Are Automated Systems the Best Option for Hospital Billing?

Hospitals have begun experimenting with the use of automated systems when it comes to managing their billing. Although a recent article hasn’t made it clear how extensive this practice is – as far as wondering whether or not it’s used when billing commercial health insurance companies or just for patients – it is obvious that this will be the future of healthcare billing practices. The return on investment is just too great, especially in a time when hospitals and clinics are either going under to merging with other practices due to financial issues. With that said, in the future, we may notice that the rise in automated systems and the mistakes that can occur because of them, could end up being tied to a rise in Federal ERISA appeals if those claims remain unpaid.

Current Automated Systems Use is Good for Business

The number one thing that everyone is quick to point out is the overall ROI (that’s return on investment) for healthcare practitioners who have decided to use these automated systems. In order to explore this concept and all of the issues that could potentially arise from it, we’ll need to start at the beginning.

According to the experts, “the hospital revenue cycle has become increasingly complex in recent years for several reasons, including the adoption of advanced payment models and the rise of self-pay accounts. To navigate this challenge and maintain a stable financial position, many hospitals and physician practices are automating billing and payment functions.” This is very true, and it makes sense that computerized billing and payment options stem from it. On top of this, computers are slowly taking over everything else, so it makes sense that hospitals would find a way to benefit from this technology.

The Reasoning Is Sound – Or Is It?

That same article goes on to describe many of the reasons why hospitals have turned to this computerized and automated type of billing system. Let’s work through them one by one.

It all starts with, “Effectively managing a hospital’s revenue cycle requires the completion of time-consuming tasks that are prone to human error. However, automation can help streamline a significant amount of this labor-intensive work.” Yes, people do make errors. However, can these automated systems read the charts and other logs produced by healthcare workers in order to handle all of the billing properly? Or do the machines make the same amount of errors as humans? For example, will a machine be able to read handwriting in the same manner as a real person? And, if the machines are doing this work, is there someone present who can make corrections when issues occur? There are more questions than answers here.

In addition to this, “In an increasingly complex payment environment, healthcare leaders are seeing the benefits of automating billing and payment functions, and the industry is beginning to shift away from manual administrative transactions, according to a report from the Council for Affordable Quality Healthcare published in January. The report tracked the adoption of HIPAA-required and other electronic transactions between healthcare providers and health plans and benchmarked how healthcare is progressing toward reducing administrative complexity.” Again, this makes sense. When it comes to HIPAA errors, it’s easy to see why computers are preferred. They can’t accidentally give away someone else’s health-related information. Plus, a good system will definitely reduce the overall complexities.

Current Uses for Healthcare Automation

At this point in time, many of the automated transactions are done for one specific purpose as outlined here,” Automating prior authorizations is one major area of opportunity for healthcare providers. The medical industry’s adoption of electronic prior authorization transactions continues to lag other transactions in the administrative workflow, with more than half of prior authorizations conducted manually.” Since preauthorizing certain procedures can be time-consuming, as the employee needs to contact the insurance company, sit on hold in order to reach a representative, and then produce all of the necessary information required for the preauthorization, it makes plenty of sense that this would an automated task. While this isn’t quite reaching the “handling all billing” stage yet, it certainly helps with a very time-consuming task.

What About the ROI?

Since many hospitals and clinics are very concerned about the return on investment, it makes sense that a lot of the studies pertain to the ROI. It’s explained that “Hospitals and other provider organizations exploring whether to invest in software to automate revenue cycle functions are using a variety of metrics to assess the ROI of automation. The CAQH report makes a strong case for automation by highlighting the potential savings it offers.” This savings is actually quite impressive.

When the entire workflow, from start to finish is examined, the amounts of money saved are enough to make this something that every hospital will no doubt be looking into. As it states in the article, “Healthcare providers could save as much as $14.64 per patient encounter by using a fully electronic workflow. CAQH said the greatest per-transaction savings opportunities for providers are claim status inquiry, prior authorization, and eligibility and benefit verification.” On top of this, “According to CAQH, the medical industry could save $9.8 billion a year by fully automating the following six functions: eligibility and benefit verification, prior authorization, claim submission, claim status inquiry, claim payment and remittance advice.” This is where the majority of the problems come into play.

The Issues with Automating Claims

Right now, every hospital, clinic, and practice (at least the ones in larger networks) have billing departments. These departments work in tandem with the medical coders, who take the paperwork and turn it into units and items that can be billed out by deciphering what the physician or specialist wrote down and assigning things to it, such as the patients name, identifiers, and even the codes that are sent to the commercial health insurance agency. When this fully automated, computers will be the ones doing this work. This not only puts a lot of people out of work, but it also opens the claims for errors.

For example, what happens if the computer misreads something? Even if the physician uses a computerized system to enter things like diagnoses and treatments, there’s still the chance that mistakes would occur. Plus, what about the three state-level appeals? If the computerized system sends out a claim with the wrong code and the commercial health insurance agency rejects it, what happens next? With an in-person system, someone is tasked with double-checking those claims and sending them through the three state-level appeals. Will a computer be able to do the same thing? It sounds as though the realm of error is the same, so many of those appeals won’t be paid, and they’ll end needing to go through the Federal ERISA appeals process.

There Will Still Be a Need for the Experts

Once they need to go through the Federal ERISA appeals process, things get complicated. Computerized systems won’t be able to handle this, as it is fairly complicated. As it turns out, even when things end up getting automated, there will still be errors as well as commercial insurance companies that don’t want to pay their claims. There will still be a need for experts like us.