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A Hybrid Strategy: Optimizing Revenue Integrity with Denial Management Software

Jan 5, 2023 4 minute read

Learn how a hybrid strategy – a blend of prospective and retrospective auditing is the ideal path to helping achieve revenue integrity.

When it comes to achieving optimal revenue integrity, one perspective is not enough. Rather, a hybrid approach that brings together both prospective and retrospective auditing provides the comprehensive view that the revenue cycle management team needs to learn from past mistakes, accelerating the revenue cycle and boosting the bottom line.

Often, prospective audits take precedence. However, while revenue integrity software can handle processing 100% of prebilled charges, running everything through the predictive engine creates two challenges for the organization and the audit team.

First, that creates a ton of work for the audit staff, which is already running lean because of the administrative staffing challenges in the healthcare industry. Imagine receiving a report with hundreds, if not thousands, of claims that are being held up. Each claim requires a fix in order to be submitted to the payer. Multiply the amount of time necessary to fix an individual claim by the total number of claims on the report and divide by the number of audit staffers to get an idea of how long that could take. Fixing claims in this manner is a monumental task that would easily overwhelm most departments.

But that’s not the most pressing issue. Each one of those delayed claims represents significant revenue for the hospital that’s being held up. Days in accounts receivable (A/R days) is a critical metric for hospitals at a time when half were expected to end 2022 with negative margins. A report prepared for the American Hospital Association notes that hospitals face other challenges besides financial shortfalls, including rising expenses, supply chain disruptions, and a lack of workers.

MDaudit research shows that the revenue opportunity for hospital DRG coding is nearly $3,000 per claim and that correct coding for drug usage could net more than $1,000 per claim. What makes more sense: indiscriminately checking each claim prospectively or focusing efforts on claims that have the greatest possibility of positively affecting revenue and maintaining revenue integrity?

Getting the Most from Denial Management Software

Adding an examination of retrospective denial data to uncover areas of concern maximizes the efficiency and effectiveness of an auditing strategy balances the financial needs of the hospital with the workforce limitations of auditing staff. Importantly, analysis of retrospective denial data can uncover denial hotspots and systemic issues where auditors should focus their attention while keeping critical revenue flowing.

Retrospective audits can show the facilities, service lines, and providers that are causing the greatest number of denials. From there, auditors can dig into those claims at a granular level to get at the source of each issue, provide the necessary fixes or workflow changes, and train/retrain the appropriate staff so clean claims can be issued going forward.

That information can then be used to guide prospective auditing. Rather than holding up every claim and swamping auditing staff with excessive work, prospective audits would be focused on high-value claims and the problem areas identified by retrospective audits. This keeps revenues flowing, but it gives auditing staff the opportunity to deploy training and education functions that can improve future revenue – creating a partnership between technology in the form of denial management software and the revenue cycle management team.

The Right Tool for the Job

Payers, including the federal government, are making significant investments in predictive modeling and artificial intelligence tools to more closely analyze claims before adjudication, which could pose revenue challenges for hospitals that don’t perform claim audits.

Just 20% of high-dollar hospital charges drive 80% of denial dollars, so it makes sense to focus on these high-impact charges before diving into other denial causes. MDaudit’s Revenue Integrity Suite takes a collaborative, analytics-driven approach to solve billing compliance and revenue integrity challenges.

By using insights provided by historical data to identify and resolve systemic risks, hospitals can proactively reduce denials and improve the time from claims submission to reimbursement to reduce A/R days. Denial management software can’t do it alone, and neither can people. It takes a collaboration between people, processes and technology to improve overall revenue integrity operations.

To dig deeper into how you can bring this process into your organization, talk to an expert in revenue integrity and revenue cycle management.

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