Congress’s recent attempts to repeal the Affordable Care Act has been a rollercoaster ride to say the least.
The House narrowly passed a bill to repeal the ACA in May, and the Senate has drafted the Better Care Reconciliation Act (BCRA), which should go to vote before fall of 2017.
While we may not know the full impact of the proposed legislation, there are steps that health systems can take act now to avoid revenue leakage. The key to success going forward is to get ahead of those changes. For hospitals and health systems, that means expanding the financial workflows that protect revenue cycles today — but ensuring that those workflows are flexible enough to accommodate new realities as they appear. Below are some tips to help hospitals prepare.
Preparing Patients
The trend towards high-deductible plans, combined with the need for greater transparency, have made consumers more interested in the costs of their healthcare. Unfortunately, many patients can’t afford their out-of-pocket insurance costs, which often run in the $5,000 range, and can’t pay down their account balances. Some 45 percent of Americans polled by the Kaiser Family Foundation said they’d have difficulty paying an unexpected $500 medical bill.
Often, patients are surprised that they have to pay any amount out of pocket and assume insurance covers 100 percent of costs. This has increased bad debt for hospitals related to unpaid portions of patient bills. U.S. hospitals had $35.7 billion in uncompensated care costs in 2015. Most of this came from unpaid patient bills according to the American Hospital Association.
To counter this trend of uncompensated care, hospitals can provide patients with a cost estimate as much in advance as possible, and offer them multiple ways to finance or assist in funding their care, including online and at the point of service. Consumers are increasingly demanding cost estimates and not surprisingly, 59 percent of consumers said they’d choose a less-expensive caregiver when they compare prices, according to a survey from the Robert Wood Johnson Foundation. Patients knowing more prior to receiving care will help ensure they make an informed decision that can work best for them.
Hospitals can also use data analytics to gauge a patient’s ability to pay. Ideally, data will also help patients make the best choices about their healthcare, including what’s likely to be most effective for the lowest cost. In a recent survey from TransUnion Healthcare, 75 percent of patients said receiving upfront cost estimates would positively impact their view of a healthcare provider. That survey also found that 43 percent of patients said it was somewhat difficult or very difficult to get information on costs.
Value-based care initiatives
Another way of addressing the issue of revenue leakage is to switch to a model of value-based care instead of fee-based care. With value-based care, an emphasis is on reimbursing for outcomes, versus volume of procedures. Following this model can help ensure interventions meet high medical standards and can help patients avoid large unnecessary bills they can’t afford.
The success of value-based care hinges on effective collection and use of data. Caregivers need to know not only what has worked in the past, but keep a running tally on what is working in the present.
It’s unclear what effects the proposed healthcare legislation might have on value-based care. In January, a group of organizations including the American Hospital Association, the American Medical Association, Merck and others, sent a letter to political leaders asking them to accelerate the transformation from fee-for-service to a value-based system.
Optimizing Patient Payments
From 2011 to 2014, there was an almost 200 percent increase in patient payment volumes. Against such a backdrop, money is left on the table if caregivers don’t optimize their patient payments.
One solution is to offer as many ways as possible for consumers to pay – ranging from check to credit card to online to in-person to mobile payments. Hospitals should also look at improving the overall customer experience since patients are more apt to pay if they believe they’ve received exemplary treatment.
In addition to fully outlining costs ahead of time to patients, some hospitals are experimenting with asking for at least a portion of payment before the care is administered.
Waiting on Legislation
Whatever the face of new legislation, the underlying financial problems that hospitals are facing – bad debt brought on by consumer non-payments – aren’t likely to subside, at least not in the near term. There’s also a chance that things could get worse. Patients are a new payer, and now represent 30% of a health care bill, which is up 10% from just a decade ago. With this increased risk, caregivers need to use all the tools available to help insulate the bottom line against uncertainty.
Jonathan G. Wiik, MSHA, MBA is principal for Revenue Cycle Management for TransUnion Healthcare. With more than 20 years of experience in health care, Wiik has worked in both the acute care and insurance setting, and he has developed several nationally-recognized programs in Point-of-Service (POS) Collections, financial clearance, and sharing best practices in hospital operations.
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