Every pain point has a source, and identifying the source can be the key to finding its cure.
Within the healthcare sector especially, many of the longest-standing pain points for system stakeholders, providers and patients are around payment processing, reconciliation and revenue cycle management (RCM).
Billing rules vary between insurance payers, such as Medicare and Medicaid, creating a minefield of administrative hurdles, Big Data Healthcare President and co-founder Dean Puzon told PYMNTS. BDHC is a wholly-owned subsidiary of Fifth Third Bank.
Navigating these reimbursement practices can result in confusion and errors that ultimately impact cash flow.
Denials, a recurring issue, further complicate matters. Claims may be rejected for reasons like incorrect coding or insufficient documentation, necessitating time-consuming appeals and administrative work, Puzon said. For healthcare providers, this means that reconciling payments with charges is not only labor-intensive but detracts from core activities like patient care.
These administrative challenges can also lead to cash flow disruptions, which hinder the ability to invest in personnel, equipment and quality patient care.
The cure? Embracing automation, machine learning and emerging technologies to help streamline payment processes, reduce errors and improve financial management, Puzon said.
“Automation can significantly transform the payment reconciliation process in healthcare,” he said.
The future of healthcare payments is defined by the benefits of automation, artificial intelligence and data-driven innovations, Puzon said.
Automated systems, like those developed by BDHC, can match payments to billed amounts in real time by cross-referencing data from electronic claims and remittance files. The integration of electronic health records (EHRs) and electronic medical records (EMRs) with billing and payment systems facilitates seamless data flow, reducing the need for manual intervention, Puzon said.
Real-time reporting through automated systems is another key benefit, providing insights into payment statuses, denials and reconciliation progress, allowing providers to follow up on unpaid or denied claims more efficiently, he said.
Automation can also apply predefined rules to categorize and process payments, directing any unmatched items that require human intervention to the appropriate staff. Streamlining the claims and payment procedure reduces the time it takes to process payments, leading to a more predictable and faster revenue cycle. Reducing the need for extensive manual work allows providers to reallocate staff resources or reduce staff hours, which can lead to lower payroll costs, he said.
To make informed decisions, healthcare providers need to assess the specific challenges within their revenue cycle, such as reducing denials or improving billing accuracy, and then match the appropriate technology — whether it’s AI, ML or automation — to those challenges. Evaluating vendor capabilities, scalability and data management requirements is critical to successful implementation, he said.
When discussing the role of AI in healthcare payments, Puzon drew distinctions between AI, ML and automation.
“Automation refers to the use of technology to perform tasks with minimal human intervention,” he said, highlighting its utility in tasks like data entry and claims processing. ML, on the other hand, is a subset of AI that allows systems to learn from data and improve over time, making it more suitable for predictive analytics, such as forecasting claim denials.
AI, the broadest category, encompasses technologies that enable machines to perform tasks requiring human intelligence, such as reasoning and problem-solving. In revenue cycle management, AI can improve decision-making by analyzing patterns in claims data and optimizing revenue strategies, he said.
Looking ahead, Puzon predicted several emerging technologies and trends that will continue to shape the future of healthcare payments. Key among these is the shift from fee-for-service to value-based care, which emphasizes quality of care over the volume of services provided. This transition will require new payment models that support quality metrics and outcomes.
The growing adoption of digital payments, including mobile wallets and contactless payments, is another trend that is making healthcare transactions faster and more convenient for patients, he said.
Banks have an important role in supporting the future of healthcare payments, he said. Through partnerships with FinTech companies, like BDHC, banks can offer innovative payment solutions tailored to the needs of healthcare providers and patients. At the same time, by investing in infrastructure that supports secure and efficient payment processing, banks can help healthcare organizations manage the complexities of modern payment models.
Financial institutions can also provide risk management services, helping healthcare providers navigate financial risks associated with new payment models while promoting health savings accounts (HSAs) to offer patients more options to save for healthcare expenses, he said.
The future of healthcare payments will be dynamic, Puzon said, and the institutions that embrace technology-driven solutions will emerge as key players in the evolving healthcare ecosystem.
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