.
The audit found that 1,026 at-risk providers in the five-year period routinely billed for a definitive drug testing service with the highest reimbursement amount (procedure code G0483) more than 75% of the time, compared with 4,227 "other providers" who "did not routinely bill this service."
The CFO of DCH Health System talks investing in revenue cycle technology when budgets are tight.
Nina Dusang, CFO of DCH Health System, a Tuscaloosa, Alabama-based healthcare provider, recently chatted with HealthLeadersabout the future of the system, and one area Dusang wants to invest in is revenue cycle technology, but with one caveat: a tight budget.
"Financially, we are starting out from a negative position and trying to claw our way out so that we can make sure we serve our community. For us, it's about being stewards of our community's money. So, looking at the entire image is extraordinarily important when investing," Dusang said.
“We don't believe we can cut our way to prosperity when I say that at all. But we do believe rigorous good business practices and cost containment are of utmost importance, while we try to find pockets of profitable business,” Dusang said.
However, cost is something DCH will always have to place a heavy focus on.
Cost efficiency ranks high for Dusang because DCH is designated as a sole community hospital—meaning it is the caretaker for its community. DCH cares for not only Tuscaloosa County but for about 11 counties that surround it, and those counties are some of the poorest in Alabama, she says.
Because cost efficiency is so important, the system needs to get a lot of bang for its buck when it implements technology. "We really have to consider the pricing versus the efficiency we will gain," Dusang says.
"I think the two areas that have the most potential [for cost efficiency] are AI and bots. There could be huge gains in our revenue cycle by using that particular technology. I'm very excited about the potential of what we're going to be able to do there, but we have to do our due diligence as an organization and find the right partner," Dusang said.
Dusang says she has spoken with several revenue cycle bot companies, and it is very clear that they are new to implementing tech because the pricing is all over the board. "One company wanted to charge me a percent on improvement, and I would have ended up paying more than it would cost to hire 10 people to do the work—that’s not efficient."
"A lot of technology is overpriced for what you're gaining. And again, as CFO I have to see our bottom line improve so that we can sustain ourselves and be able to provide better access to care, more care for more people, kept here locally," Dusang said.
Cigna is taking heed at its "burdensome" documentation requirement.
Just days before it was to take effect, Cigna announced it would delay implementation of a strict new policy requiring submission of office notes with all claims including evaluation and management (E/M) codes 99212, 99213, 99214, and 99215 and modifier -25 when a minor procedure is billed.
At the time, Cigna announced it would deny payment for these E/M services reported with modifier -25 if records documenting a significant and separately identifiable service are not submitted with the claim, and medical groups were quick to respond.
For background, the revenue cycle coding staff report modifier -25 for E/M services on the same day of another service or procedure when it is performed by the same physician or provider.
The payer first unveiled the policy last summer, then postponed its activation after more than 100 medical associations said the policy would be too administratively burdensome and would negatively impact patient care.
The payer announced this year that it would go live with the policy on May 25. But on May 23, Cigna announced it would postpone the requirement, and did not supply a new implementation date. “Cigna will continue to review for future implementation,” the insurance company stated.
All this back and forth means that staying compliant with payers has been, and will continue to be, a burden on the revenue cycle workforce. With already strained staff it can be hard to find extra hands, and money, to keep up with payer requirements and policy changes.
Changes under new legislative proposals (from 340B requirements to site-neutral payments) could cost hospitals big if approved.
Changes to the Medicaid disproportionate share hospital (DSH) program, price transparency requirements, Medicare site-neutral payments, and the 340B drug pricing program, are potentially underway according to recent legislative proposals advanced by the House Energy and Commerce Subcommittee on Health.
Quick to respond to the proposals was the American Hospital Association (AHA), which voiced its opposition to the budget cuts and more in its written testimony before the House.
According to the AHA, the reductions to the Medicaid DSH program—which under the proposal would see a $32 billion cut over the next four years—were enacted as part of the Affordable Care Act, with the reasoning that hospitals would have less uncompensated care as health insurance coverage increased.
“Unfortunately, the projected coverage levels have not been realized and hospitals continue to care for patients for whom they are not receiving payment. Consequently, the need for the Medicaid DSH payments is still vital for the hospitals that rely on the program,” the AHA said.
As expected, the AHA applauded the subcommittee for its legislative improvements on price transparency requirements, but it opposed the intended site-neutrality payment cuts on the grounds that it would “result in a major cut for hospital outpatient departments that provide essential drug administration services, including for vulnerable cancer patients, who may require a higher level of care as they receive their essential treatments.”
The AHA said that the site-neutrality cuts would “exacerbate” the financial instability of hospitals and health systems already reeling from these payment cuts and, most importantly, threaten patients’ access to quality care.
The 340B proposal—which would add “new and burdensome reporting requirements” for the number of individuals receiving 340B drugs by payer total costs, payments, and savings—is considered overly burdensome by the AHA. The AHA says that none of these data points individually or collectively will tell the full story of how 340B hospitals use the program to benefit the patients and communities they serve.
Instead of advancing the 340B proposal, the AHA encouraged the subcommittee to reign in the largest drug companies who have restricted and denied hospitals access to 340B drugs and placed the financial health of critical access hospitals in jeopardy.
High expenses, low payer reimbursement rates, and inflation are to blame, the system says.
Ascension Healthcare, a nonprofit hospital operator, says it has implemented "significant improvement plans" focused on operational efficiencies and controlling expense growth as the system just reported a loss from operations of almost $1.8 billion on revenue of $21.3 billion for the nine months ending on March 31.
