23 Oct Automating Eligibility Checks and Authorizations: The Key to Saving Labor and Accelerating Revenue
Healthcare organizations of all sizes are feeling the financial strain of the pandemic. The American Hospital Association (AHA) projects hospital losses due to COVID to total $323.1 billion this year. A recent Health Affairs article forecast a loss of $67,774 in collections for each full-time physician in a primary care practice. Many providers have had no choice but to cut back on administrative staff until claims volumes rise again and are relying on a skeleton crew to keep revenue moving.
Even before the pandemic, verifying eligibility and obtaining authorizations were challenging for many organizations. With less workforce than ever before, practices realize it’s necessary to automate eligibility checks and authorizations to alleviate administrative burdens and keep cash flowing.
Traditional workflows vs. automated workflows
The hidden costs of manual processes for eligibility checks and insurance verification
According to the 2019 CAQH Index, which quantifies the cost of manual versus automated administrative tasks in healthcare, manual eligibility checks cost providers $5.30 per transaction.
The traditional workflow of manually checking eligibility and insurance with phone calls and logging into multiple payer websites is labor-intensive. Unfortunately, eligibility and verification are often skipped by offices that are already straining under a heavy workload.
Claims with inaccurate patient demographics are rejected by clearinghouses, leading to time-consuming manual investigation and corrections. Unfortunately, often correct data is placed on a claim to get it accepted into the clearinghouse but is not entered into the clinic’s software, which destines the next claim for the patient to deny as well. The cycle of rejected claims can extend days in accounts receivable, which is further exacerbated if a claim is denied. Coordination of benefit denials are often the direct result of incorrect insurance information and can be particularly difficult to resolve; patients need to be notified and then contact their insurance companies directly to rectify the confusion around primary and secondary payers.
The traditional process of obtaining prior authorizations is a pain point for providers and patients
Prior authorization is the single most expensive transaction for providers. The CAQH Index found that the average cost for a manual prior authorization was $10.92 per transaction. A recent survey published by the American Medical Association (AMA) quantified the toll of prior authorizations on providers:
- 86% averaged nearly 14.4 hours per week on prior authorization tasks
- Almost 30% have staff that work exclusively on prior authorizations
- 33: the average number of prior authorizations per week per provider
In addition to the sky-high administrative costs, some professionals have expressed concern about the effect of prior authorizations on patient care. The AMA survey found some disturbing trends:
- 64% waited a full business day for authorizations
- 29% waited three or more business days
- 24% reported an ‘adverse health event’ resulting from an authorization delay, including 16% that said it led to hospitalization
Between labor costs and the impact of slow processes, traditional prior authorization workflows can be considered a barrier to care, which runs the risk of being further aggravated if staffing is stretched.
Automated eligibility and insurance verification: clean claims and saved labor
Providers that automate eligibility and insurance verification often achieve clean claim rates of over 95%. Many systems can run batch checks several times before the patient visit, giving the billing office ample time to resolve any questions before the encounter and input correct information into the EHR before a claim is generated — stopping cycles of denied claims and accelerating revenue.
The cost savings of automated eligibility are substantial. According to the CAQH Index, providers can save $4.12 per transaction from switching from a manual to an automated system. A system that is partially automated will still save over $3.00 per transaction.
Automated prior authorizations: easier submissions with time savings
There have been many barriers to prior authorization automation, but efforts are underway to standardize data to ease the submission process and establish standardized response times. Some payers have portals that will accept electronic prior authorizations. If the process can be fully automated, the cost savings estimate is $9.04 per transaction, with a time savings potential of 17 minutes.
Anecdotally, electronic submissions are sometimes processed faster than manual submissions, which can encourage positive health outcomes. Partnering with an organization with the technology to evolve with innovations puts healthcare organizations in the best position to reap the benefits of automation.
Automation leads to labor savings and increased revenue regardless of staffing levels
Healthcare organizations that embrace opportunities to automate eligibility checks and authorizations to protect their revenue during the pandemic can benefit long after it is over. As staffing levels return to normal, managers can deploy employees to billing activities that increase patient satisfaction and, consequently, revenue, such as cost estimates and payment counseling creating a win-win for patients and providers.
Medusind automates both eligibility checks and the entire authorization workflow for our RCM and medical billing customers.
Connect with us to learn more about our end-to-end medical billing solution.