Payer Increases Revenue $2+ Million with Operational, Accounting Improvements

Updated on August 9, 2022

By Samir Panchal, Consultant, Freed Associates 

Independent physician associations, management service organizations, PPOs and health systems all compete for the same providers. Often the competitive ability of one organization over another to attract and retain providers comes down to that organization’s ability to deliver both high-quality services AND positively impact providers’ cash flow.

A prominent regional payer sought to expand its claims administration services for providers. However its expansion was hampered due to multiple revenue cycle issues. Increased payment turnaround times, aging accounts receivable (AR) and high denials led several participating providers to express concerns about the payer’s service. Some providers even threatened to change their claims administration support. In response, the payer’s leadership launched an immediate and comprehensive effort to identify and correct these revenue cycle handling issues.

Lacking sufficient internal resources to address its claims and revenue cycle challenges, the payer engaged an external consultancy to optimize claims workflows, close out aging accounts and implement automated posting of health plan payment denials. This consultancy was chosen based on its significant prior operational and revenue cycle expertise and a promise to quickly achieve positive results. 

Achieving a Series of “Quick Wins”

The payer and consultants began by planning to achieve multiple, specific quick “wins,” based on analyzing and improving the company’s AR processes and aging. The goal was to identify the root causes of the AR issues, devise ways to reduce or resolve these issues, and subsequently highlight to providers the payer’s rapid improvements in claims administration. 

The consultancy’s analysis quickly revealed a disconnect between the payer’s claims and IT teams, prompting collaborative improvements between these two teams to enhance the turnaround time of AR postings. Multiple process and technology issues were identified. The consultancy escalated the resolution of multiple operational bottlenecks that were not receiving sufficient attention and support. For example, the payer was experiencing a backlog of claims due to pending medical correspondence seeking additional input before these claims could be processed. 

Based on a backlog of provider service inquiries to the payer about denials and related payment delays, the consultancy analyzed denials and their root causes, and recommended claims handling improvements.

In addition to addressing the payer’s immediate AR needs, the consultancy also identified several ways for the organization to optimize future operations. For example, this work included reviewing claims team member functions and workloads, identifying operational challenges with the team’s current staffing model and recommending actions to address staffing and workflow deficiencies. Particular attention was paid to the correlation between staffing numbers, work volume, and specific payer turnaround time.

By looking at claims function staffing and workload, it was possible to identify opportunities for improving denials management and provider performance and payment contract variance reporting. It also became apparent how the payer could improve existing provider relationships by increasing value-added services, such as educational offerings on denial management and revenue management.

Fast Results, Long-Term Gains

Based on the consultancy’s analysis of the payer’s claims administration and the implementation of several recommendations for improvement, the payer significantly reduced its volume of open AR and lowered its claims workflow turnaround times. As a result, the payer significantly improved both its reimbursement collection and delivery to participating providers. 

Through this work and a series of corresponding program enhancements, the payer ultimately achieved a $2+ million annual increase in revenue for its provider claims administration program, and record monthly claims volumes. These improvements not only meant a significant financial gain for the payer, but also preserved the payer’s professional reputation and the long-term business potential of its provider claims administration program.

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