Patients are taking on more of the financial burden for their medical care. That’s even when they have personal healthcare insurance plans or are eligible for state or federal benefits. This can lead to unpaid (or partially paid) medical bills, which has major adverse impacts on U.S. healthcare systems across the nation. According to a report from Sage Growth Partners, more than a third of health systems have faced more than $10 million in bad debt annually.1
However, patient health coverage isn’t always easy to find. In fact, hidden coverage is one cause for missed reimbursements. This occurs when patients are believed to have no insurance at all, or in other cases, when there is a patient balance after insurance, and the patient may be unaware of additional coverage (supplemental coverage).
Many hospitals lack a cohesive recovery plan to identify all their missed coverage. A recent analysis shows hospitals can increase their revenue recovery by implementing or improving their insurance discovery process and optimizing Medicare reimbursement. This points to the importance of having a strategy in place to help ensure hospitals can be sustainable and provide quality care in their communities. Below are a few ways that hospitals can consider implementing effective collection strategies to help recover their earned revenue.
Scrutinize self-pay accounts
After several years of decline after the Affordable Care Act (ACA) was passed in 2010, the rate of uninsured has grown since 2016, with 15.5 percent of adults being uninsured as of March 2018.2 With a larger pool of uninsured patients, there’s a good reason for healthcare systems to start looking for reimbursement opportunities in self-pay accounts. This is because one to five percent of self-pay accounts written off as bad debt actually have billable insurance unknown to the healthcare provider.3 Moreover, data shows that 60 percent of missed coverage comes from these self-pay patients.4
When hospitals incorrectly categorize self-pay accounts as bad debt without double and triple checking for billable insurance options, they could be leaving thousands or even millions (depending on the size of the hospital) of earned revenue on the table, which can have a major impact to the quality of care they are providing to patients.
Identify potential coordination of benefits opportunities
Patients sometimes have more than one insurance plan. This is due in part to the ACA creating more instances in which patients have both Medicaid and Medicare, or one of these pairs with commercial insurance. It’s in the best interest of the hospital to inquire about all possible coverage known, and even unknown, to the patient to ensure both the primary and secondary payer are identified correctly.
Skipping past this step can be costly to the hospital, and could result in lost revenue, especially since timely filing deadlines may adversely affect payments. Identifying commercially insured patients who present as only Medicaid-eligible could mean adding $500,000 in recovered revenue over a three-year period for the average mid-sized hospital.5
Look into government plans
More and more people are on government insurance plans. In 2017, 61.1% of total payment amounts paid to hospitals came from Medicare or Medicaid.6 As the payer mix shifts, there is also risk in hospital bills being paid at lower rates, which can really impact the bottom line. According to a NerdWallet Health study, Medicare receives a 73% discount on the average hospital bill from the hospitals’ standard billing rates.7 Medicare beneficiary bad debt was $3.68 billion in 2016 according to data from the Healthcare Cost Reporting Information System (HCRIS). 8
A Kaiser Family Foundation report found that 37 states have expanded Medicaid eligibility and additional states may expand coverage later this year. While more than 11 million people have enrolled since ACA was enacted, there are still 27 million non-elderly patients without coverage and there may be many opportunities for dual coverage9 to be found.
Consider external help
Hospitals should consider the ways in which their insurance discovery and collection processes can be improved in-house, but an external discovery process can also be very beneficial. Having an external process to supplement internal efforts could assist in locating coverage on up to seven percent of self-pay patients that hospitals treat.
Hospitals absorbing the brunt of revenue leakage should take steps to mitigate the risk. As Medicare and Medicaid brace for similar cuts, it is detrimental to leave money on the table.
Create a holistic collection strategy
To identify complex missed coverage, developing a comprehensive collection strategy that is integrated into the hospital’s operation is necessary. Hospital management should convey to their teams how a healthier bottom line means that a hospital can better provide patients with the top line care they need and deserve. This means carefully screening patient payment responsibilities for all parties involved, keeping the organization in a favorable financial position and implementing tools to ensure all revenue is captured.
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[2] https://www.cbsnews.com/news/more-americans-are-going-without-health-insurance/
[4] TransUnion Healthcare proprietary data
[9] https://www.kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/
About the author:
Jeff Farmer, Healthcare Solutions Manager, TransUnion Healthcare
Jeff Farmer has over 12 years’ experience in healthcare information technology and revenue cycle consulting. He began his healthcare career as a Data Integration Analyst with Healthcare Payment Specialists. He then joined eScan Data Systems where he held numerous roles including the Director of Application Integration. In this role, he oversaw a team of developers and configuration analysts responsible for all incoming and outgoing data on their insurance discovery platform.
Following the acquisition of eScan by TransUnion, Jeff now lends his expertise and strong healthcare knowledge to support current customer needs as well as acquire new clients.
Jeff has a bachelor’s degree in finance from Colorado Technical University.
TransUnion Healthcare’s comprehensive insurance discovery solutions help identify complex hidden coverage opportunities beyond just self-pay accounts. Learn more about https://www.transunion.com/insurance-discovery.
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