Cloud Revenue Cycle Management

Richard (Rick) Mills
Ahead of the Herd

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As a general rule, the most successful man in life is the man who has the best information

U.S. hospitals write off between 3% and 17% of their revenue due to denied claims from payers – insurance carriers, other third-party payers, or health plan sponsors (employers or unions) for the patient. Further, administrative and process-related inefficiencies are reducing health care cash flow, revenue is being lost that should have been collected – it’s a lot of revenue.  

This “lost revenue” puts additional burden on hospitals that already are stretched due to rising healthcare costs and lower reimbursement rates.  In the low margin healthcare business it’s sometimes the difference between a profitable year and a losing one, or even possibly the existence of the hospital.

The following data typifies the estimated annual denial costs for community, teaching and health system hospitals in the U.S. and the potential amounts of claim recoveries that can be achieved if the issue is addressed.

2013, Hospital Denials Management: In-source, Outsource or Both?

Example of Denied Claims Categories and Recovery Estimates

Current trends in U.S. healthcare are going to make this situation worse… 

Clinical documentation and billing submissions are so demanding, complex and time consuming hospitals are writing off an astounding 50 percent of denied claims without any effort to collect. And things are going to get worse, much worse, here’s a few reasons why:

1. With the implementation of the Affordable Care Act (ACA), another 45 million more people will be eligible for Medicaid or coverage from insurance.

2. U.S. adoption of The International Classification of Diseases Tenth Revision (ICD-10) means clinical documentation for billing submissions will become even more complex. ICD-10 implementation entails a seven-fold increase in procedure and diagnostic codes – the number of inpatient procedure codes alone will increase by more than 1,700%.

3. Payers are tightening the screws and paying less. They also suffer from an increasingly complex workload. And of course, as businesses concerned with their own bottom line the practice of preserving or ‘stretching’ cash becomes more common – the money they have they want to keep because it increases the internal rate of return on that cash. All the more reason to get proper documentation and billing submission right, and done, in a timely fashion.

Dell Solutions says the number of denied claims is forecast to grow 400 percent just over the next four years.

A longer-term consideration is demographics, specifically an increase in the number of senior citizens; “In the next two decades, the increase in the 65-and-older population will be about twice as great as it was in the decades just past.” Nicholas Eberstadt, The Demographic Future

Senior citizens need increasing amounts of medical attention as they age and seniors are covered by Medicare/Medicade. The reimbursement rates for Medicare/Medicade are lower than commercial insurers – hospitals can no longer rely on high income insured patients to cover losses.

In an effort to keep up with health care industry demands and improve their bottom lines health care providers and payers are increasingly relying on third-party experts such as specialized claims audit and recovery firms to resolve claim denials and capture charges that should be paid.

Certive Solutions TSX.V-CBP

Searching for a company that is launching into a fast-growth period in an attractive market? If getting ‘in’ at the start of building something special is what you are looking for then look no further then Certive Solutions CSE-CBP.

Every company needs competent ‘been there done that’ type managerial talent to recognize opportunities and steer the ship. Some companies are more successful at attracting top shelf talent than others. Having John Shackleton as Chairman is a significant indicator for Certive’s value proposition. Mr. Shackleton led the growth of OpenText from $50M to $1.3B in revenue – Open Text, a Waterloo-based company, is the world’s leading independent provider of enterprise content management software.  Having John serve as  Certive’s Chairman is certainly something investors are going to have to take very seriously. If a high quality management team, governed by a ‘been there done that’ kind of guy is your top priority then look no further than Certive Solutions CSE – CBP.

In a nutshell here’s Certive’s opportunity – revenue sharing with health care providers.