By Richard Mills.
U.S. hospitals write off between 3% and 17% of their revenue due to denied claims from payers – insurance carriers, other third-party payers, or health plan sponsors (employers or unions) for the patient. Further, administrative and process-related inefficiencies are reducing health care cash flow, revenue is being lost that should have been collected – it’s a lot of revenue.
This “lost revenue” puts additional burden on hospitals that already are stretched due to rising healthcare costs and lower reimbursement rates. In the low margin healthcare business it’s sometimes the difference between a profitable year and a losing one, or even possibly the existence of the hospital.
The following data typifies the estimated annual denial costs for community, teaching and health system hospitals in the U.S. and the potential amounts of claim recoveries that can be achieved if the issue is addressed.
2013, Hospital Denials Management: In-source, Outsource or Both?
Example of Denied Claims Categories and Recovery Estimates
Current trends in U.S. healthcare are going to make this situation worse…
Clinical documentation and billing submissions are so demanding, complex and time consuming hospitals are writing off an astounding 50 percent of denied claims without any effort to collect. And things are going to get worse, much worse, here’s a few reasons why:
With the implementation of the Affordable Care Act (ACA), another 45 million more people will be eligible for Medicaid or coverage from insurance.
U.S. adoption of The International Classification of Diseases Tenth Revision (ICD-10) means clinical documentation for billing submissions will become even more complex. ICD-10 implementation entails a seven-fold increase in procedure and diagnostic codes – the number of inpatient procedure codes alone will increase by more than 1,700%.
Payers are tightening the screws and paying less. They also suffer from an increasingly complex workload. And of course, as businesses concerned with their own bottom line the practice of preserving or ‘stretching’ cash becomes more common – the money they have they want to keep because it increases the internal rate of return on that cash. All the more reason to get proper documentation and billing submission right, and done, in a timely fashion.
Dell Solutions says the number of denied claims is forecast to grow 400 percent just over the next four years.
A longer-term consideration is demographics, specifically an increase in the number of senior citizens; “In the next two decades, the increase in the 65-and-older population will be about twice as great as it was in the decades just past.” Nicholas Eberstadt, The Demographic Future
Senior citizens need increasing amounts of medical attention as they age and seniors are covered by Medicare/Medicade. The reimbursement rates for Medicare/Medicade are lower than commercial insurers – hospitals can no longer rely on high income insured patients to cover losses.
In an effort to keep up with health care industry demands and improve their bottom lines health care providers and payers are increasingly relying on third-party experts such as specialized claims audit and recovery firms to resolve claim denials and capture charges that should be paid.
Certive Solutions TSX.V-CBP
Searching for a company that is launching into a fast-growth period in an attractive market? If getting ‘in’ at the start of building something special is what you are looking for then look no further then Certive Solutions CSE-CBP.
Every company needs competent ‘been there done that’ type managerial talent to recognize opportunities and steer the ship. Some companies are more successful at attracting top shelf talent than others. Having John Shackleton as Chairman is a significant indicator for Certive’s value proposition. Mr. Shackleton led the growth of OpenText from $50M to $1.3B in revenue – Open Text, a Waterloo-based company, is the world’s leading independent provider of enterprise content management software. Having John serve as Certive’s Chairman is certainly something investors are going to have to take very seriously. If a high quality management team, governed by a ‘been there done that’ kind of guy is your top priority then look no further than Certive Solutions CSE – CBP.
In a nutshell here’s Certive’s opportunity – revenue sharing with health care providers
Revenue Cycle Management (RCM) companies such as Certive are comprised of four different functions:
Billing, charge capture and coding
Claims management
Reimbursement, insurance/payer management
Payment resolution and collections
Currently U.S. hospitals are writing off between 3 and 17 percent of their revenue because claims are denied. Coding errors, lack of pre-approvals, lapsed coverage or timing out and wrong category allocation are all major causes of denied claims and lost revenue.
Certive has identified several opportunities that currently exist in Revenue Cycle Management (RCM), here’s two that exist in claims management:
Internal Growth – To reduce denial incidence as close to zero as possible, and help negotiate successful resolution of denied claims with its payers, hospitals will increasingly need to more intelligently outsource claims.
External Growth – Acquisitions and amalgamation of the space. As it currently stands the claims denial industry is extremely fragmented. There are many Tier Three players whose existing customers, contacts and cash flow will build very serious shareholder value for the acquirer.
Other opportunities will be rolled in as the company progresses.
Certive’s competitive advantage is its DNA in cloud business process software technology – technology that makes businesses run more efficiently, enables scale, and analytics and intelligence to do it better.
