How Organizations Can Streamline Health Care Payment Reconciliation

For health care providers, payment reconciliation can be a complex process that includes matching data between an electronic medical record (EMR) and finance systems, often manually sifting information and tracking down mystery payments. The cumbersome procedure can raise costs and make it difficult to fully utilize cash balances.

The goal, of course, is to ensure all medical billing bank deposits are accounted for and matched to an electronic remittance advice (ERA), which is also known as an 835 file. But the reality is that many hospitals and health care clinics still struggle with unrecorded payments.

“You get to the point where you can’t truly close out your books for the month,” says Jessica Lemoine, assistant vice president and healthcare success manager at Fifth Third, "and unrealized revenue poses a risk. There’s the potential for unapplied cash or open accounts receivable balances to further slow cash collections.”

Fortunately, automated and artificial intelligence (AI)-powered billing reconciliation solutions are now available to help identify unmatched payments. Solutions such as Big Data Healthcare (BDHC — a wholly owned indirect subsidiary of Fifth Third) can accelerate cash posting and save employees time creating a more accurate picture of an organization’s cash position.

Communication breakdown

Within health care organizations, there’s often a disconnect between the revenue cycle function and the broader accounting and finance group. It’s not uncommon for one group to report that monthly payments are reconciled while another team has to search for payments, comparing an insurance firm’s explanation of benefits (EOB) data with ERAs and manually entering payment information so that the books can balance.

“The more we dig into it, the more we discover that there’s a lot of manual interaction between the two groups,” Lemoine says.

In fact, manual work is far too common. Consider that many large hospital systems still manually reconcile 835s to bank deposits. The Council for Affordable Quality Healthcare (CAQH) reports that nearly one-quarter of claims payments from medical plans are still paper-based, requiring employees to reconcile those payments and deposit checks manually.

Part of the issue is that teams may be working in different systems. For example, revenue cycle groups often work with a health care system’s EMR platform and send files or emails to the accounting team. When the latter group has questions, finding the answer, which may reside in the EMR system or within an insurer’s EOB, can be challenging.

Unrealized revenue, realized risks

The siloed nature of providers’ healthcare payment reconciliation and accounting operations can increase the potential for having unrealized revenue, which comes with its own challenges. Consider the financial and operational risks of unrecorded payments:

• Increased payment errors. Finding and matching unrecorded payments is often a manual process, and manual data entry has an error rate of 1% to 4%, depending on the complexity of the information. While that may seem small, it can become a significant problem if you’re processing hundreds or thousands of payments each month.
• Lagging cash collection. If providers believe they haven’t received an insurer’s payment, they may postpone collecting the patient’s portion of the bill. This can slow an organization’s revenue collection and lead to other challenges, such as disputed patient bills and decreased patient satisfaction.
• Poor financial visibility. Unmatched or unrecorded payments make it impossible to gain an accurate view of an organization’s revenue performance and current cash position. This can impact decisions regarding budgeting, forecasting, strategic planning and more.
• Increased administrative burden. Reconciling unmatched payments requires employee time and effort, including manual data entry, time spent tracking down insurer remittance forms and phone calls and emails between providers and insurers, as well as between internal finance and billing functions.

Taken in the aggregate, these factors highlight the missed opportunity of unrealized revenue and the time and money it can cost organizations. “The unmatched payments slow down the reconciliation process, which can then reverberate across the organization in negative ways,” Lemoine says.

AI and automation transform reconciliation

Now, there’s a better way. The development of automated reconciliation solutions such as BDHC enables health care providers of all sizes to accelerate their payment processes. Electronic funds transfers and automated remittance and deposit reconciliation of ERAs reduce manual processes, decrease errors and ensure that your organization accounts for every transaction. Modern remittance and payment solutions can flag exceptions, meaning employees only have to address potential problems.

“We can now speed up or automate the manual work employees had been doing so that they can focus on the things that weren’t getting attention, such as insurance denials or pursuing more prior authorizations,” Lemoine says. “That can lead to additional revenue coming in.”

The introduction of AI adds even more capabilities, including reading and interpreting correspondence between insurers and providers. “AI can help decipher the content of letters, categorize them and even create an 835 from that information,” she adds.

The Big Data Healthcare advantage

BDHC uses intelligent data automation to reconcile health care remittances with deposits. The company’s suite of solutions helps health care providers automate and improve:

• Deposit and remittance reconciliation. Health care providers can leverage BDHC’s FUSE platform to import deposits and remittance files from their bank, clearinghouse or payers; automatically reconcile the information; and identify and match unrecorded revenue.
• Enterprise cash management. The platform provides full transparency into all bank transactions and a unified workflow with enterprise cash management for revenue cycle and accounting departments.
• Benefits and correspondence. By connecting with existing bank lockboxes, the platform captures EOB documents and creates ERA files for automated posting.

Providers who partner with BDHC have experienced increased access to working capital, shortened revenue collection cycles and decreased manual processing costs. Even better, unrecorded payments become realized revenue that health care organizations can account for and ultimately use.

If you are interested in learning more about how intelligent data automation can accelerate and improve your reconciliation process, click here to find out more about BDHC’s reconciliation solutions.