The hospital reimbursement landscape is rapidly changing. Although more people are now insured under the Affordable Care Act, high-deductible health plans can leave patients with large out-of-pocket expenses, which increases the potential for more bad debt for hospitals. According to Kip Piper, a former state Medicaid official and White House budget officer who advises large healthcare organizations on health policy, finance and business strategy, this makes financial planning and revenue projections difficult. "Hospitals are definitely worried more about collecting in an environment where the consumer is at greater financial risk," Piper told the Chicago Tribune.
In order to mitigate the possible damages, hospital CFOs may need to restructure the way they are interacting with insurers and with patients. Here are five strategies that can help:
1. Identify the potential for bad debt up front.
In an interview with Hospital Access Management, Katherine Murphy, CHAM, vice president of revenue cycle consulting in the Oakbrook Terrace, IL, office of Passport (part of Experian), said hospitals need to have a comprehensive process in place to clear patients financially prior to scheduled services. According to Murphy, if hospitals don't currently have a defined method, "they need to develop one immediately or move to outsourcing the management of this process." Paul Shorrosh, CHAM, founder and CEO of AccuReg Front-End Revenue Cycle Solutions in Mobile, AL, told Hospital Access Management that historically, up to 50% of bad debt could have likely been prevented through front-end denials prior to service. Another 20% to 30% could have been handled by diverting to charity care or other payers (e.g., Medicaid, marketplace exchanges, disability insurance, third-party payers), offering patient discounts, charging to available credit balances or offering extended payment arrangements, nonrecourse loans or other financial options.
2. Ask for payment in advance.
Many hospitals are now asking patients for payment before providing treatment, which is a dramatic change from previous collection practices. "The biggest challenge for us is to move conversations (with prospective patients) as far up in the process as possible," Andy Scianimanico, vice president of revenue cycle for Northwestern Memorial HealthCare, the parent company of Chicago's largest hospital said in an interview with The Chicago Tribune. "It's not about strong-arming patients to pay. It's about getting information into the hands of patients so they can make better-informed decisions."
3. Provide adequate training to registrars.
Shorrosh told Hospital Access Management that patient access teams at every hospital in the country must change from a "collection reluctance" to a "collections culture". "This change requires top-down support, training and scripting, he said, "as well as automated systems for estimation, collections and financial assistance."
4. Offer affordable financing.
Some hospitals are partnering directly with financial institutions to offer financing options, such as medical credit cards or nonrecourse loans. Some are even assuming shared risk for patient balances.
5. Offer discounts to uninsured patients.
Uninsured patients are frequently being offered discounts similar those that hospitals offer insurers. Although, in many cases, this only serves to reduce "reported" bad debt expenses, as the debts may still go unpaid.