Over the next three months Certive will be deploying its cloud technologies into three fundamental areas of operation:
Phase I – Data capture, initiated July 1st 2014. Data capture tools are being developed that will streamline access to relevant information on claims allowing auditors to more efficiently utilize their expertise and time on the actual audit of a claim, and the processing of adjustments for payment.
Phase II – Audit work flow
Phase III – Collection
Certive expects rapid growth through standard selling processes, but also plans on significant growth through acquisition – acquiring the smaller industry players that are good companies with good principals and good customers, but lack the resources to invest in technology. Certive’s “technology-enabled” acquisition model will drive growth – leveraging the company’s entire management team’s significant experience in growth through acquisition.
Industry Structure: A large fragmented industry ripe for aggregation.
The total available market for Certive, based on CMS National Healthcare Expenditures, is $US50 billion.
Are you looking for an opportunity that’s so clear and concise, so well thought out and so damn compelling you can almost feel how successful it will be? Look no further then Certive Solutions CSE-CBP.
Cloud Analytics
Certive Solutions describes itself as – a Cloud Solutions provider for the U.S. Health Care Market serving the revenue cycle management segment, focused on claims audit and recovery solutions for U.S. hospitals.
Cloud computing makes it possible to take full advantage of the vast amount of data collected. Analyzing the data and extracting relevant trends and groups increases the amount of, and speed of, revenue recovery for the hospitals, and Certive too.
Cloud Analytics is a term for a set of technological and analytical tools and techniques specifically designed to extract information from massive amounts of data. With an online connection cloud computing can be done anytime from anywhere. You and your team are no longer tied to individual computer hard drives, instead everything is done via the net.
Hospitals face three challenges they are increasingly not able to meet:
Managing the ever changing nature of the data
Applying the right analytical techniques to use the information most effectively
Adapting workflow tools to the workplace by applying good business practices in this fragmented industry
Certive’s Cloud Automation
Think of an inefficient factory. As a business manager, as the factories CFO, you need to realize productivity/revenue gains. One way of doing so is automating whatever you can automate, whatever you can put on an assembly line you will – improved technology means greater efficiency and speed which equals greater productivity.
Now think of something similar happening in a hospital – using the internet as your assembly line.
The ever-increasing availability of cheap computing power and storage capacity makes automation of claim processing and follow up possible. Cloud computing makes the internet your assembly line. Certive’s Cloud Technology is an incredibly efficient organizer, storage facilitator and an enabler of speed.
Revenue increases exponentially through faster, more efficient and more successful resolution of denied claims by adoption of Certive’s Cloud Analytics automation technologies and workflow management tools. By engaging with Certive, hospitals are taking massive steps toward improving their speed and amount of denied claims recovery which improves their bottom line and relieves the pressure hospitals now face.
Certive’s revenue cycle business segments are:
Zero Balance - Zero Balance is the auditing of claims to identify underpayments by comparing actual payments to contracted terms for specific procedures. Zero Balance is the highest margin business line for the company. Zero Balance is a revenue sharing business line where Certive will realize the most immediate benefit from its workflow technology.
Billing Support - Billing Support is the company’s highest volume business wherein it analyzes claims to be submitted for payment prior to billing, this is done on a cost plus basis.
Early Out - Early Out is a revenue sharing business line where the company intercepts claims, audits and collects them before the expiration of the contractual period with the payer. Certive will gain immeasurable scale in this line of business, as it develops processes for the assignment of accounts to its collectors, and develops work cues to track files and anticipate delivery schedules.
Clinical Review - Certive reviews and audits any claim items that have been denied for clinical reasons. Generally these claims have been paid but a medical review determines that additional payments may be justified. The company is paid on a revenue-sharing basis.
Special Projects - Many underserved niche market opportunities -
audit and recoveries identified through an understanding of the regulatory environment – are regularly presented to the company. Most are revenue-sharing models.
Certive’s Cloud Revenue Growth Watch
June – Certive reported revenue of US$214,387 for the month of June 2014. Cash collections were US$247,336.
July – Certive reported revenue of US$238,207 or 11 percent higher than June. Cash collections were US$336,286 for July, an increase of US$88,950, or 36 per cent over the month of June.
Conclusion
Administrative and process-related inefficiencies, constant changes in payer rules and regulations, time-sensitive processes, the Affordable Care Act and implementation of The International Classification of Diseases Tenth Revision (the shift from IDC-9 to ICD-10) are all combining to dramatically increase the complexity of coding and reimbursement.
Ensuring that every patient claim is billed correctly, payers are invoiced on time and denied claims are dealt with properly and promptly are very real, and potentially revenue draining challenges, for health care givers in the U.S.
These are all excellent reasons why Certive Solutions CSE-CBP should be on every investors radar screen.
Is CBP on yours?