The Affordable Care Act has only been law for less than five years with early results becoming apparent during the past two years. Millions more Americans have health insurance and important consumer provisions give protection to those with pre-existing conditions, force insurers to spend more on actual treatment rather than administration, and enable parents to keep adult children on their health policies until age 26.
But the law is also affecting how-and when-providers get paid. While the pressure on healthcare provider revenue streams may seem daunting, there are steps hospitals and physician practices can take to improve payments.
The ACA ushered in a new era of accountable care tightly linked to improvements in population health management, with increasing reliance on health information technologies such as electronic health records, health information exchange and, especially, data analytics. The IT brings critical support to better track, coordinate and assess care because not only are providers now more accountable for improving their patients' outcomes and overall health status, but their reimbursement, over time, will be based on the value of the services they offer.
"Value-based reimbursement" is a big part of the ACA, which demands higher quality and outcomes while reducing overall healthcare costs.
And not only is the way providers get paid changing, there are more paying patients in the system. More patients are covered by low-paying Medicaid, with many others under high-deductible health plans but not fully understanding the level of financial responsibility they have incurred.
Deductibles that used to be $500 now commonly are $2,000 or higher, says Doug Lightfoot, revenue cycle management executive at Hayes Management Consulting.
These plans are becoming more common. A recent National Business Group on Health survey found 32 percent of responding companies adopting a high-deductible health plan in 2015. This compares with just 24 percent in 2014, according to Matt Guldin, a clinical analytics and care coordination analyst at Chilmark Research. More will follow, he adds. "The issue is how quickly large firms will move to offer only high-deductible health plans or send employees to a health insurance exchange with a large contribution and say, 'Good luck.'"
As of December 2014, 27 states and the District of Columbia have expanded Medicaid under the Affordable Care Act, according to the Kaiser Family Foundation. While reimbursement may be low, expansion is bringing financial benefits to hospitals. Several studies have found expansion states are seeing improved utilization, higher admissions and lower bad debt. Still, Guldin notes, rural hospitals continue to struggle as they don't have the reimbursement negotiating power with insurers that large hospitals have. "Is Medicaid payment a noticeable improvement? No, but it is better than the status quo," he says.
For providers to keep their revenue levels healthy, they need to better adhere to procedures and performance metrics many already have in place, Lightfoot says. A hospital, for instance, may have a metric of pre-registering 85 percent or more of patients scheduled to come in. That way, by the time the patient arrives, staff members have verified insurance eligibility and deductibles paid to date, so they can explain the patient's financial responsibility and secure payment up front or set up a payment plan.
Staff in physician practices and outpatient settings are not as accustomed to gathering the information necessary to ascertain payment responsibility before the patient presents at registration. And many don't have updated software that supports newer HIPAA eligibility verification transactions that give details on coverage level.
That may soon be changing, however, Lightfoot says. He's seeing more ambulatory organizations standardizing and centralizing scheduling and registration as well as determining patient responsibility and collecting at the time of the visit.
Software that estimates a patient's propensity to pay has been available for several years but not widely adopted, and that must change soon, Lightfoot asserts. It has always been tough for community hospitals and practices to pull credit reports and other information on neighbors and friends, and to talk about payment responsibility. But in the past couple of years, providers are starting to realize they need to do these unpleasant tasks because they have a responsibility to keep the facilities open for the community and to understand how much effort goes into getting full reimbursement.
But, of course, when it comes to revenue management, it's not just about getting paid, it's when payment arrives.
Ten years ago, patients were responsible for about eight percent of their bill; today that figure can be 30 to 40 percent. Rates like that lengthen the time it takes to collect payment. Further, some patients, particularly those on Medicaid, bounce in and out of having insurance coverage, says Monte Sandler, executive vice president of revenue cycle management at NextGen Healthcare Information Systems, with surveys showing that the priority of paying an insurance premium is below that of paying a cell phone bill.
Consequently, revenue preservation and expense management have to become higher priorities for many providers, and providers also have to make it easier for patients to pay.
That means offering online bill pay through websites and patient portals, and having a patient's credit card on file with pre-approved limits to make payments after insurance reimbursement. Kiosks in the waiting room where a patient signs in and fills out forms also can accept payments for bills outstanding. "Patients are open to doing this and it makes the revenue cycle a lot smoother," he adds.
These aren't new technologies, Sandler acknowledges; they just need to be utilized more. But as value-based reimbursement increases, providers will need a new set of skills-cost accounting. Providers negotiating reimbursement rates with insurers are at a distinct disadvantage when they don't understand their own costs to deliver care. Vendors increasingly are offering cost accounting services to educate providers and equalize negotiations with insurers.
Time for school
New rules implementing ACA provisions have come fast and furious in recent years from the federal government. What hasn't come is an adequate effort to educate consumers and those in the industry on the fast-developing changes in America's healthcare system.
Employers are not adequately educating employees on newer types of insurance-particularly high-deductible health plans-and many provider organizations haven't implemented patient education programs, says Chris Robertson, senior vice president of McKesson's business performance services division. Combine this with the fact that too many providers haven't educated their own staff on understanding deductibles and co-insurance and collecting co-pays, and opportunities are being missed to optimize revenue.
Many providers also are not properly managing bad debt because they don't understand it. Data analytics can help identify how much bad debt comes from the indigent patient population, from patients who bounce in and out of insurance eligibility, and from patients with high-deductible health plans, Robertson notes. Understanding where the bad debt lies and using software to predict a patient's propensity to pay helps an organization determine where to focus efforts to recoup funds.
It comes down to this
Health reform has brought new revenue challenges to healthcare providers, says Cecil Bohannan Jr., a revenue cycle management consultant at CTG Health Solutions. But, bottom line, the revenue cycle hasn't changed, the revenue stream has.
Providers must use robust eligibility verification and benefit determination tools, and formalize processes for collecting payments up front-things they should have been doing anyway, Bohannan says. "If you miss collecting deductibles up front," he says, "that's missed revenue because collecting on the back end is always more difficult."
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