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4 ways to reverse dwindling reimbursements from payer and patient revenue streams

The silver lining amidst the current cost-shifting trend toward lowered reimbursement rates and increased patient responsibility is is that every organization can implement the following steps to optimize reimbursement capabilities.

It’s no secret that the healthcare climate is continuously evolving and adding financial pressure as it changes. With cost shifts affecting patients via employer-sponsored, high-deductible plans, everyone is understandably talking about the rise of consumerism. Yet we shouldn’t forget the other side of the coin: the payers who still possess the lion’s share of financial responsibility for patient visits.

Naturally, healthcare organizations are feeling the strain of seeking reimbursement from patients, especially when the average American struggles to keep up with this increased responsibility. This can rightfully cause healthcare organizations a bit of anxiety, but payer reimbursement is still the bread-and-butter revenue that keeps the lights on. Therefore, it’s crucial to optimize reimbursement collection from patients and payers simultaneously.

The risks of dwindling reimbursement

In the past, medical groups and hospitals could write off unpaid patient debts with less impact because commercial payers covered a high enough rate to offset most of the losses. Now, dwindling reimbursement from patient and payer revenue streams can equally impact an organization’s capital budget and resource allocation. It limits the ability to repair equipment, enhance facilities, or invest in state-of-the-art technology that could improve clinical outcomes and accelerate revenue cycles.

As it does with companies in other industries, decreased reimbursement can lead to staffing cuts. With fewer professional nurses and a lack of advanced technology, healthcare organizations may struggle to recruit top talent, or they may lack the funds to hire or retain the best candidates. These and other internal issues create a ripple effect that ultimately impacts the patient experience, as well as a hospital’s or medical group’s financial well-being.

How to reverse the downward trend

The troubling fact about the current cost-shifting trend toward lowered reimbursement rates and increased patient responsibility is that no healthcare organization is immune to its effects. The good news, though, is that every organization can implement the following steps to optimize reimbursement capabilities:

  • Close the gaps in payer contracts.
    With payers as a top revenue source, healthcare organizations must negotiate or renegotiate more favorable contract rates and become intimately familiar with the terms of their payer contracts. The only way medical groups and hospitals can know whether they are being reimbursed properly is to make sure payers are living up to their contractual obligations by routinely auditing payer performance.

    Unless an organization is particularly small, keeping track of all payer contracts will require the right technology. Healthcare billing, payer contract management, and patient collections are so complex that there is no viable way to manually track every fee schedule, modifier, and bundling edit for each payer. Fortunately, technology already exists to help monitor these contracts in real time to ensure payers are fully meeting their obligations.
  • Offer transparent price estimates.
    While closing the gap in payer contracts and reimbursement, organizations should also focus on providing transparent cost estimates throughout every patient’s continuum of care. This helps patients know what their costs are so they’re better prepared to pay them — plus, nearly 30 states currently require providers to share this information.

    Even outside of those states, providers are proactively pushing to move billing and collections to the front of the revenue cycle. And cost transparency is vital to that push. When viewed through the lens of traditional healthcare, asking for payment upfront can seem taboo. However, today’s consumers expect this transparency in every other type of commerce, and technology can automate bill estimation to help ensure accuracy every time.
  • Master the art of clean claims.
    Accurate, transparent price estimates make it easier to recover reimbursement from patients, but the secret to collecting from payers is to submit clean claims. Denied claims are one of the common reasons behind delayed, lower-than-expected, and nonexistent payer reimbursement. State by state, denial rates range from as low as 8.63 percent to as high as 38.19 percent.

    The goal should be to reduce denial rates to as close to zero as possible. This requires administrative simplification to ensure claims are billed cleanly the first time. The American Medical Association, the Healthcare Financial Management Association, and the Healthcare Information and Management Systems Society offer educational resources to train staff on how to submit clean claims. Also, organizations can take advantage of technologies that automatically transmit clean claims to payers and track their status as they’re processed.
  • Improve clinical documentation.
    Even when the service is considered medically necessary according to a payer’s medical policies, subpar clinical documentation can be another big factor in diminished reimbursement. In fact, studies show that better collection of medical data can add millions of dollars to your bottom line. Every procedure should be concisely and accurately documented, with sufficient proof that each procedure is medically necessary according to the payer’s medical policy requirement.

    Bring patient access, billing, managed care, coding, and health information management teams together around the common goal of validating the need for every patient-facing action they take. Don’t hesitate to consult with trusted third parties such as the American Health Information Management Association and to use its improvement-focused educational resources.

The rising costs of healthcare present a seemingly endless stream of challenges. To start, simultaneously optimizing patient and payer reimbursement can seem daunting. With the help of technology and a more consumer-centric approach to providing healthcare, your organization can overcome this roadblock and continue to provide high-quality care in the future.

Photo: BrianAJacksonm Getty Images


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Merideth Wilson

Merideth Wilson is vice president of revenue cycle solutions at Experian Health, where she leads teams dedicated to the innovation and growth of Experian Health’s suite of products dedicated to contract management, patient estimates, quality assurance, and reimbursement. Prior to joining Experian Health, Wilson held marketing and product management leadership positions at MedQuist Inc., Novation, and Bank of America. Wilson earned a Master of Business Administration from Mercer University and a Bachelor of Business Administration from Baylor University.

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