How hospitals, ambulatory clinics, and providers manage billing and claims have a direct impact on a their healthcare organization's bottom line. However, these hospital billing processes are often overlooked by hospital executives when they try to increase profits and improve financial performance.
Insert Shutterstock image = 525881512 -- Caption: Hospital billing and claims management processes need evaluation when it comes to improving financial performance. Alt Text: Hospital Billing
We take a deeper dive into the relationship between internal hospital billing and claims management processes and how your organization's financial health could be affected by poor internal practices.
States Introduce Legislation Around Balance Billing
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According to a recent article published by Inside Arm, balance billing is "the process by which patients receive higher-than-expected bills from healthcare providers, often due to having unknowingly received out-of-network care---has become a bellwether in state capitols across the U.S."
Some states have enacted laws on core principles of balance billing practices, including Illinois, Connecticut, New York, Florida, and California. Recent legislation has successfully addressed a combination of some of the following issues as reported by Inside Arm:
Limits on out-of-network care charges (CA AB1305, CT SB433, FL HB221, UT SB216)
Increase disclosure of healthcare costs and improve network transparency (CT SB433, FL HB221, FL HB1175, GA SB302, MN HF3142, TXSB425)
Analysis of possible balance billing parameters (GA SR974)
Creation of processes used to resolve potential billing disputes among doctors, patients, and hospitals (FL HB221, TX SB481)
How Hospitals Can Improve the Billing
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Michael Rawdan, a director in the revenue cycle department at St. Luke's Health System in Boise, Idaho concurs with this need in a recent article in Modern Healthcare. According to the article:
"The antiquated paper system many hospitals have used for decades was inefficient. It confused patients, who had a hard time knowing what they owed, what they'd paid and what they were being billed for. As a result, patients could be mired in confusion over billing codes and crisscrossing information from insurers and a multitude of providers..."
Improving the Patient Financial Experience
In the new world of value-based healthcare, proving the optimal patient experience is a key factor that influences whether or not a hospital collects patient payments. However, oftentimes, the financial side of this experience can be overlooked.
James Green, a national partner with Advisory Board's revenue cycle management division was recently interviewed by Becker's Hospital Review. We will close this article with the following three thoughts on how to improve the financial experience for patients from Green.
Know who your patients are and what they
I attended the Saturday Lab 1 session discussing the Denison Specialty Hospital case study. In our session, we had a through discussion into the different budget terminology. I learned about the difference between accrual and cash accounting methods, which is based on the timing of when the revenue and expenses are recognized. I also learned about responsibility centers as an organizational unit under the supervision of a manager, who is responsible for its activities and results. In addition, the manager is accountable for the budget of the department that they head. Therefore, a centralized form of management in developing the budget because it makes easier to because the information for the department budget is located
Blomqvist A., Busby C., (2012). How to pay family doctors: Why “pay per patient” is better than fee for service. C.D. Howe Institute Commentary, Commentary 365.
Medical billing transforms health care services into billing claims. The responsibility of the biller is to follow that claim to ensure the physicians, hospitals, third party billing companies, as well as federal and state governments receive reimbursement for the work that is provided. An experienced biller can boost revenue performance for the facility while keeping the business running smoothly.
In the United States, healthcare fraud and abuse are significant factor associated with increasing health care costs. It is estimated that federal government spends billions of dollars on the health care cost (Edwards & DeHaven, 2009). Despite the seriousness of fraud and abuse offenses, increasing numbers of healthcare providers are seeking new and more profitable ways to build business relationships. These relationships include hospital mergers, hospital-physician joint ventures, and different types of hospital-affiliated physician networks to cover the rising cost of health care (Showalter, 2007, p 111-114). When these types of arrangements are made, legal issues surrounding the relationship often raise. There are five important Federal fraud and abuse laws that apply to the relationship and to physicians are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL) and (Office of Inspector General (OIG), 2010). Out of five most important laws that apply to the relationship and the physicians, we are going to focus on the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (Stark law).
Since the quality of healthcare would not suffer, the only thing to lose through maximizing efficiency is a bunch of waste. Through its administrative simplification advocacy, the American Medical Association (AMA) claims that up to 14% of a physician’s revenue is taken up by administrative waste. The goal of the administrative simplification is to inspire physician practices to use computerized, instantaneous health plan transactions, minimize manual procedures through the claims revenue cycle, while increasing transparency and reducing vagueness with the payment process involving the insurance company. It is the AMA’s hope to push this movement into high gear, getting more practices on board and to eventually see a decline in wasteful and inefficient administrative
Hospital Corporation of America (HCA). Staff Analysis Statement of Problem HCA, after following a conservative financial policy since its establishment, has entered the new decade preparing to make some changes in order to realign their financial strategy and capital structure. Since its establishment, HCA has often been used as a measure for the entire proprietary hospital industry. Is it now time for the market to realign their expectations for the industry as a whole? HCA has target goals that need to be met in order to accomplish milestones in the future.
