A recent report on the hospital revenue cycle conducted by the American Hospital Association and Kaufman Hall revealed that hospitals could face a loss of above USD 120 Billion in 2021! The revenue losses took a dive after the pandemic struck the countries. However, when evaluating yearly reports, it was found that hospitals were facing severe losses year after year, even during the pre-pandemic era. To analyze the situation, you need to know the institutional causes of hospital revenue losses.
Hospital medical billing might be more complicated than it appears to be. But you can optimize your organization’s processes with the help of a few steps. In this article, we will discuss the repeated causes of hospital revenue losses and how you can optimize them with the help of proper guidelines.
What are the institutional causes for revenue loss in hospitals?
There is a wide gap between the charges of the hospital and the payments they receive. This is due to various factors like federal regulations, state-specific rules, and unique guidelines of insurance companies. To add to that, you have the cost that the hospitals have to bear to provide those care programs.
According to the American Hospital Association, here are some common issues:
- There is a discrepancy in maintaining uniformity of charges and actual payments received by the hospitals.
- The charges for all patients should have a uniform plan according to federal regulations. However, the rules for payments are different for all.
- The Medicare rates are decided by the federal bodies, while the Medicaid rates are determined by the respective state authorities.
- Together they make up around 65% of the patient volume in a typical hospital setup. The cost of care surpasses the payment rates, amounting to a loss of almost USD 70 Billion.
- These losses, occurring year after year, impact the bottom line of the organizations adversely, making it difficult for them to thrive for improvement.
The ones who are covered by a private insurance company need to make up for the losses. The out-of-network patients help in making up for the loss since they can be billed with full charges.
How to optimize hospital medical billing with insurance companies?
Getting timely payments from private insurance companies can go a long way to make up for the loss made elsewhere. Private insurance companies pay the hospitals according to the negotiated rates. So you should make sure that the claims are clean without any error to get the payments at the right time. Here are some things that you should review:
- Make sure you have a robust hospital medical billing system and a professional team to take care of the bills.
- Software tools or other automation systems can be highly beneficial since they help in detecting any misplacement of documents within a brief period of time and with maximum accuracy.
- Outsourcing to leading billing companies can also help you gain your financial ground better. They can provide you with dedicated teams to work on your specific goals.
- Among private insurance companies, a part of the patients is also charged under the worker compensation bills. Though the private insurances have negotiated rates, the worker comp bills or auto accident cases can be marked to full charges.
- This gives the hospitals a bigger window of opportunity to reverse their losses. However, these cases require a significant load of paperwork. Make sure you get in touch with a billing company that specializes in these areas.
- Invest in good billing teams when it comes to revenue cycle management. Keep in mind that the payments from the private insurance companies have a significant role to play to make up for the losses.
Issues with Out-of-Network Hospital Medical Billing
Billing for an out-of-network provider has many angles that need a careful understanding of the system. Payments for a care schedule with an out-of-network provider can change the scale of loss to any extent. Let’s see how.
- When we talk about losses, out-of-network bills can have a great role to play in reversing the loss since they can be charged fully without any mandated discounts or negotiation.
- But these cases do not always go in that direction. A large section of the patients coming in is often uninsured, as per the data.
- Among them, very few are able to pay the full bills. Over 70% of them cannot afford to pay anything at all.
- However, for the insured patients coming in an out-of-network facility for emergency care, rules mandate that the costs be paid by the respective insurance companies.
How can you improve your cash flow in these cases?
Healthcare organizations take the help of debt collection third parties to retrieve the amount due in these cases. For case-sensitive matters, it is also essential that patients get the financial assistance they need to pay for their medical bills. If your organization is making use of these practices, keep the following things in mind:
- The third party in charge of the debt collection should be in compliance with the Fair Debt Collection Practices Act.
- It is the responsibility of the healthcare organization to review the collection policies frequently to maintain a balance between revenue flow and patient welfare.
- These rules are particularly applicable in the case of hospitals that are tax-exempted under federal law.
- Friendly and transparent communication with the patients can go a long way to ensure that the details are correctly noted.
- If the patients need financial assistance, the cases can be identified much earlier in the process if the billing system is simple to navigate.
- Experts advise that it is better to avoid any legal battles unless the hospital is absolutely sure that the patient is willingly not paying back the bills.
Out-of-network billing is undergoing certain changes, especially with the passage of the No Surprises Act. To know how you can maximize your revenue while staying compliant with the law, you can read the article here.
We hope this article helped you identify the reasons why hospitals suffer from revenue losses and how you can reverse the loss with the help of the industry’s best practices. If you have any questions, drop a comment below, and we will get back to you shortly. For more interesting articles on healthcare, revenue management, and technology, please subscribe to our blog. Do not forget to follow us on LinkedIn, Twitter, Instagram, and Facebook for regular updates.