Administrative costs are a major contributor to the healthcare industry’s runaway costs. The industry spends $100 million annually to manage claims processes alone – much of it tied to costly, inefficient and error-prone paper-based processes. A major culprit of all this operational inefficiency is the delivery of payments and explanation of benefits (EOB) information, which arrive as paper most of the time, according to the McKinsey report, “Overhauling the U.S. Healthcare Payment System”.
In fact, automating EOB processing and moving to automated payment and remittance processing could save larger hospitals millions, according to the Healthcare Financial Management Association (HFMA) report, “Looking to Rev Up Your Revenue Cycle”.
Eye-popping savings like this will be critical as healthcare providers look for ways to lower operating costs in the wake of new government regulations and lower reimbursement.
Curious how much your organization could save by automating EOB processing? Here are some key elements to include in your business case:
- Faster cash posting: In an automated environment, 90 percent or more of payer remittances can be posted electronically to a patient’s account within 24 hours of payment receipt. Compare that to a manual environment where it takes the majority of providers 14 days to post payments, according to a 2010 study by The Association for Work Process Improvement (TAWPI). Similarly, automated EOB processing reduces a healthcare provider’s Days Sales Outstanding (DSO) from an average of 48 days to 21 days, according to the TAWPI study. Beyond improvements in float and cash flow, faster remittance posting also enables healthcare providers to address secondary billing or denied claims much faster.
- Streamlined secondary billing: In an automated EOB environment, healthcare providers can instantly access the EOB information required for working with payers on adjusted or denied claims, potentially resulting in faster revenue recognition for these transactions. With ACA, International reporting that the healthcare industry writes off a whopping 4.88 percent of its total receivables each year, incremental gains in this area can deliver tremendous benefits for healthcare providers. Information can be retrieved by viewing an entire EOB, payer-specific claim information, or patient claims based on critical data fields.
- Reduced labor costs: Automated EOB processing eliminates the manual keying required for posting – a task that is so onerous that 19 percent of providers never bother to reconcile their accounts, according to a study by PayStream Advisors. Beyond the significant expense of manually keying EOBs, consider the costs associated with simply handling the paper documents: $20 in labor to file a single EOB document, $120 in labor to find a misfiled EOB document, and $220 in labor to reproduce a lost EOB document (all according to AIIM).
Importantly, automating EOB processing delivers benefits across the claims lifecycle, including improved workflows, no lost or misplaced records, fewer write-offs and reduced postage costs. Automated EOB processing also frees staff from manual processing to focus on patient care. EOB processing is one of the most costly and labor-intensive functions for most healthcare providers.
So with these kinds of savings available, why haven’t more providers automated their EOB processing? After all, HIMSS reports that 33 percent of providers recognize that payments and remittance functions would significantly benefit from electronic processes. There are two major reasons providers are dragging their feet: perceived technology issues and implementation costs.
Today, new cloud-based solutions can make it easy for healthcare providers, banks, service bureaus and healthcare billers to convert EOBs into a variety of post-ready files. To learn more about automating EOB processing, click here: http://www.orbograph.com/orbograph-p2post-for-eob-processing.htm.