Navigating the intricacies of healthcare billing and insurance claims is no small feat. RCM in healthcare is the financial process that healthcare facilities use to track patient care episodes from registration and appointment scheduling to the final payment of a balance. It includes various steps such as patient registration, insurance verification, medical coding, claim processing, payment collection, and managing denied claims.

It’s common knowledge that maintaining revenue collection (which means limiting claim denials) is the main goal of the whole revenue cycle model. Let's delve into the common reasons for claim denials and why focusing on Coordination of Benefits (COB) first makes practical sense.

Understanding Coordination of Benefits

COB is not merely a procedural formality; it's a strategic operation that, when optimized, can significantly streamline processes and enhance revenue flow. It clarifies which insurer is the primary payer and which ones are secondary or tertiary, preventing payment duplication and ensuring a fair distribution of insurance benefits.

Why start with the Coordination of Benefits?

In working with our clients, we’ve seen how complex managing revenue can be, especially when it involves dealing with insurance providers. Our analysis identified four key areas that usually cause claim denials: prior authorization, eligibility issues, coordination of benefits, and not following payer guidelines. You might think it makes sense to tackle the biggest issues first — like prior authorization, which accounts for a large chunk of denials. However, our experience shows that starting with what seems to be a smaller issue, COB can be more effective. 

When we analyze claim denials, four major areas stand out:

• Prior Authorization: Accounting for around 35% of denials, this area is pivotal because it holds significant revenue. The process is mostly manual, posing a challenge for automation, especially since much of it isn't digitized yet it's crucial for claim submission.

• Eligibility: Making up 12-15% of denials, eligibility verification is essential for determining active or inactive coverage and understanding the limits of a patient’s policy. Fortunately, this process is easier to automate, which can streamline operations considerably.

• Coordination of Benefits (COB): Responsible for 15-17% of denials, issues here often stem from confusion over primary payers, outdated coverage information, or incorrect plans.

• Payer Guidelines: Causing around 30% of denials, adherence to payer guidelines is critical. Denials in this category are frequently due to medical necessity compliance issues or coding errors, such as incorrect CPT codes and modifiers. Automation here requires customization to meet specific payer requirements.

Given these insights, it might seem logical to tackle the areas with the highest percentage of denials first. However, our experience suggests a different approach. By focusing on COB — a seemingly smaller piece of the puzzle — we've unlocked a strategic advantage that yields quicker wins and sets a solid foundation for addressing more complex challenges.

What does it look like in practice?

Step 1: Automate Eligibility Checks

The first step towards a refined COB process is the automation of eligibility checks. This foundational move reduces manual labor and diminishes errors significantly.

1. Generate Eligibility Batches: Automatically create eligibility batches within your Lab Information System (LIS) or equivalent.

2. Utilize Integration Engines: Use an integration engine, such as InterSystems Health Connect, to transport eligibility batches via API connections. This engine should break down batches into individual 270 requests, each containing minimal but essential patient data.

3. Process Through a Clearing House: The integration engine sends these requests to a clearing house, which then distributes them among insurance providers and returns responses swiftly.

Step 2: Streamline Ineligible and Eligible Streams

Responses to eligibility requests usually fall into three categories: active coverage, inactive coverage, and errors. It's crucial to divide these responses into ineligible and eligible streams for efficient processing.

• Ineligible Stream: Focus on responses arising from errors, like incorrect Member ID or policy details. Utilize the integration engine to analyze the 271 EDI file responses and initiate automatic coverage detection processes if necessary.

• Eligible Stream: For positive eligibility responses indicating active coverage, further analysis is needed to identify primary or secondary payers, essential for the COB process. The integration engine plays a crucial role here, analyzing EDI 271 files for specific payer codes and generating detailed COB reports.

Achieving Immediate Impact

Implementing these strategies streamlines the COB process and yields immediate financial benefits. In our experience, the COB bucket saw a reduction of 30% in the first month and up to 80% over six months, significantly improving our client's financial health and allowing further investments in process improvements.

The Human Element

While technology is at the heart of these revenue cycle optimization strategies, the human element cannot be overlooked. Creating a change-friendly environment and empowering teams with knowledge and training are paramount. This ensures not only the successful adoption of new systems but also the creation of a more seamless, patient-centered healthcare ecosystem.

Moving Forward

Looking ahead, the goal is to integrate COB results directly into client systems, bypassing manual report generation to further streamline the billing process. This ambition underlines our commitment to continuous innovation and improvement, leveraging advanced tools and custom developments to enhance healthcare technology solutions.

In conclusion, mastering COB within the revenue cycle management framework is not just about financial optimization; it's about fostering a healthcare system that prioritizes efficiency and patient care. By employing strategic automation and focusing on both technological and human elements, healthcare organizations can navigate the complexities of revenue cycle management more effectively, ensuring a brighter future for healthcare delivery.

If you have a similar project in mind, we invite you to contact us at Kepler Team. Let's schedule an initial conversation and explore how we can contribute our expertise, work together to optimize your revenue and establish a relationship based on trust.