Solving the Unique Complex Claims Challenge to Optimize ROI

Posted December 8, 2020 by Greg Snow

The percentage of hospitals outsourcing complex claims has doubled over the past several years.  The number of complex claims outsourced to specialized, third-party companies has increased from 20.4% to 39.8% and continues to grow. [1]

Nationwide, reduced operating margins require healthcare management to capture 100% of net expected reimbursement, according to the recent survey responses for 1,309 hospital chief financial officers and business office leaders.

Approximately 76% of healthcare administrators believe outsourcing complex claims improves productivity of in-house staff and frees up their time to focus solely on optimizing traditional claims. With respect to the growth within this area, there is an emphasis on complex claims outsourcing and this segment is expected to grow 18% annually. [2]

Complex claims typically include Veterans Administration, Workers’ Compensation and Motor Vehicle Accident accounts as they present a mixture of challenges for the revenue cycle management staff.  These claims tend to be marginalized because they represent a relatively small amount of total hospital reimbursement in conjunction with a lower productivity rate.  This results in complex claims being written-off when it is determined that limited revenue cycle resources are better spent managing traditional claims.  When compared to traditional claims, complex claims were adjusted/denied at a much higher rate than traditional claims.  (i.e., 3X greater)

Outsourcing complex claims to a specialized, first-tier partner rose 51% in recent years and continues to increase. [3] Both payers and providers cannot find enough specialized talent for the successful resolution of complex claims, especially Veterans Administration.  Revenue cycle processes must be extremely efficient in this new age of healthcare, requiring the utilization of more experienced personnel for making high-risk decisions in order to optimize hospital resources.

The overhead for recruiting, retaining, and utilizing specialized staff challenges the largest systems, let alone the small to medium-sized organizations.  Outsourcing complex claims has become the standard operating procedure for complex claims needing specialized review.  This allows in-house staff to focus solely on optimizing traditional claims while improving internal productivity in excess of 80% based on current productivity standards. 

Complex claims also present a mixture of challenges for the healthcare system revenue cycle staff, who usually have limited experience in dealing with non-traditional payers.  These claims tend to be marginalized because they account for a relatively small amount of total hospital reimbursement (i.e., 3% to 4%).  This often results in complex claims being written-off or not fully pursued.

Key Findings: [4]

  • Hospitals state that 81% of them lack the specialized talent to resolve difficult complex claims, including 92% of hospitals with less than 150 beds.
  • 69% of hospital CFOs state they must utilize high-cost back office associates to compensate for current systems, which lack the functionality to manage complex claims. 
  • 49% of hospital CFOs acknowledge that outsourcing is becoming a more viable alternative for various segments of their revenue cycle claims processing.

In conclusion, a recent survey reported that 96% of healthcare system leaders that were surveyed (1,100 CFOs and revenue cycle leaders) reported they are now in the process of evaluating, acquiring and/or deploying advanced, external complex claims solutions.  Write-offs have increased dramatically in recent years and the payer’s systems are rejecting and/or downgrading complex claims, which the typical healthcare business office is not staffed to handle.  In the current situation, with hospital margins decreasing significantly, the need for greater net revenue and reduced time in accounts receivable is critical to the organizations’ survival in 2021 and beyond.

During the coming months, we will be publishing a series of case studies to further highlight the results achieved for our clients. To find out how EnableComp can become an extension of your RCM team “down the hall” and help collect every dollar you’re owed, please click here.

[1] Becker’s Hospital CFO Report: “Outsourcing of complex claims is a trend set to expand, Black   Book survey finds,” December 8, 2016.

[2] RevCycle Intelligence, “Revenue Cycle Management Outsourcing Market to Grow at 11.9%   CAGR,” July 27, 2018.

[3] Black Book RCM Survey Response – June 6, 2017

[4] BHM Healthcare Solutions: “Outsourcing Complex Claims and Cases Review,” May 2017.