Reducing Back-End Denials by Automating Front-End Financial Clearance

By Matt Bridge, senior vice president – Strategy and Solutions, AGS Health.

Optimizing financial clearance and other patient access operations is an important aspect of any strategy to offset revenue cycle issues that are behind more than half of all claim denials. Healthcare organizations struggle to do so, however, thanks to staffing and technology limitations that impede efficient operational processes and increase front-end authorization errors.

Those barriers are starting to crumble as artificial intelligence (AI) and automation become more deeply embedded in healthcare revenue cycle management (RCM). Of particular note is the emerging subset of tools designed to streamline and expedite aspects of financial clearance operations, including eligibility and benefits determination and prior authorization processes. Early adopters of these intelligent authorization tools are reporting rapid return on investment (ROI), including 70% to 85% faster eligibility and benefit determination and 85%-90% improvement in authorization determination time.

Also being reported are 65% to 80% less time on authorization initiation and authorization follow-up times that are up to 85% shorter, as well as 80% faster price estimating. The result of these improvements is not only higher revenue growth and employee retention, but an improved overall patient financial experience.

Challenges to Financial Clearance

Operational inefficiencies, outdated technology, and staffing limitations are among the main contributors to rising denial rates, which were up to nearly 12% in the first half of 2022. More than 41% of those denials are the result of front-end RCM issues, including eligibility, authorization, and other financial clearance activities, which also contribute to higher net revenue leakage via avoidable write-offs.

Breakdowns in the financial clearance process can also drive down patient experience scores, with one survey reporting that 93% of patient respondents indicated provider loyalties hinge on their financial experience and more than half said it also impacts their decision to refer a friend or family member. Forty-one percent said they’re unhappy with their overall medical billing experience, with many pointing to a lack of pricing transparency or certainty despite the No Surprises Act mandate to provide them with both.

One cause is the 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%.

The opportunity to resolve these challenges while also eliminating error-prone manual processes from financial clearance is why nearly 80% of healthcare organizations surveyed are turning to AI and automation. Financial clearance and its redundant and time-consuming tasks is a prime candidate for AI and automation, with 42% of respondents to one survey saying their organization would benefit most if eligibility checks and prior authorizations were automated.

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 most effective approach is to bring together intelligent authorization tools capable of automating multiple steps of the financial clearance process. These should include:

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

Decisions on which front-end automation technologies are the best fit are challenged by the fragmented front-end automation market. As such, when evaluating AI-enabled authorization options look for scalable, customizable solutions. Consider which specialties the solution will support, which financial clearance processes are best suited for automation, and how to manage those processes that will not be automated.

Finally, consider working with a consultative vendor that can 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.

Measurable ROI

Front-end automation has delivered measurable ROI for early adopters, including reports of doubled daily production volumes.

One outpatient imaging provider with nearly 150 locations reported an increase in daily cases processed from 60 to 120 per representative. Authorizations were also extended from an average of three days out to as many as nine days, improving care access and reducing the volume of rescheduled appointments.

Along with the ability to grow and expand business without needing to hire additional front-end staff, other reported benefits include enhanced 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 Growing Influence

The ability of artificial intelligence to address pain points around staffing, denials, and revenue cycle health is driving healthcare finance leaders to embrace RCM automation. Those who have targeted the financial clearance process in their AI/automation strategies in particular are reporting high value and rapid ROI from their investments, greater financial data accuracy, prompt authorization, flexible financial advocacy, and improved price transparency.

Thoughtfully designed AI-enabled authorization has the potential to accelerate and maximize the revenue cycle, thereby delivering an optimal patient financial experience and improved overall financial health.