Improving Cash Flow Collections by More than $30 Million Annually
Sagility helped a leading payer significantly increase their ability to recoup overpayments, resulting in improved cash flow collections by more than $30 million annually. Leveraging our propensity-to-pay analytics, we devised an analytical and strategic approach that not only identified overpayment trends but also made it actionable, thereby enhancing capital and reducing financial leakage.
About the Client
The client is a prominent payer in the healthcare sector, facing challenges in recouping overpayments. With overpayments draining their financial resources, they sought to bolster their recoupment efforts and improve their cash flow collections significantly.
The client needed a way to capture vital data on overpayment trends, but more importantly, they needed to transform this data into actionable insights to support their financial growth and stability. They needed a solution that would offer more than just a band-aid fix, but rather a holistic strategy that could permanently mitigate the issue of overpayments. With their existing systems and processes, they were unable to effectively identify and recoup these overpayments, creating a significant financial drain.
The client grappled with a lack of forecasting accuracy which led to ineffective planning and increased financial uncertainty. The lack of a robust system to calculate the interest on overpayments and flag potential escalations further exacerbated the problem.
Recognizing the need for precise and actionable data, we implemented our propensity-to-pay analytics. This sophisticated system effectively captured key data on overpayment trends, serving as a foundation for developing strategic action plans.
Refined Analytics Approach
We knew that a successful solution required more than just a reactive stance. Therefore, we revolutionized the client’s approach from simple collections to proactive planning and forecasting. We initiated an analytics model that specifically targeted less than 90-day claims overpayments, paving the way for intricate data mining by the age of the receivable. This strategic pivot helped gain the client’s trust and opened the door for the creation of a more mature and aligned model.
Advanced Overpayment Recoupment Model
Leveraging our analytics expertise, we designed a sophisticated model that delved deeper into overpayment costs, recoupment, and forecasting. This model facilitated the collection and forecasting of provider collections and overpayment data, calculated interest on overpayments, and flagged potential escalations. The new approach armed the client with insights to strategically address overpayments, increasing per-day savings and optimizing the process.
DSO Model Implementation
Our team built a days-sales-outstanding (DSO) model focused on the age of receivables, interest, and the probability of collection within a specific day window. This allowed the client to significantly tighten up their loss ratio, thereby freeing up capital between $30 million to $35 million.
Process Reengineering and Automation
We knew that strategic analytics needed to be supplemented with robust processes. We brought about impactful process reengineering and automation to streamline the recoupment process. This not only resulted in reduced labor costs but also improved efficiency and speed in handling overpayments.
By addressing these challenges through a blend of strategic analytics, innovative modeling, process reengineering, and automation, Sagility was able to develop a comprehensive solution that led to dramatic improvements in overpayment recoupment and financial stability.
In Yearly Cash Flow
In Financial Recovery Forecasting