The Secret to Unlocking Financial Performance in Healthcare is… A Healthy Circulatory System?

Cindy Klain

While thinking about the importance of an Electronic Data Interchange (EDI) clearinghouse it struck us: In healthcare, the claims and remittance process is essentially the circulatory system of the revenue cycle.

After all, the human circulatory system passes nutrients and vital elements to and from the right places at the right time in order to keep a person alive and healthy. In a similar vein (pun fully intended), EDI services manages the flow of information that ultimately supports the financial health of providers.

Now, the EDI process may not be as glamorous as the human circulatory system, but most who manage the healthcare revenue cycle would likely agree that an EDI clearinghouse plays a vital role in today’s challenging environment. What’s also clear is that the healthcare billing and payment process is extremely complex, which is why there’s much more to providing EDI services than simply managing electronic transactions. It’s also why a clearinghouse has ample opportunity to add value to the providers it serves. It just depends on the clearinghouse and what it does to bring more to the table.

Simply put: Not all clearinghouses are created equal.

So how do you keep that circulatory system humming along? Here are two ways a good clearinghouse service can help you  maintain a healthy revenue cycle:

  1. Proactively monitor the health of your financial transactions
  2. Support your ability to minimize rejections and denials

Proactively manage your revenue cycle’s wellness as opposed to treating issues as they come up

Healthcare has come a long way.  We are moving from a system that treats maladies as they arise to a system that promotes wellness and staying healthy in the first place. This is a lesson that applies to your revenue cycle as well.  One way a clearinghouse can add differentiated value is to offer sophisticated tools that allow providers to track claims in a logical fashion throughout the entire process. Clearinghouses that maintain a dedicated staff of claims analysts can go a step further and be on constant lookout for exceptions or issues that can result in a delayed or lost claim (as well as the payment that goes with it!) The motto of your EDI clearinghouse service should be: “Don’t wait until it’s been denied, get it fixed up front!”

A typical case in point is proactive monitoring. When a claim is electronically submitted to a payer at 8 a.m., for example, there should be an “electronic handshake” back within a few hours to signal the claim has been received and is being processed. In reality, however, that doesn’t always happen and the result is delayed or lost claims. Similar to a human being, unfortunate things happen when the financial circulatory system doesn’t perform as well as it should.  But just because things can slip through the cracks, there’s no reason they should. A good clearinghouse can help, by capitalizing on metric-based analytics that pinpoint the status of every claim at all times. It’s even better when the team working at the clearinghouse actually takes initiative to help you resolve issues before they have a chance to harm a practice’s revenue cycle.

Helping providers stay ahead of the game is also a function of innovation. EDI innovation is born out of the need for highly efficient claims processes that allow providers to remain competitive in an industry in transition. A classic example is the ability for a provider to check on the status of a particular claim or batch of claims at every stage, to see whether it’s paid, pending or denied. Doing so can help providers identify problems early, which may translate to shorter A/R days and better overall financial health.

A proactive clearinghouse is also diligent about payer mandates, which are as challenging to navigate as government regulations, given the constant changes. To bring more to the table, a forward-thinking clearinghouse will reach out to payers to understand the changes they are planning, adapt their solutions and educate customers about the changes and what their potential impact, long before they’re implemented. That way, potential glitches are addressed before they can disrupt the revenue cycle.

Proactively maintaining the health of your revenue cycle is akin to maintaining a proactive approach to your health.  The benefits are long term and you’ll definitely feel better knowing that your revenue cycle is in good shape, with an experienced partner supporting your success.

A healthy revenue cycle means fewer rejections and denials  

Another major area where a clearinghouse clearly can – and should – provide value is by minimizing claim rejections and denials. Here’s why: Many claims are rejected or denied because they are incorrectly coded[1], and the mistakes made are ones that can be easily fixed.

The potential for a provider to lose revenue and get bogged down by inefficiencies because of errors in coding is definitely unacceptable. To help providers address the problem, a clearinghouse needs to provide visibility into the issues that cause problems – because it’s the only way they can be fixed.

Typical coding miscues that commonly surface are things like invalid insurance or a missing modifier. However, an EDI service integrated with the provider’s Revenue Cycle Management (RCM) system – and one that is also managed by a proactive clearinghouse team – lets the provider know about potential problems before claims are submitted. For example, to solve these typical problems, the system can offer eligibility verification functionality, allowing your staff to proactively verify a patient’s insurance up front.  Or that missing modifier can be flagged by the system, then inserted by the practice right away and scrubbed to ensure the claim is submitted as cleanly as possible the first time.

But up front work is only part of the equation. The other is to get at the root cause of the problems, which is yet another way a clearinghouse adds value. An example is the ability to look back on activity and identify trends in top rejections and denials, determine why they’re happening – and what they mean in terms of delayed or lost revenue. Perhaps most importantly, it’s a capability that lets the provider help train staff in order to avoid making the same mistakes down the road and also measure progress.

The difference between vendor and partner

When it’s all said and done, an EDI clearinghouse can be much more than a vendor who simply passes electronic claims and reports between a provider and payers. Instead, the right clearinghouse will add value at every step and act as more of a partner who helps provider organizations make sure the financial circulatory system of the organization is functioning as efficiently as possible, so that it can effectively compete and deliver a high level of patient care.  Much like choosing a physician to help keep you on the right path towards long term health, you need to carefully select an EDI partner who can be that smoothly-functioning circulatory system, helping you keep your revenue cycle as healthy as possible.


[1] MGMA.com “In Practice” blog December 21, 2011: Insurance denials: Is your practice to blame?


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