CLEVELAND – Pricing transparency and the increasing rise of self-pay are making significant impacts on cash flow management for hospitals and large physician practices, experts say.
As a result of these outside forces, hospitals and large physician groups must operate in a new environment and equip themselves with technology and consulting solutions across their business processes.
“With the sea change in benefit plans, hospitals and doctors are getting hit with an increasing fraction of self-pay, which is much more costly and takes longer to collect,” said David Hammer, vice president of revenue cycle management at McKesson Provider Technologies.
Statistics show that the rate of growth in enrollment of high-deductible plans is outstripping the rate of growth of deposits in health savings accounts, or HSAs, Hammer said. With a greater percentage of people who haven’t funded their HSAs, providers are the ones left with unfunded receivables.
While there are technology solutions that give providers the ability to verify benefits and eligibility and process claims in real time, Hammer said a number of other applications are on the 12- to 24-month horizon that will give providers more solutions to keep the cash flowing.
Michael Nowicki, professor of health administration at Texas State University, said hospitals only collect 25 percent of fees due at the point of service. “That’s the gold standard,” he said. “As we move to more consumer-directed healthcare, we really need to gear up to collect that money.”
He recommends a combination of automated processes such as credit card payment at the point of service and financial counseling and training so admitting or registration clerks can collect the money upfront.
On another front, federal and state mandates have been calling for transparency in pricing of procedures. In response, a number of companies are coming to market with software that will allow hospitals, financial counselors and consumers/patients to estimate out-of-pocket expenses before procedures, said Hammer. The Healthcare Financial Management Association released a toolkit approximately two years ago that was designed to help organizations reevaluate their prices.
“Some prices are out of line based on cost and competition,” Nowicki said.
Payment from high-deductible patients is still a small, albeit growing, percentage of a providers’ receivables, said William Cleverley, president of Worthington, Ohio-based Cleverley + Associates, a financial consulting services firm for hospitals.
Third-party payers represent the greater percentage of cash flow into hospitals and large physician practices. The key to keeping revenues flowing in a timely fashion is to make sure billing is accurate, the patient has coverage and the payer deems whatever service is being rendered is medically necessary.
That means deploying a combination of training and technology solutions to make sure procedures such as billing and coding are being done correctly by staff. “Payment systems are constantly changing,” Cleverley said, so these procedures require continuous monitoring.
Contract management is also critical to cash-flow management, Cleverley said. Contract management tools will validate that whatever amount was received is the agreed-upon amount per contract terms.
A significant portion of many providers’ revenues is in the Medicare market, making the upcoming change in Medicare reimbursement rate a major concern, said Jim Sacher, partner at Cleveland-based Skoda, Minotti & Co., an accounting, consulting and financial services firm.
In the last few years, Congress has proposed drastic cuts in November, the industry has protested vociferously and the final cuts have shrunk to roughly 2 percent. The revised cutbacks in favor of providers won’t continue, warned Sacher. “We know Medicare is out of balance; the other shoe is going to drop,” he said.
While “there’s no real good solution on the horizon,” Sacher said large practices and hospitals need to cut costs in other areas of the business. Large physician groups have been aligning with big hospital systems to take advantage of better fee schedules on the commercial business, malpractice insurance coverage and better negotiating structure with payers. Other physician groups are banding together for greater market power or looking for more ancillary services to do in-house.
CareMedic Systems, Inc.
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Cincom Systems
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Eclipsys
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e-MDs, Inc.
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Epic Systems Corp.
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MD-X Solutions (MedAssets)
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Navicure
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Dynamic Claims Status functionality enables claims to be easily tracked in any stage of processing and the cause of denials readily analyzed. A comprehensive reporting solution ensures that all levels within an organization – from billing staff to executive leadership – have tools at their fingertips to eliminate billing errors and ultimately improve cash flow.
NaviMedix
NaviNet
By seamlessly integrating into the daily workflow, NaviNet enables providers to streamline administrative transactions that directly affect their cash flow – including eligibility and benefits, referrals, pre-certification and authorizations, claims status inquiries and credentialing – with health plans and other specialty groups.
Phoenix Health Systems
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Phoenix Health Systems’ team of experienced professionals will reduce costs, improve cash flow and increase operational efficiency for healthcare organizations through an integrated set of technology services and tools, business process optimization techniques and a flexible approach to sourcing partnerships.
QuadraMed Corp.
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RelayHealth
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RelayHealth delivers intelligent financial clearance and settlement solutions that enable you to confirm patient payment source pre-service, collect self-pay dollars faster through online billing and advanced patient statements, monitor and track quality of your registration and OP coding data, distribute outpatient results electronically to your physicians, utilize outsourcing support for your business office, and effectively manage all of your claims through resolution.
SearchAmerica Inc.
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