A well-managed revenue cycle would enable hospital administrators to focus on maximizing the stream of revenue created by the new healthcare insurance exchanges. Even though it has not been determined what impact the exchanges will have on hospital finances, there are steps hospitals can take to increase the likelihood of positive effects on their revenue cycles.
Assessing revenue cycle impact
With the rollout of the Affordable Care Act (ACA), pertinent information about insured patients will be more accessible. Essentially, uninsured consumers are required to, and easily can, find insurance coverage through an insurance exchange. An insured U.S. undoubtedly will reduce the bad debt that has caused major problems for the revenue cycles of most hospitals and other healthcare organizations nationwide.
Hospital administrators understandably are concerned about the uncertain financial impact of the ACA. While there will be revenue growth from newly insured patients, there also will be significant reductions to both Medicare reimbursement and disproportionate share dollars. According to a final rule that implements some provisions of the act, the ACA “requires aggregate reductions to state Medicaid disproportionate share hospital (DSH) allotments annually from fiscal year (FY) 2014 through FY 2020,” at the same time the marketplace and Medicaid are providing increased coverage options that will reduce uncompensated care levels for hospitals.
Well-executed research, managed care contracting and patient access, and analyses of bad debt and denial management trends will increase the positive impact of the ACA on a hospital’s revenue cycle.
Step 1: Research
Research should begin with the identification of the type of exchange chosen by the state in which the hospital operates. The U.S. Department of Health and Human Services (HHS) has outlined three exchange models:
- State-run exchange – The state operates all aspects of the exchange.
- State-federal partnership – The state performs some functions, and the HHS performs others.
- Federally operated exchange – The HHS operates the exchange.
Hospital administrators should investigate private insurance plans offered on the exchange to the uninsured population in their community. Enroll America is a good source of data for this endeavor.
Step 2: Managed care contracting and patient access
Information gained through this research should allow administrators to manage insurance contracts more effectively. It should also maximize the payments received for services rendered to newly insured patients.
In addition, hospital administrators can use the information to build a strong network based on strategic alliances the hospital makes with physicians and insurance providers. More specifically, to prevent an increase in out-of-network patients, hospitals need to make sure they contract with insurance providers that offer plans in their service areas.
Prior to negotiating any agreement with a physician or insurance provider, hospitals should determine their desired profit margin by analyzing the current cost of services rendered. Costs include materials, labor, facilities, supplies, and equipment.
Self-pay and underinsured patients walk into hospitals every day, most often without the ability to pay. As their first line of defense against declining revenue, hospitals should invest in the front-end revenue cycle – that is, patient access. Self-pay patients should be greeted by trained financial counselors who can assist patients with identifying a viable payment source.
All financial counselors meeting with patients should meet the state and federal guidelines for being a certified healthcare insurance exchange navigator. A navigator is defined as “an individual or organization that’s trained and able to help consumers, small businesses, and their employees as they look for health coverage options through the Marketplace, including completing eligibility and enrollment forms.” Navigators are required to be unbiased, and their services are free to consumers. This investment in patient access can be part of internal team training or a contract with a third-party vendor.
Even though most patients have insurance, some patient accounts go into bad debt because the insurance co-payments and deductibles are not paid after services are rendered. Another component of using patient access as the first line of defense is the implementation of point-of-service collection programs within the scheduling and registration processes. Hospitals have a higher probability of collecting payment at the point of service, thereby mitigating the risk of increased bad debt.
Step 3: Bad debt and denials management
Hospitals lose money every day by ignoring the impact of initial denials from insurance companies. When denials are received, it delays reimbursement and increases labor cost due to claims resubmissions. Continual analysis of both bad debt and initial claim denials can improve productivity, assist revenue cycle efficiency, and maximize revenue.
As organizations seek to provide the best patient care and improve patient satisfaction, patient access staff will have to be more knowledgeable than ever before. Having access to available data streams – for example, claims rejection data (that is, initial denials) – will allow organizations to learn and apply lessons and enhance the patient experience.
It also is critical that organizations have the ability to estimate patient responsibilities with respect to provided services. These new exchange plans can be difficult to understand, and patients will prefer organizations that have knowledgeable and friendly staff supporting patients’ healthcare needs.
Key takeaways
The true impact of the ACA on hospital revenue has yet to be seen. To benefit from the law, administrators must arm themselves with knowledge, including how the law will affect their uninsured population and their revenue. Hospitals need to become proactive in other ways as well – in particular, ensuring that:
- Financial counseling and back-end self-pay collections include three crucial responsibilities: Medicaid enrollment, payment planning services, and health insurance exchange enrollment
- Scheduling and registration have the appropriate categorization of benefit plans (Land of Lincoln, Bronze, and any sub-plan element)
- Point-of-service software (coverage verification, patient liability estimation) also incorporates all of the new health insurance exchange plans
- Denial management teams are prepared for an increase in denials related to coordination of benefits, ineligible members, and out-of-network issues
- Customer service (such as the call center) staffers are educated on exchanges. Consumers will select plans based on in-network hospitals but might not know the nuances of navigating within the new system.