Zohaib Sheikh: Hi, I'm Zohaib Sheikh, Head of Content at Fierce, and today I'm excited to speak with Cheryl Taylor, one of the leaders in Cognizant’s RCM business. Welcome, Cheryl.
Cheryl Taylor: Thank you for having me. I'm excited to share my passion for revenue cycle management. I've worked within the RCM space for over 30 years. My journey began by owning my own RCM company for 19 of those. I've sat as VP or director of RCM, but fell in love with consulting after spending five months living in Mumbai, India, fixing a large RCM client for a BPO company.
I'm somewhat of a unicorn because I've done every job within the RCM processes, patient access, billing, coding, to all backend AR activities, which helps me to look at processes in a very holistic way. My role at Cognizant is the director of Health Sciences consulting for RCM, and believe that given Cognizant's convergence with consulting, technology, and business delivery, it was a way for me to expand and deliver at a higher level for my clients.
Zohaib Sheikh: As a leader of the revenue cycle management consulting group at Cognizant, what are some of the biggest revenue leakage issues you're seeing providers face?
Cheryl Taylor: Revenue leakage is a loss of revenue where a healthcare provider fails to get timely payment for services. And today, I'm going to address denials, accounts receivable, and underpayments, and I'm a statistical person, so I'd like to start there. For denials, according to a recent industry study, the average denial rate is up to 12%. 82% of denials are potentially avoidable, and 22% of those aren't recoverable. Front-end denials account for more than 41% of all denials. AR – so key revenue cycle management metrics such as AR turnover ratios, days outstanding, collection effectiveness indexes, they're low and they're decreasing for many healthcare providers as they get hit with the impacts from staffing shortages and continuous issues with payers.
Underpayments – a recent Becker study found that on average, 1% to 3% of provider net revenue is lost annually by commercial payers due to underpayments. The two primary causes of underpayments are payer issues and preventable revenue cycle issues, such as contractual underpayments, process errors, and complex claims. The MGMA has stated that 7% to 11% of all government and commercial claims are underpaid. So, from these statistics, you can clearly see that denials, AR, and underpayments continue to be a key source of revenue leakage for most healthcare organizations.
Zohaib Sheikh: Why do you think those are the biggest issues that the industry is facing?
Cheryl Taylor: Well, with more access to technologies than ever before, so EMRs, practice management, tools, bots, and AI, one would think operational efficiency should be at an all-time high. However, the metrics don't show the progress we had hoped for. Denials in AR continue to grow, but much like complicated medical problems, RCM is quite complex, and that's an understatement.
The exchange of information between our systems is often inefficient or non-existent at times. Most payers don't document their rules in a manner that's easy to follow, and they build algorithms within their systems to reject claims erroneously. There's administrative burdens that continue, and there simply isn't enough staff to handle the work. A Becker study that included 40 interviews of healthcare executives, they stated 63% of those providers are dealing with revenue cycle staffing shortages.
Zohaib Sheikh: What innovative solutions have drawn your attention recently that you believe could be the saving grace for healthcare providers facing revenue integrity issues?
Cheryl Taylor: Automation and AI technology have the potential to dramatically decrease revenue leakage by mitigating denials, identifying underpayments, and optimizing revenue integrity protocols. However, it's important to consider the practical applications of the various types of technology, and depending on the problem you're trying to solve for. So, robotic process automation, RPA, for instance, one of the earliest types of AI, can and should still be used for repetitive and voluminous tasks. If you need to rebuild 10,000 claims, a simple and temporary bot could be quickly built and deployed and save your team hours of overtime. As we scale to more advanced AI, like machine learning, ML, an organization can tackle more complex issues like underpayment identification. The algorithm learns payment patterns, understands all contractual obligations and regulatory requirements, and it never runs out of time to validate.
Now, let's go with the art of the possible. Imagine your follow-up and collection agent being notified by the ML model that a new batch of denial claims has a common root cause. And a genAI-powered chatbot asks the agent, "Would you like me to rebuild all these claims with X modifier, which will likely net you 40% more payment? Or would you like to first take a manual review and determine next steps?" The ultimate decision still lies with your trained human agent, but being equipped with a suite of AI tools allows them to do the work of an entire team.
Zohaib Sheikh: If healthcare providers could take away one or two best practices from this interview that would enable them to solve some of their big issues, what would those be?
Cheryl Taylor: First – and I can't stress this enough – your front-end financial processes are key to reducing denials in AR. 41% of first-pass denials are due to eligibility, authorization, and benefit level issues, so focusing efforts on those key areas will provide an immediate reduction in denials and increase your revenue. Second, staff can only do so much, so it's critical to identify other support methods to alleviate the burden. Some of those support methods may include a denial task force that can identify trends with the sole purpose of remediation, leverage automation to minimize manual tasks and interventions within a process. And last, identify additional streams for support, whether with a vendor or temporary support to get AR cleaned up and the revenue cleaned. Even if it requires an upfront cost, some revenue is better than writing it off and with no revenue. I guarantee in the long term, it will pay dividends.
Zohaib Sheikh: If you could promote one call to action for healthcare revenue cycle executives, what would it be?
Cheryl Taylor: My one call to action would be to view RCM in a proactive way. Spread that messaging throughout your teams, your vendors, executive leadership. We get so bogged down with metrics, numbers, hitting goals, but real change – which will lead to improvements in all those areas – begins when we empower our teams to be proactive rather than reactive, and coming up with tactical prevention strategies. What we do in RCM has a huge impact on our patients, and the efficiency of these processes creates a better experience for them. I urge you not to neglect financial aspects of the patient experience, and seek to follow the reason all us healthcare professionals are in this industry for, and that is to improve the lives of as many people as possible.
Zohaib Sheikh: Well, it's been great speaking with you today, and thanks for sharing your insights.
Cheryl Taylor: Thank you for having me.