Final-Effort Insurance Collections Help Convert Denials to Cash
January 9, 2019
Vice President of Operations
Healthcare Financial Resources, LLC
Hospitals often assume they have no choice but to accept denial write-offs as an unfortunate but inescapable fact of life. But just like football teams that push the ball over the goal line in a final effort to score a touchdown on a fourth down, hospitals and health systems are turning to final-effort insurance collections to make one last attempt to pull cash to their bottom line.
Approximately 9% of the total hospital claims in the U.S. worth about $270 billion were initially denied in 2016, a recent study found, and more than two-thirds of denials are never corrected and re-submitted for reimbursement. The paltry follow-up rate reflects the conventional wisdom that working aged, low-value denials is not a wise use of limited billing office resources.
Yet with more than 60% of recently surveyed hospitals experiencing a drop in operating income between 2015 and 2017, a growing number of facilities understand they can no longer afford to walk away from denials, regardless of the underlying claim’s age or size.
A new kind of AR partner
Helping hospitals convert previously written-off denials into cash is the focus of a new type of accounts receivable (AR) management vendor, the final-effort insurance collections specialist. Just as hospitals have long relied on secondary collection firms to resolve aging patient self-pay claims, they’re now turning to outsource companies specializing in final-effort (sometimes known as secondary) insurance collections to work super-aged commercial claims, many of which exceed 300 days
The goal is to increase reimbursements by ensuring that even the oldest claims continue to be pursued to resolution. This approach represents a significant shift in the industry: According to a recent study, 20% of responding CFOs said their hospital or health system currently writes off claims at 120 days, while 92% said they write off claims from between 120 to over 300 days.
Final review of a hospital’s AR prior to write-off by a partner specializing in AR resolution and recovery can substantially reduce lost revenue. With operating income falling due to cuts in Medicare reimbursement, declines in self-pay collections and discounts associated with value-based contracts, collecting this additional cash has become essential.
Combining technology and human specialization
Final-effort collections frequently are incorporated as one element in a comprehensive AR management strategy designed to optimize collections at each stage of the claim’s lifecycle. A health system on the West Coast, for example, uses internal staff to work commercial accounts up to 60 days from the billing date, then shifts to a primary AR vendor to handle claims that are aged 60 to 120 days. A final effort insurance collection specialist handles claims of 180 days or greater.
This tiered approach allows in-house personnel to concentrate on achieving rapid resolution of near-term claims to maximize cash flow. Because a significant percentage of the health system’s commercial claims typically remain uncollected after 180 days, the claims are initially worked by the primary AR vendor and then sent to a final-effort vendor for resolution.
Writing off commercial claims doesn’t need to be the final answer
By pursuing super-aging claims, a final-effort partner can help health systems increase cashflow and improve margins. Resolving denials that previously have been worked unsuccessfully by internal billing staff and primary vendors generates new collections from claims that otherwise would have been written off.
Healthcare Financial Resources (HFRI) specializes in all aspects of accounts receivable recovery and resolution. We help resolve your aging insurance AR quickly and efficiently to support your internal staff and increase cash collections. For more information, visit: www.hfri.net
 Philip Betbeze, “Claims Appeals Cost Hospitals Up to $8.6B Annually,” HealthLeaders, June 26, 2017.
 Chris Wyatt, “Optimizing the Revenue Cycle Requires a Financially Integrated Network,” HFMA. July 7, 2015.
 Jacqueline LaPointe, “Hospital Operating Income Falls for Two-Thirds of Health Systems,” Rev Cycle Intelligence, Nov. 26, 2018.
 HFRI Internal Survey, 2018.