HASC and Blue Shield Collaborate on Claim Adjudication Process Improvement
The HASC Contracting Committee and Blue Shield have engaged in a claims adjudication process improvement collaboration that has produced positive results, such as faster claim payments, reduced accounts receivable, and reduction of waste and inefficient practices.
Many market forces affect reimbursement and cause contract value to shift over time. These factors create a gap between what a hospital thought it would earn from a contract and what the hospital actually receives in payments. Professional Data Services (PDS) subscribers use market reimbursement data to alert them when a particular payer’s reimbursement is falling behind their peer group.
But what is a hospital to do if it digs down into the data and realizes this gap is due to either payer behavior or their own internal hospital processes? It will disturb many hospitals to know that the majority of process errors originate within their own ranks, based on the work of a HASC and Blue Shield collaboration.
Since January 2010, Blue Shield and the HASC Contracting Committee have engaged in a claims adjudication process improvement collaboration that has produced stunning, positive results that are delivering tangible benefits, such as faster claim payments, reduced accounts receivable (A/R), and reduction of waste and inefficient practices.
For example, decreased claim denials for 2009 over 2008 were 19 percent lower for Partnership in Operational Excellence and Transparency (POET) hospitals, and 6 percent lower for non-POET hospitals. One hospital reported a trending denial reduction with Blue Shield three times greater than reduction trends seen with other payers. This translates directly to faster payments and lower operational costs. Blue Shield has derived similar administrative savings and has revised its portal and operational process mapping as a result of this work.
Two other hospitals in the study report similar denial reductions as well as staff productivity improvements. For example, what would be your expense reduction if you could decrease the number of phone calls on inpatient claim health plan inquiries by 50 percent and outpatient claim inquiries by 95 percent? What if you could get a 25 percent productivity gain on just one claim data analyst? What bottom line revenue gain is represented by expenditure reductions like this, not to mention the associated drop in A/R represented by the faster payment of closed claims?
The Blue Shield POET program provides monthly reports displaying each provider with their hospital-specific dashboard of all claim transactions and status. Using POET data for claim denials as a starting point, a HASC/Blue Shield Work Group designed and conducted a 90-day pilot study involving four HASC member facilities. This group reported significant direct and indirect savings which, if applied to all California Blue Shield contracted providers, would conservatively represent administrative expense reductions and revenue gains of millions of dollars to the bottom line of their provider network.
These results with Blue Shield represent only the beginning efforts at streamlining the claims adjudication process focused on denial rates. HASC’s Workflow Diagnostics Work Group will address similar savings in avoiding unnecessary claim appeals and litigation costs at the November quarterly meeting with Blue Shield and HASC member cohorts of revenue cycle/contracting teams.
Hospitals participating in the pilot study were: Cedars-Sinai, Providence Health & Services (St. Joseph, Burbank), and two St. Joseph Health System – Orange hospitals (St. Jude Medical Center and Mission Hospital). Other HASC members joining an expanded Blue Shield/HASC effort include: Pomona Valley Hospital Medical Center, Daughters of Charity Health System, and Adventist Health.
Imagine the same process improvements applied to the other commercial plans. Together, these best practices, if applied statewide or nationally, would truly bend the cost curve and benefit the hospital bottom line. Achieving a national standard “best practice” like this innovative collaboration with Blue Shield is the goal of the HASC Workflow Diagnostics Work Group. This is not a pipe dream—Health Net will join HASC in this effort in January 2011. Hopefully, the other major commercial plans will follow.
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The claims denial work will expand next to appeals and grievances, as HASC believes equal savings can be found in that area of the claims adjudication transaction processes.
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