In her paper emerging model of quality, June Larrabee discusses quality as a construct that includes beneficence, value, prudence and justice (Larrabee, 1996). She speaks of quality and value as integral issues that are intertwined with mutually beneficial outcomes. Her model investigates how the well-being of individuals are affected by perceptions of how services are delivered, along with the distribution of resources based on the decisions that are made (Larrabee, 1996). She speaks of the industrial model of quality and how the cornerstone ideas of that model (that the customer always knows what is best for themselves) does not fit the healthcare model (Larrabee, 1996). Larrabee introduces the concept that the patient va provider goal incongruence affects the provide (in this case the nurse) from being able to positively affect healthcare outcomes (Larrabee, 1996). The recent introduction of healthcare measures such as HCAHPS: Patients' Perspectives of Care Survey has encouraged the healthcare community to firmly espouse an industrial model of quality. HCAHPS is a survey where patients are asked questions related to their recent hospitalization that identifies satisfaction with case based solely on the individuals’ perception of the care given. This can lead to divergent goals among the healthcare team or which the patient is a member. Larrabee’s model of quality of care model
Hospitals were reimbursed using a fee-for-service standard, sanctioning all insurance companies to pay the same prices for hospital services offered by different providers. Due to removing restrictions on hospital prices, hospitals now negotiate reimbursement rates for each payer, thus, causing a substantially difference in prices among payers.
In addition to costly outliers, both the IPPS and HH PPS share other similar payment adjustments in order to ensure that all eligible beneficiaries have access to the appropriate services. They include adjusting the payment rate for partial episodes, and low-utilization of services. The outlier adjustment is made in order to pay for beneficiaries whose cost of care exceeds the threshold amount for their assigned group, just as for the IPPS 3. Under the HH PPS, the low-utilization adjustment can be made for beneficiaries whose episodes consist of four or fewer visits. When this is the case, workers will be paid based on the services they provide per visit multiplied by the number of visits provided during the episode 3, 4. One additional payment adjustment made under the HH PPS, the partial episode payment adjustment (PEP) can be made for patients who change HHAs or are discharged and readmitted within a 60-day episode. When this happens, a new episode will begin for that patient and they would now required a new plan of care and assessment. The adjustment to the original 60-day episode proportionately reflects the length of time the patient remained under the agency’s care
The balance between quality patient care and medical necessity is a top priority and the main concern of many of the healthcare organizations today. Due to the rising cost of healthcare, there has been a change in the focus of reimbursement strategies that are affecting the delivery of patient care. This shift from a fee-for-service towards a value-based system creates a challenge that has shifted many providers’ focus more directly on their revenue. As a result, organizations are forced to take a hard look at the cost of services they are providing patients and then determining if the services and level of care are appropriate for the prescribed patient care.
Health care must be fully accountable for quality and the patient experience is simply the patient's perception of quality. Society should question and debate on how healthcare organizations should show improvement for consumers. This can help organizations create reliable health coverage cost and evaluate medical performances for families and individuals in the future. Physicians and organizations are now evaluating patients with collection of electronic data to improve a patient’s...
The concept of Case management has was first introduced in the 1970’s by insurance companies as a way to monitor and control costly health insurance claims, commonly created by a catastrophic accident or illness (Jacob & Cherry, 2007). Today almost every major health care organization has a case management program managing and directing the use of health care services for their clients. Also, case management by payer organizations is recognized as external case management.
Working within the workers’ compensation (WC) structure in cost and billing is different than the Affordable Care Act (ACA) reimbursement system. Prior to taking the Healthcare Business Dynamics class, I understood the different WC medical care pay schedules according to each state; albeit, participating in the strategic planning of a business plan, I have a better understanding that Medicare, Medicaid, and group insurance is reimbursed at a lower rate causing concern that the AFA may cause financial distress on the healthcare institutions (Aldhizer & Juras, 2015). Thus, hospitals and insurance companies continue to think like a business versus a service provider because they do not want to cover pre-existing conditions or be held accountable
Healthcare services have been on the rise for over 10 years now. According to a 2012 consumer alert, the industry provided $2.26 trillion in payments for more than four billion health insurance benefit claims in the year 2011(Fraud in Health Care). The bulk of the claims and the mainstream of fraud and abuse stem from the Medicare system professionals, who are knowledgeable about the process and persuade new clients into handing over their pertinent information in hopes of deception and illegitimate claims. Multiple and double billing, fraudulent prescriptions, are some of the major flaws in this organization that has made the healthcare services industry curdle. (AGHAEGBUNA, 2011) This is a non-violet crime and is often committed by very educated people including business people, hospital, doctors, and administrators.
There are several factors that contribute to the complexity of the revenue cycle. Frequent changes in contracts with payers, legislative mandates, and managed care are just a few examples of reasons why revenue cycle in the healthcare industry is so complex. Furthermore, the problems that arise in the steps of the revenue cycle further complicate the whole process. For example, going through the steps of the revenue cycle efficiently is extremely difficult when it is managed by poorly trained personnel. Furthermore, if a healthcare provider does not have the proper information system to track patient records and billing, receiving reimbursement can become difficult. In addition, one of the main factors that delay payments is denial from the insurance companies. The reason for Denial includes incorrect coding, the certain sequence of care and medical necessity or even delay in submitting claims. Lastly, inefficient patient correspondence can not only hinder the process of revenue cycle but also result in many patient complaints (Wolper, 2004).