"As has been widely reported, hospitals nationwide are experiencing intense financial and operational pressures as a result of the after effects of the COVID-19 pandemic, continued healthcare worker staffing shortages, ongoing supply chain challenges and persistent inflation. Ascension is no exception to these trends," Liz Foshage, EVP and CFO of Ascension, said in the announcement.
The main reason for the loss though? Expenses, the system says.
Ascension attributes its expense growth to inflationary pressures consistent with the overall healthcare provider industry, it said. While Ascension said it has implemented plans focused on controlling expenses and improving efficiency, its actions didn’t gain traction against inflationary pressures.
Both supply and salary and benefit expenses decreased for the operator as Ascension relied less on contract labor, but the system reported a 15% increase in other areas like purchased services, driven by its transition to outsourced laboratory services.
Unsurprisingly, Ascension noted that the reimbursement rates from commercial and government payers have also not kept pace with operating expense inflation, which has been a common complaint heard across the healthcare leadership landscape.
Due to these ongoing business challenges, Ascension also saw a one-time, non-cash impairment losses in the third quarter of fiscal year 2023 of $715 million as the carrying value of certain assets within Ascension’s markets may not be fully recoverable, the system said.
Third quarter losses seem to be a trend as another large system recently announced similar financial results citing the same concerns as Ascension.
CommonSpirit says a decline in patient acuity and reimbursement that has not kept up with inflation impacted its financial results for the 2023 third quarter. Rising expenses, labor shortages, and the impact of a cyber security issue from late 2022 also played a role in the organization's latest financial results.
A new KPI benchmarking report shows that one in three inpatient claims submitted by providers to commercial insurers in first quarter 2023 weren’t paid for over three months.
Through the first quarter of 2023, commercial payers initially denied 15.1% of inpatient and outpatient claims for any reason compared to 3.9% for Medicare over the same period, according to the data from Crowe Revenue Cycle Analytics.
These numbers are nearly three times the number of claims delayed for that amount of time by traditional Medicare and over four times the initial denial rate for traditional Medicare claims over the same period, the study said.
Although the study said most initially denied claims become paid claims, the administrative effort to bring an initial denial to positive resolution is very costly for providers.
The study, which analyzed data from over 1,800 hospitals and 200,000 physicians, also found that eight cents of every dollar providers bill to commercial insurers will never be received or will be taken back once received.
When it comes to prior authorizations, the data showed that traditional Medicare plans tend to be easier to work with.
The initial prior authorization/precertification denial rate for inpatient claims for commercial payers was at more than 3% through the first three months of 2023. By comparison, the denial rate for traditional Medicare was 0.2% through the first quarter of 2023, the study said.
So is it time for revenue cycle leaders to start canceling commercial payer contracts? According to the data, not so fast.
“If you ask hospitals and health systems to pick which type of payer they’d prefer to have more of in their payer mix, the answer still likely would be commercial,” the study authors said.
According to the report, the data shows that commercial payers still reimburse providers at a higher amount on a per-case basis compared with Medicare:
$18,156.50 is paid by commercial payors compared with $14,887.10 paid by Medicare in average net revenue per inpatient case.
$1,606.86 is paid by commercial payors compared with $707.30 paid by Medicare in average net revenue per outpatient case.
The higher reimbursement rates may be worth the headache for most.
Hundreds of leaders were asked which rev cycle tasks require the most subject matter expertise.
More than 550 healthcare financial and revenue cycle leaders were asked which revenue cycle tasks require the most subject matter expertise and denials management took the top spot, according to a new HFMA survey commissioned by AKASA.
According to the survey shared with HealthLeaders, respondents could select up to five out of 15 tasks, and while denials management lead the pack, interestingly, coding broke ahead of prior authorization:
78.7%, denials management
50.1%, coding
49.7%, prior authorization
Seeing denials management at the top of the list is no surprise as HealthLeaders has dubbed 2023 as the year of reducing denials for revenue cycle. An abundance of recent studies have been pointing to the growing concern of denials for revenue cycle leaders as more pressure is put on these leaders to help increase their bottom lines.
On the same note, another survey this year showed that revenue cycle leaders consider denials management and prior authorizations to be the most time-consuming revenue cycle tasks.
As denial rates continue to increase, establishing a streamlined denials management strategy is key for healthcare organizations to reduce complexity and workload for staff and avoid reimbursement delays.
“Revenue cycle leaders are being challenged to do more with less as they’re strapped for resources, while also experiencing higher volumes of claims,” said Amy Raymond, VP of revenue cycle operations at AKASA. “To continue to improve yields and meet revenue goals in this environment, leaders must leverage automation and AI-driven solutions that help reduce burnout for existing employees and ensure workflows still get done reliably.”
Pulling in more expertise for both inpatient and outpatient coding tasks is also not surprising. As the payer/provider relationship grows more strained, leaders need to begin tightening up coding processes.
For example, organizations will need to stand firm on compliance and reimbursement when its revenue cycle team submits evaluation and management (E/M) claims with modifier -25 as Cigna recently dropped a new policy.
According to Cigna, it created a new policy requiring submission of office notes with all claims including E/M codes 99212, 99213, 99214, and 99215 and modifier -25 when a minor procedure is billed.
Cigna said it will deny payment for these E/M services reported with modifier -25 if records documenting a significant and separately identifiable service are not submitted with the claim, and at the time, medical groups were quick to show their frustration.
As for other tasks in the revenue cycle that require the most subject matter expertise, the survey showed the following:
47.6%, insurance follow-up
30.4%, patient cost estimation and price transparency
26.5%, eligibility and medical necessity
24.4%, underpayments
23.6%, claim edits
Commissioned by AKASA, the survey fielded responses from 556 chief financial officers and revenue cycle leaders at hospitals and health systems across the United States through HFMA’s Pulse Survey program between July 8, 2022, and August 2, 2022.
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