For: 400-Bed Hospital
Situational Challenge
A cumbersome claims process with excessive delays in receivables was creating poor cash flow for the hospital. Apparent conflicts between costs and care were also creating cash flow problems and patient hassles.
Hospital administrators recognized the need to create a partnership with strategic insurance payers and to simplify their internal process for submitting claims.
Project Activities
The facility created an improvement team to study the current claims process and to look for opportunities to make improvements. The team’s investigation revealed these key findings:
- Manual processes were still predominant
- Case transcription and coding steps greatly effected submission times
- Changes in treatment protocols were driving high rates of “exception handling” (handling that is outside the normal process; requiring lengthier processing times and increasing the likeliness of rejection or the need for additional information/justification)
- Staff roles in the submission process were unclear, causing confusion and leading to big delays.
In the past, such inefficiencies would be turned over to the Information Technology group to design a solution. However, lead times in the IT department were unpredictable, ranging from weeks to months, and the team wanted a quicker resolution to the problem.
The team decided to take a kaizen approach. Working with their Productivity Healthcare consultant, they broke down work activity flow using waste elimination techniques, and then created a simpler process flow that reorganized work, eliminating the need for many of the approvals and handoffs which added unnecessary delays to the process. Simplified forms were created, and an easier data collection process was put in place. These improvements reduced submission times by 2.5 days.
The team reduced the process by an additional 3.5 days by identifying and eliminating things which would cause the facility’s computer database to become out of sync with their payers’ systems.
With help from the Productivity Healthcare consultant, the team forged an “improvement” partnership with a strategic insurance payer’s reimbursement processing group which resulted in lower costs for both payer and provider. This partnership focused on improving processes in tandem and resulted in improvements in both party’s outcomes. Work standards and manning models were created and deployed. These standards helped manage the process internally and improved the transmission of claims to the providers; with new staffing models which helped administrators establish fair measures for performance evaluation of staff who were involved in the processing of claims.
Administration worked with medical staff to get revised standard treatment protocols into insurance databases for quicker claims payments and fewer denials. Finally, work groups were formed to clean up massive backlogs and create watch measures to prevent future backlogs.
An action plan was created for piloting the new process to assure viability. After several weeks, the consultant led the team in a review and adjustment of the new process. Once stabilized the new process was replicated at other clinics.
Improvements, Benefits, and Key Outcomes
Outstanding receivables were reduced by 6 days.
Other Key Improvements and Outcomes:
- One time gain of $800k
- Improved cash flow
- Fewer payment exceptions
- Claim processing capacity increased over 20%
- Less patient payer annoyance
Project Duration
- 5 months