3. EDI transactions are complex & imperfect
EDI transactions are used by many healthcare organizations to handle large volumes of information and expedite reimbursement. For instance, electronic eligibility checking is the most widely adopted electronic transaction today. So, why are 23.9%
of claims still denied due to eligibility and registration issues?7
That’s partly because of a broken billing process across the revenue cycle
and disadvantages that come with the current electronic data interchange options.
Let’s look at the current options around eligibility and authorization for this example, 270/271 and 276/277. Prior to a patient’s visit, the 270/271 inquires and identifies the health care benefits and eligibility associated with a patient, but often times the responses have a lack of complete information, causing an additional touch for staff to fix the missing information from the front end. There are limitations with EDI transactions after
a patient has received care, too. The 276/277 options are also limited by the information they return – organizations may know a claim was rejected because of missing information, but won’t necessarily know what
information is missing. We can tell the industry is still struggling with this issue, because many inquiries about status are still done outside of the EDI transactions. And manual checking of each claim requires exponentially more staff than most organizations can hire, not to mention added room for human error and the added cost to collect.
Reprocessing claims drives up labor costs as billing staff are forced to devote more time to unpaid claims. We see the capacity constraints show up in the numbers, too – only around ½ of denials are appealed11
and it’s estimated that up to 90% of those should have been paid.1
Another 4% don’t get paid just because they’re too late.12
These denied claims trigger effects that spill over to disrupt other aspects of the hospital’s finances, too. For example, after a payer denies a claim, administrators are forced to chase the denial, which often requires multiple calls to the ordering physician and working closely with the payer. We all know this is time-consuming and may not always lead to reimbursement. The claim then sits in accounts receivable until it is adjudicated, which can take weeks – even months. Not knowing where claims stand in the adjudication, and for what reason, has a negative impact on days in A/R and contributes to writing off accounts as uncollectible. To have a significant reduction in these uncollectible claims and improve an organization’s overall cash position, organizations need to know more information, sooner.