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Revenue cycle startup thinks it can collect on previously uncollectable claims

The 3 to 5 percent of claims hospitals are tempted to give up on trying to collect can generate millions of dollars that would otherwise be lost.

Jeff Lagasse, Associate Editor

Credit: KembertonCredit: Kemberton

Claims management tends to be a fairly straightforward process that comes down to proper execution. But when it doesn't work things go really wrong. Complex claims can be so thorny, in fact, that some hospitals even give up on them entirely. Others hang on longer than they should. Either way results in lost revenue.

What's more, the problem is getting worse. A median hospital loses some $3.5 million in uncollectable claims, according to the Advisory Board's most recent Revenue Cycle Survey, and providers wrote off 90 percent more claims in 2017 than they did in 2011.

[Also: Hospital says web-bots helped boost point-of-sale collections by nearly $4 million]

These vexing claims have been dubbed the "specialized revenue cycle," and figuring out how to collect on them -- and when to let go -- is a fist step to optimizing your rev cycle.

"Each one is a snowflake," said George Abatjoglou, CEO of Kemberton, a specialized revenue recovery firm based in Tennessee. "You have to look at the situation. And that's where it's difficult for providers to have enough resources. The challenge that happens to providers is they become too emotionally connected to the claim. They say, 'I know we should overcome this,' and they just don't let it go."

[Also: Denials still a major risk to revenue cycle departments, despite build-out]

There are certainly no shortage of companies out there that provide revenue cycle management. McKesson, athenahealth, Optum360, Kareo and ZirMed are all players in that particular space.

Kemberton touts its ability to collect revenue that was previously thought of as uncollectible -- which Abatjoglou estimates is between 3-5 percent of the total claims volume of any given provider. That estimate is close to athenahealth's projection that its Medical Billing Rules Engine collects 94 percent of claims the first time.

[Also: Baylor, Scott and White increases collections through price transparency]

Kemberton President Brandon Rife offered the example of a patient involved in a motor vehicle accident. Three different insurance carriers were involved, a claim was denied, and with a non-responsive patient, two insurers were on the hook and one disputed its responsibility to pay. The matter was essentially dropped, left unpursued. That's lost revenue.

"The landscape has shifted. The one thing that's been constant is insurance companies have found new and inventive ways to make hospitals' lives more difficult by denying claims," Rife said. "There's always been a struggle between the volume of good claims coming in the door and the staff's ability to handle it. It ebbs and flows, and hospitals have a difficult time keeping up with that."

Making matters more challenging is that denials aren't getting any less complex -- and the volume hasn't decreased. For hospitals, it's a moving target.

"The struggle is, you're always trying to reduce denials by going upstream, putting in place clinical documentation programs to address medical necessities," said Abatjoglou. "The denials are a steady stream of new things coming in every month. Where we see the challenge is that once you get past that initial set of activities you need to do … the complexity of getting the denial overturned from that point becomes much greater. And at the same time, you've got new denials coming in that you've got to keep track of."

Neglect some, he said, and it creates a snowball effect.

Revenue cycle management technology has been playing an ever-increasing role in collecting on some of the more complicated claims, but according to Rife, the technology is only as effective as the people who are in place once the system has identified the denials. The only way to do it justice is to have a dedicated team of trained professionals working on those irksome claims, whether it's a team that's been outsourced or an in-house cadre of dedicated gurus.

"Even the Conifers of the world, when they outsource the entire volume of their hospital customers, they have the same problems," said Rife. "They have better technology, maybe, or better controlled processes, but if they don't have a business that trains people on nothing but denials, that's effectively what hospitals should be looking at.

"Denials are specialized in nature," he said. "You need a specialized company or a subset of your revenue cycle department to do well. There are tons of rules and regulations, and it gets difficult to follow. By the nature of the denial, you need people who are willing to be creative, who are just natural at wanting to investigate and advocate on behalf of patients and hospitals."

Abatjoglou said Kemberton is able to collect on about 30 to 35 percent of the claims in which the hospital essentially gave up -- not a bad number considering the firm deals with claims that have an average age of 280 days. The older a claim gets, the less likely a hospital is to collect.

In some cases, that 3-5 percent of complex claims, if collected, can translate into additional revenue of about $1 million or more annually, depending on the size of the organization. And the revenue is greater when the claim is caught earlier in the process.

"I think the ultimate question for hospitals is, can they take a long, hard look at their revenue cycle processes, and challenge themselves and their teams?" said Abatjoglou. "You need to be willing to look at alternatives, and know what you're good at and own that."

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

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