Automating Financial Clearance Processes to Reduce Denials, Accelerate Patient Access

Updated on December 12, 2023
Healthcare costs and fees concept.Hand of smart doctor used a calculator for medical costs in modern hospital with VR icon diagram

With approximately half of all denials resulting from front-end revenue cycle issues, optimizing patient access operations – in particular financial clearance processes – is crucial to the financial health of today’s hospitals and health systems. For many, achieving that goal has been hindered by staffing and technology limitations that impede efficient operational processes and increase front-end authorization errors.

However, as artificial intelligence (AI) and automation make their way deeper into healthcare revenue cycle management (RCM), we are seeing an emerging subset of tools capable of streamlining and expediting many aspects of financial clearance operations including eligibility and benefits determination and prior authorization processes. 

Early adopters of these types of intelligent authorization tools are reporting rapid return-on-investment (ROI), including:

  • 70%-85% faster eligibility and benefit determination
  • 85%-90% improvement in authorization determination time
  • 65%-80% less time on authorization initiation

They are also reporting authorization follow-up times that are up to 85% shorter, as well as 80% faster price estimating. All of which contribute to an improved overall patient financial experience with higher revenue growth and retention.

Financial Clearance Challenges

Staffing, technology, and operational limitations are significant contributors to the increased rate of denials across healthcare, which climbed to almost 12% in the first half of 2022. More than 41% of denials can be traced back to front-end RCM issues, including eligibility, authorization, and other financial clearance activities, which also contribute to higher net revenue leakage via avoidable write-offs.

Hiccups in the financial clearance process can also negatively impact patient experience scores. According to a survey conducted on behalf of Cedar by El Studios, 93% of patients said their provider loyalties hinge on their financial experience, and more than half said it also impacts their decision to refer a friend or family member. Further, 41% said they are unhappy with their overall medical billing experience, with many pointing to a lack of pricing transparency or certainty – despite the requirements to provide both under the nearly two-year-old No Surprises Act.

Part of the problem lies with the chronic – and critical – shortage of RCM professionals. More than 60% of providers face RCM staff shortages and nearly half of CFOs and revenue cycle vice presidents from large health systems and physician groups say their labor shortages are severe, with four in 10 reporting vacancy rates between 51%-75%. 

Addressing these issues and eliminating error-prone manual processes from financial clearance are why more healthcare organizations – nearly 80% according to one recent survey – are turning to AI and automation. With its plethora of redundant and time-consuming tasks, financial clearance is a prime target, with 42% of respondents to one survey saying their organization would benefit most if eligibility checks and prior authorizations were automated.

Intelligently Automating Authorization

AI-enhanced authorization solutions have emerged as a critical element of RCM automation for their ability to streamline and expedite steps within the financial clearance process. Compared to manual processes, these tools can significantly enhance productivity, improve operational efficiencies, reduce costs, and avoid prior authorization-related denials while enhancing the patient experience by expediting access to necessary services.

The ideal solution will bring together intelligent authorization tools to automate every step in the financial clearance process, including:

  • Real-time eligibility and benefits verification – automation helps simplify navigation of payer systems, eliminates inconsistent data, and reduces call volumes. 
  • Prior authorization determinations – process automation streamlines authorization workflows, minimizes denials, and accelerates/optimizes the revenue cycle.
  • Authorization initiation – Fully automating the prior authorization submission process up to the point of clinical questionnaires accelerates workflows and helps reduce or eliminate errors and missed steps. 
  • Authorization status retrieval – automatic status updates and reporting allow financial clearance teams to stay up to date on the status of all authorization requests.
  • Patient cost estimates – automating the good faith estimate process supports No Surprises Act compliance and reduces administrative burdens while increasing patient satisfaction.

The front-end automation market is extremely fragmented, which makes decisions on which front-end automation technology is the best fit. Thus, when evaluating AI-enabled authorization options, look for solutions that are scalable based on the organization’s needs. Consider which specialties the solution will support, as well as which financial clearance processes are best suited for automation. Also determine how processes that are not prime for automation will be managed. 

Working with a consultative vendor can help work through these considerations. The right vendor will help organizations understand their existing processes and workflows and provide a technologically agnostic approach to solution design. Ideally, they can also help identify outsourced service solutions for processes that are not ideal for automation. 

Demonstrated Benefits

Front-end automation has delivered measurable ROI for early adopters, with some organizations reporting that daily production volumes have doubled. 

One outpatient imaging provider with nearly 150 locations reported an increase in daily cases processed from 60 to 120. Authorizations have also been extended from an average of three days out to as many as nine days, contributing to improved care access and reduced volume of rescheduled appointments.  

Other reported benefits include the ability to grow and expand business without needing to hire additional front-end staff. Additionally, approving authorizations farther in advance helps with scheduling flexibility. For example, staff can fill cancellations by offering the slots to patients whose later appointments have already been approved, eliminating wasted time, improving billable time, and granting earlier access to care for patients.

AI’s Expanding Influence

Automating RCM is a priority among healthcare finance leaders for its ability to address pain points around staffing, denials, and revenue cycle health. Those that have targeted the financial clearance process in their AI/automation strategies are reporting high value and rapid ROI from their investments into intelligent authorization, including more accurate financial data, prompt authorization, flexible financial advocacy, and improved price transparency.

When approached thoughtfully, intelligent AI-enabled authorization can deliver an optimal patient financial experience and improve a healthcare organization’s overall financial health by accelerating and maximizing the revenue cycle.

Matt Bridge copy
Matt Bridge
Senior Vice President at AGS Health

Matt Bridge is Senior Vice President – Patient Access and AR Service Lines for AGS Health.