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More hospitals outsourcing complex claims to collect revenue, survey finds

Margins of 3.2 percent mean the C-suite is looking to capture all of the revenue it is owed, according to Black Book Research.

Susan Morse, Managing Editor

The percentage of hospitals outsourcing complex claims has doubled over the past three years, according to Black Book's 2016 revenue cycle survey released last week.

The number of complex claims outsourced to a specialized provider climbed from 20.4 percent in 2013, to 39.8 percent during the third quarter in 2016, according to the research firm.

Nationwide, margins of 3.2 percent mean the C-suite is looking to capture all of the revenue it is owed, according to the survey responses of 1,309 hospital chief financial officers and business office leaders.

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[Also: Nonprofit healthcare margins to buckle under value-based pay in 2016 and beyond, Fitch says]

Next year's reimbursements are expected to decline and inpatient margins narrow further, Black Book said.

"Outsourcing complex claims allows hospitals to tap into an infrastructure that can successfully recover this often lost source of revenue," said Doug Brown, managing partner of Black Book.

Three quarters, or 77 percent of administrators believe outsourcing complex claims improves productivity of in-house staff and frees up their time to focus solely on optimizing traditional claims.

[Also: 10 ways to achieve revenue cycle success]

Complex claims - those typically involving motor vehicle, workers' compensation, injury, catastrophe and general liability cases - present a mixture of challenges for a hospital's billing and collections staff, who are usually not experienced in dealing with non-traditional payers, according to Black Book.

"These claims also tend to be marginalized because they account for a relatively small amount of total hospital reimbursement and this results in complex claims written off when it's decided limited hospital manpower is better spent managing traditional claims," Brown said. "In fact, when compared to traditional claims, complex claims were written off at a significantly higher rate last year."

As a result, the complex claims outsourcing market is expected to grow at least 18 percent annually through 2019, adding to nearly 76 percent of U.S. hospitals already outsourcing some extended business office tasks.

[Also: Court sets 2020 deadline for HHS to resolve Medicare claims backlog]

Ninety-one percent of hospital CFOs participating in the survey revealed delaying outsourcing complex claims management in 2015 because of business office staffing shortages, other reimbursement delays and regulation changes. This year, only 30 percent of CFOs reported any hesitation in using external service firms to process their complex claims for further evaluation.

Eighty-one percent of respondents said they lack the specialized talent to resolve very difficult claims, with 92 percent of these respondents representing hospitals of under 150 beds.

Close to half, 49 percent, of hospital CFOs said outsourcing, including offshoring, is becoming a more viable alternative in 2017 for more parts of their organizational claim processing.

Black Book has no financial interest in any of the vendors  encompassed in the survey, it said. Since 2000, Black Book has polled vendor satisfaction across 30 industries in the software/technology and managed services sectors.

Twitter: @SusanJMorse