Whether you agree with the Affordable Care Act provisions or not, we can safely say that insurance premiums continue to rise impacting consumer out-of-pocket. Based upon a report from the Kaiser Family Foundation in November, it is expected that insurance premiums in 2018 will continue to rise further, in part, due to the Trump administration ceasing payments to insurers for cost sharing reductions.
Based upon Mercer’s 2017 National Survey of Employer-sponsored Health Plans, employers can expect to see a 4.3 increase in premiums for 2018. This is the highest increase since 2011. As premiums increase, plan benefits change.
Healthcare revenue cycle departments must have processes in place to understand these impacts on their revenue cycle and what they must do to minimize the impact. I am going to highlight 3 early warning signs to look for so you can correct your course of action to help mitigate the damage to your cash per patient.
First, identify the payers which make up 80% of your overall revenue cycle, then follow the three warning steps below:
Early Warning #1: Days Sales Outstanding Changes
Most states have a requirement within their insurance code that mandates how insurance companies should process “clean claims.” Many states may have slight modifications to the definition of a “claim claim” but basically it means any claim that is submitted that is not considered incomplete by the carrier due to medical documentation requirements, missing data elements or other defects.
Many governmental payers and third party payers process clean claims according to the business rules within their systems. Some will pay within 14 days of a clean claim and others may pay on day 28. If you start seeing the average payment date change for specific carriers, this could be a warning bell. While the payer may still be within their legal requirement of paying a clean claim, it could cause an issue with your revenue cycle management.
This warning bell may require you to look at specific contract language addressing timely payment in your payer contracts. If you are receiving an inordinate amount of denials for clean claims, you may invoke another remedy.
Days Sales Outstanding on the aggregate could be marginal unless you are looking payer specific and you are not seeing the first warning bell until it is too late. Drill down by payer and the warning bells will go off sooner.
Early Warning #2: Out-of-Pocket Changes
Another warning bell is relative to the changing out-of-pocket (OOP) requirements by patients. Understanding the benefit requirements early regarding how your top payers process an emergency ambulance benefit, versus a non-emergency ambulance benefit, will assist you in developing a reporting structure that helps you ascertain when OOP is rising or decreasing, on average, by payer. Do not confuse this with a payer type report. You will need to go granular as a RCM manager. Deductibles and OOP are changing dramatically. According to the Kaiser Family Foundation, annual deductibles have grown by 52% since 2012. With growth like this, managers of revenue cycle need to be watching these trends and modifying their processes in almost “real time.” Solutions Group can assist in providing your revenue cycle with solutions to convert deductibles and OOP to cash. Click here to be contacted by a representative.
Early Warning #3: Patient Payment Behaviors
According to poverty data developed by the US Census Bureau through the American Community Survey, approximately 14% of all Americans are 200% of Federal Poverty Level (FPL). This means that over 48M Americans make less than $25,000 per year for a family of 4.
Information like this suggests that you should know the payment behaviors for your consumers to adjust your collection process accordingly. If you do not know how the consumers of your healthcare services which are Blue Cross Blue Shield members pay for their bills, you should. Once you identify your top payers and understand the payment behaviors of the consumers (i.e. your patients), you will see fairly quickly the propensity to pay after balance bill. Higher deductibles and OOP are mandating that revenue cycle departments begin looking at these behaviors in order to target collection processes.
There are many vendors ready to assist, but align yourself with partners and consultants who are looking out for your best interests and not theirs. If you are unsure how to begin, please do not hesitate to send me an email and I will respond with a few suggestions.
RESOURCE: Population in Poverty (By Location)