The ongoing – and worsening – labor shortage plaguing all corners of the healthcare ecosystem is hitting revenue cycle management (RCM) particularly hard, with RCM and billing departments reporting vacancy rates as high as 75%. Exacerbating an already significant challenge is the threat it poses to revenues at a time when hospital operating margins continue hovering near zero.
To keep their limited RCM teams from drowning and avoid the inevitable impact on the revenue cycle, healthcare finance executives are increasingly turning to technology to automate manual billing compliance processes and deploy advanced analytics as they recruit skilled professionals to close staffing gaps.
As a bonus, these tools help provider organizations better understand their claims and auditing processes, ferret out the root cause of denials, and mitigate compliance risks at a time when a growing number of private insurers follow Medicare’s lead by increasing third-party audits. Technology also provides a lift in ensuring that staffing levels and costs are optimized even when health systems outsource to external vendors to address staffing.
After more than a year of operating in the red, U.S. hospitals saw signs of stabilizing in May amid slightly improving operating margins, declining expenses and notable increases in outpatient visits, according to research from Kaufman Hall. However, the financial impacts have yet to be seen from the end of public health emergency’s Medicaid continuous coverage requirement and labor costs, while down from May 2022, remain considerable.
When it comes to staffing shortages, the financial impact can be significant. In addition to potential lost revenue while new RCM employees get up to speed, other direct costs include recruitment, onboarding, training, overtime pay, retention strategies, and temporary employees that may be needed to prevent backlogs.
Staffing and other costs and margin pressures are causing the C-suite to carefully examine RCM strategies to lessen the impact of the skill shortage. Recent interviews with healthcare executives determined that 63% of providers faced RCM staff shortages. Further, a survey of CFOs and revenue cycle vice presidents from large health systems and physician groups revealed that 48% categorized their labor shortages as severe, with an additional 34% reporting moderate shortages. At least four in 10 organizations reported their RCM/billing departments had vacancy rates between 51%-75%.
To cope with fundamental losses of talent, 56% of CFOs indicated plans to adopt automation technologies in the revenue cycle and billing departments. It’s a smart move for reasons that go beyond the shortage of skilled RCM professionals.
Medicare Integrity Program activities are intensifying, with federal authorities budgeting $2.5 billion in mandatory and discretionary investments in the Healthcare Fraud and Abuse Control and Medicare Integrity Programs for fiscal year 2023. This includes investments in advanced predictive modeling and artificial intelligence (AI) to enhance Centers for Medicare & Medicaid Services (CMS) audit efforts. The agency is also exploring machine learning to accelerate chart reviews for improved payment accuracy on the front end. Further, federal, and private payer audits are expected to pick up following the end of the public health emergency, placing additional burdens on RCM teams.
Calls to trim costs and streamline operations coupled with razor-thin margins, delayed reimbursements, and the specter of additional external audits place extreme pressures on RCM teams. The right processes and technologies will help these highly trained professionals optimize their effectiveness at collecting and retaining revenue. Nearly 80% of respondents to a recent survey named denials management as the task that required the most RCM expertise, followed by coding (50%) and prior authorization (50%).
To combat this, a growing number of provider organizations are turning to a range of technology tools to help automate and streamline many aspects of the RCM process. More than one-half of providers planned to add or enhance digital payment options, which can alleviate the burden on staff to collect payments from patients and 32% sought an increase in self-pay options such as online and text-to-pay. Other ways to ease the pressure on RCM teams include expanding or making permanent remote work opportunities and increasing training to build expertise from within.
Many organizations are also looking at tools to automate workflows to help address RCM and billing department labor shortages. In a survey from the Healthcare Financial Management Association, 78% of respondents reported either using RCM automation or planning to do so, an 18% increase over a previous survey.
Tech-Enabled Audit Processes
Healthcare organizations that automate workflows and deploy analytics tools and denial management software can increase both efficiency and revenues by employing a hybrid audit strategy made up of prospective and retrospective audits. Doing so is one of the catalysts behind an uptick in internal audits; MDaudit research shows that risk-based audits increased by 28% in 2022 while prospective audits increased by 32%.
Performing internal audits can catch and correct errors earlier in the claims cycle, helping hospitals retain as much as 25% of their total revenue. Streamlined audit workflows can help staff optimize their time, quickly identifying anomalies that could impact revenue and training and retraining staff on proper and ever-changing billing and coding procedures.
Because of manual, paper-based processes, a large multispecialty group practice in the Midwest was unable to achieve its organizational goal of auditing each of its 3,500 physicians yearly. However, by deploying technology to automate its audit workflows, the practice was able to focus on solving the most serious denial-related issues while boosting case accuracy rates and reducing compliance and revenue risks – despite facing a 125% decrease in RCM staff.
By using technology to prepare the audit records, the practice’s RCM staff was able to conduct two audits a day. Previously, each audit could take weeks to compile the necessary data and complete the review of 10 charts. Besides workflow efficiencies, audit staff have returned significant revenue to the practice. Out of $14 million in claims and audits of 16,590 cases, it realized $1.9 million in additional revenue, $1.4 million in potential claw backs, and $7.8 million in agreed findings.
Addressing a Critical Problem
Revenue integrity is critical for healthcare organizations of all sizes, and no single solution will solve every challenge, including staffing. However, by leveraging technologies that use augmented intelligence and RCM best practices, healthcare organizations can increase efficiencies, retain revenue, and reduce compliance risk despite the chronic shortage of RCM professionals.
Further, by creating fulfilling opportunities for RCM professionals, automating manual workflows, and implementing innovative technology to increase efficiency and productivity, organizations can turn today’s challenges into tomorrow’s opportunities.
Ritesh Ramesh is the CEO of MDaudit, a leading health IT company that harnesses its proven track record and the power of analytics to allow the nation’s premier healthcare organizations to retain revenue and reduce risk.
The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.