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Perspective
6 Steps That Can Capture More Revenue for Your Hospital
Summary
Learn how providers can capture more revenue for your hospital.
Perspective | Staurt Hanson
Senior Vice President and General Manager of Consumer Payments
Change Healthcare
Stuart Hanson is responsible for strategy and product development for consumer healthcare payment solutions. Hanson also led business development strategy at a variety of global financial institutions.
As healthcare providers grapple with rapidly changing industry dynamics such as the growth in high-deductible health plans and the shift to value-based programs, they must also continue to address familiar challenges impacting the bottom line. This Perspective highlights areas of significant concern to providers and offers strategies to help increase revenue and improve cash flow.
Key Healthcare Challenges
Increasing Denials
A recent analysis found that providers submit an estimated $3 trillion in claims every year.1 Of those, $262 billion are denied. The average cost of a denied claim is approximately $118, representing on average $4.9 million per hospital—nearly 3.3 percent of net patient revenue.2 In addition, the Centers for Medicare and Medicaid Services reports that 60 percent of denied, lost, or ignored claims will never be paid in full.3
Underpayments and Unpaid Claims from Payers
Collecting timely and full payment from commercial and government payers continues to be top of mind for industry executives. Between underpaid and unpaid claims, American medical practices alone may be leaving a total of $125 billion on the table every year.4 Ensuring claims are paid at contracted rates will help providers realize optimal revenue for services rendered.
Rising Cost of Uncompensated Care
Self-pay patients continue to remain a significant source of financial risk for providers. An estimated 27.6 million Americans were still uninsured at the end of 2016,5 and for the first time since the Affordable Care Act (ACA) went into effect, the uninsured population rose by 1.3 percentage points to 12.2 percent in 2017.6 Hospitals continue to struggle under the weight of uncompensated care, incurring more than $576 billion in costs since 2000, according to the American Hospital Association.7
Increasing Patient Responsibility
The shift to high-deductible health plans means providers can no longer rely on payers to reimburse them for the majority of costs. Instead, they must focus equally on patient payments and payer reimbursement if they want to collect all they’re owed. This adds significant challenges and complexity to the revenue cycle, as 63% of Americans are unable to handle a $1,000 emergency room bill.8
Opportunities to Capture Revenue
The complexities and challenges of today’s healthcare landscape are driving healthcare providers to take advantage of the following opportunities to capture revenue:
Step one: Help your patients get insured.
Reducing the number of self-pay patients can help reduce non-payment risk. During the 2017 open enrollment period, 12.2 million enrolled, including 33 percent who were new enrollees.9 Forrest General Hospital in Hattiesburg, Miss., has been actively helping uninsured patients enroll in Medicare and Medicaid for years; in 2014, the hospital system expanded its efforts to include plans available on the federal health insurance exchange. Part of this plan included community outreach to educate patients about the ACA and how they could benefit from it.
According to Pat Riley, Director of Insurance Operations at Forrest General, the decision to promote enrollment through the exchange was an easy one, saying, “We felt like any uninsured patient who we could enroll in an insurance plan through the exchange would be a potential savings for our hospital. So we did various things to help people understand they could come to us for help and information, and we could also help them enroll in a plan if they chose to do so.”
With the expansion of Medicaid in many states, helping to enroll eligible patients can drive improved revenue.
Step two: Facilitate both financial clearance and patient payments.
As patient responsibility grows, providers must go beyond eligibility verification; they need an efficient workflow for full financial triage. This includes verification of identity; checking eligibility and benefits; gaining prior authorization or checking for medical necessity; accurately estimating and communicating patient financial responsibility and determining propensity to pay; and facilitating patient payments at every step in the patient journey: prior to and during the pointof- service, and after the delivery of care. Creating a culture of patient education and payment request is critical for increasing patient payments. The added transparency of providing patient estimates upfront helps build consumer trust, simplify the patient billing cycle, and improve the overall patient experience.
Step three: Optimize payment for each episode of care.
Make sure payers are meeting their negotiated, contracted payment rates. Concurrent, retrospective, and ongoing reviews of contractual denials and underpayments, as well as recovery of zero-balanced third-party accounts, will help ensure you are getting paid the right amount the first time. In 2015, Medicare and Medicaid underpaid U.S. hospitals by $57.8 billion.10 Double-check all DRGs, specifically Transfer DRGs, to ensure proper payment from Medicare. Twelve to 15 percent of Transfer DRG claims are underpaid, which amounts to an average payment reduction of approximately $3,500 per instance.11 In aggregate, hospitals may lose an estimated $4 billion dollars to miscoded Transfer DRGs annually.
Step four: Prevent and proactively address denials and rejections.
Determining benefit eligibility and getting medical necessity documentation prior to and during care delivery helps ensure claims are submitted correctly on the first pass, which itself reduces subsequent administrative expense. Employing technology is an easy way to validate eligibility and benefits are accurately verified and to catch administrative errors, both of which help to increase the first-pass clean claims rate. Submitting clean claims eliminates the time-and-expense of reworking/correcting rejections and denials, and prevents delays in reimbursement. Develop a task force to examine denials and solve upstream issues. Analytical tools can proactively identify opportunities to increase cash flow and stem revenue leakage; this in turn helps providers reduce the risk of audit and/or non-payment.
Step five: Efficiently collect patient payments.
Many consumers expect a retail-like experience in healthcare as they do in other industries. Reduce the risk of delayed or non-payment by communicating with patients in the way they prefer to make payments. For example, some consumers still prefer to receive paper statements to make payment via checks, while others prefer electronic messaging and making digital payments via smartphones and tablets. Recent studies show that offering consumers multiple payment channels helps to drive patient satisfaction.12
Step six: Streamline payment posting and remittance management.
Providers work with multiple types of payers, and payers use various remittance processes and forms of payment. This creates many challenges, including matching payments to remittances. Leverage technology that integrates key processing into a single solution by automating payment posting from payers. Eliminating manual posting helps improve accuracy, save time, and stimulate cash flow.
Summary
Providers face numerous challenges in getting paid for the services they provide, but there are also numerous solutions available to help address these challenges, such as implementing patientcentric and technological solutions that integrate with operational workflows. Taking advantage of opportunities such as these will help improve efficiency and customer satisfaction.
1. Data captured by Change Healthcare Analysis: An Estimated $262 Billion in Healthcare Claims Initially Denied in 2016
2. Based on Change Healthcare statistical averages for hospital customers in 2016
3. “Optimizing Front Office Performance Executive Briefing” The Advisory Board Company, 2016
4. “3 Ways Software Can Improve Medical Billing” Capterra, May 1, 2011
5. “Key Facts about the Uninsured Population” Henry J. Kaiser Family Foundation (KFF), November 29, 2017
6. “Millions more Americans were uninsured in 2017” CNN Money, January 16, 2018
7. “Uncompensated Hospital Care Fact Sheet” American Hospital Association, December 2017
8. “Most Americans can’t handle a $500 surprise bill” CBS News/Bank Rate survey, January 16, 2016
9. Health Insurance Marketplaces 2017 Open Enrollment Period Final Enrollment Report: November 1, 2016 - January 31, 2017
10. “AHA: Medicare, Medicaid underpaid hospitals by $57.8 billion last year” American Hospital Association, December 16, 2016
11. “Transfer DRGs: Approaches to Revenue Recovery”, Besler Consulting, January 29, 2014
12. “Satisfied patients are more willing to pay their bills” Connance, 2016
