According to the 2018 Annual Survey of Employer Health Benefits, enrollment in high-deductible health plans (HDHPs) increased 50% over the previous five years, with 29% of all covered workers now in this category.1 The average annual deductible for single coverage in an HDHP/HRA is $2,245 with a maximum out-of-pocket of $4,563. The annual deductible for family coverage in the same plan averages $4,329, although other HDHPs can reach out-of-pocket maximums of $6,650 for single coverage and $13,300 for family coverage.
Of all covered workers, 58% have a deductible of $1,000 or more, 26% have a deductible of $2,000 or more, and 11% have a deductible of $3,000 or more.2
The growth of deductibles and patient responsibility has put a significant financial burden on consumers. And the repercussions are staggering:
- 79 million Americans struggle with medical bills or debt3
- 58.5% of bankruptcies are due to medical expenses4
- 83% of small physician practices are challenged by slow payments by HDHP patients5
- Write-offs are expected to reach $200 billion in 20196
As patients’ financial responsibility continues to rise, provider practices must do all they can to reduce costs, optimize reimbursement, and most importantly, protect their bottom line. Following are three opportunities to mitigate the financial impact.
Enable Price Transparency of Healthcare Costs
The topic of price transparency has been in the news a lot lately as our government seeks to get healthcare costs under control. One of the issues highlighted is the “surprise bill,” where patients receive unexpected, expensive bills for medical care not covered by their insurance.7 Few other industries provide a service or sell products to consumers without first telling them—or at least estimating—the cost. But it’s not just a problem for consumers; It’s also an issue for the provider. Without knowing what the patient will owe, they have no way to collect the full amount or set up payment plans before the patient leaves the office. And this puts the provider at a disadvantage as the cost to collect goes up significantly once the patient leaves the office.
Providers can improve price transparency by doing the following:
- Perform authorizations and eligibility verifications before the appointment
- Use payer connections through your clearinghouse to determine payment responsibility
- Generate a report of the patient’s responsibility—along with explanations—that can be shared with the patient prior to or at the time of service.
- Train staff, providing scripts and talking points, to improve the effectiveness of asking patients for payment
- Offer flexible payment plans to help make it easier for patients to pay
Enabling price transparency has another benefit that many may overlook: improved outcomes. An article published by Patient Engagement HIT says that 64% of patients delay or skip care because of costs, which can lead to more costly episodes, such as emergency room visits, hospital readmissions, or even death.8 Complications from avoidance of care can also lead to lower reimbursements and potential penalties in alignment with value-based care guidelines.
Address Rejections and Claim Denials Up Front
Many practices just assume rejected and denied claims are an unavoidable part of managing the revenue cycle. But we shouldn’t be so lackadaisical in our thinking. Rejected claims are often a matter of coding errors or missing information that can be addressed through staff education. Denials, on the other hand, are a bit more complicated but still reparable.
Denials—90% of which are avoidable—are time-consuming, resource-intensive and cause unnecessary delays in reimbursement, something few practices can afford.9 According to MGMA, most practices have an average denial rate of 5% to 10%. For small practices submitting 2,000 claims a month, an 8% denial rate results in $16,000 a month, not including the $25 it costs to rework a denied claim.10 That’s money that could be used to bring on new staff, purchase new technology, or increase advertising.
The first step in preventing rejections and denials is to understand what has caused them. And this requires insight. Practices need the ability to conduct a root cause analysis on each rejection or denial—a process that can be conducted through revenue cycle management tools provided by their clearinghouse, practice management, or other revenue cycle vendors. The best tools are those that:
- Interface with the practice management system
- Enable customization for things like denial code categorization and root cause analysis
- Are user friendly
- Provide reports that are easy to configure, understand, and download
Eric Krepfle, CRCR, senior director of product management for revenue cycle management applications at Change Healthcare, explains that providers need all the data available around eligibility, authorizations, filing claims, and getting paid in order to understand where their processes are falling short. Having this information allows practices to proactively address those issues to help prevent rejections and denials in the future and reduce their financial impact.
Leverage Physician/Medical Practice Analytics Tools
Providers can also help protect their bottom line by using analytics tools to track and measure practice performance. These tools can provide real-time insights into all claim-related activity, including rejections and denials. They also enable benchmarking, both internal and industry-related. “It’s important that practices regularly measure themselves against their peers so they can get a better sense of how they’re doing,” Krepfle says. “Looking at your own practice’s performance month to month can certainly reveal improvements, but it won’t tell you where you need to be to be performing optimally.” Krepfle says having the metrics in real time allows practices to take immediate corrective action.
Analytics that practices should be monitoring include the following, all of which should be available by provider.
- Collection percentages
- Actual or average days bills have been outstanding
- Aging report—less than 10% of outstanding accounts should be 120 days outstanding
- Charge payments and adjustments
- Denials by payer and reason code
- Rejections by payer and reason code
“Business as Usual” Won’t Work in the Practice of the Future
The future is bright for physician practices that embrace a new way of doing business. Improving price transparency helps make it easier for patients to pay and for providers to collect. Increasing workflow efficiencies to reduce rejections and denials can shorten the time it takes to get reimbursed while reducing costs. And leveraging analytics to track and measure practice performance can help providers identify problematic trends and opportunities for long-term improvement. One of the fastest ways to create the practice of the future today is to partner with a revenue cycle solutions vendor to help put these processes into place.
Revenue Performance Advisor from Change Healthcare gives providers the tools they need to facilitate price transparency, help decrease rejections and denials, and leverage analytics for enhanced practice performance—all in a single, easy-to-use revenue cycle software solution. Providers can benefit from optimized efficiency, facilitated reimbursement, enhanced cash flow, and fewer write-offs.
1 “2018 Employer Health Benefits Survey,” Kaiser Family Foundation, October 3, 2018
2 “2018 Employer Health Benefits Survey,” Kaiser Family Foundation
3 “79 Million Americans Have Problems with Medical Bills or Debt,” The Commonwealth Fund
4 David U. Himmelstein, Steffie Woolhandler, Robert M. Lawless, Deborah Thorne, Pamela Foohey, “Medical Bankruptcy: Still Common Despite the Affordable Care Act,” AJPH Law & Ethics, March 2019
5 “Providers Driven to Implement Patient-Centric Financial Solutions as Consumer Payment Responsibility Skyrockets 29 Percent, Black Book Survey,” PR Newswire, October 24, 2017
6 Johnathan Wiik, “Financial Health of Patients is an Afterthought,” HIStalk, November 2, 2015
7 Emmarie Huetteman, “Legislation to End Surprise Medical Bills Has High Public Support – in Both Parties,” Kaiser Health News, September 12, 2019
8 Sara Heath, “64% of Patients Avoid Care Due to High Patient Healthcare Costs,” Patient Engagement HIT, February 15, 2018
9 “The 6 Fundamentals to Prevent Denials,” MGMA