As the US healthcare system continues to evolve from a fee-for-service model towards value-based care models, patients and providers are facing new and different challenges in working both with each other, as well as with payers, to secure payment for healthcare. Hospitals in particular are facing greater administrative burdens, including planning and executing modifications to patient estimates and front-end care to align with the No Surprises Act, as well as increasing transparency related to the cost of care, and at the same time communicating this information effectively to patients, who may have little understanding related to the economic costs of care.
On the Front-End, Administrative Challenges & Solutions
Much has been written about the front-end challenges in patient finance and revenue cycle, and how errors in registration, eligibility verification, and prior-authorization result in follow-on denials for payment from payers after care has been provided. With a focus on the need for greater accuracy in collecting patient details, healthcare staff are under greater pressure than ever when gathering and verifying registration data. Further complications arise as prior-authorization becomes more difficult, with payers at times indicating a prior-authorization is not required, and then rejecting the claim due to lack of prior-authorization.
As the No Surprises Act is implemented into healthcare systems across the country, providers are also facing the challenge of balancing another administrative compliance task, in a particularly complex environment. While providers generally support transparency efforts, additional challenges arise in conveying information to patients, changes to procedures which may result in higher costs, as well as changes to policy minutiae reducing coverage and increasing exclusions.
Staffing across the revenue cycle continues to also impact operations, as shortages reduce the available workforce at a time where there is a tremendous need for additional team members to manually gather and verify information, as well as to follow-up and monitor complex cases. Technology providers are meeting these challenges head-on with solutions to reduce administrative burdens in documenting care, verifying information and monitoring cases but many hospitals and health systems grapple with finding the funding and resources for successful implementation while at the same time meeting today’s demands.
On the Back-End, Administrative Challenges Persist
Ongoing research into denials confirms the worrying trend that the rates of denials is continuing to escalate, with a host of reasons split broadly into the two categories of medical necessity / clinical denials and then administrative denials. While hospitals and health systems are working tirelessly to both prevent denials in the first place, as well as to overturn denials for care that has already been provided, the burden is ever increasing and requires more and more resources to obtain adequate reimbursement.
What seems to be neglected in these discussions is the additional cost to collecting reimbursement from payers, the administrative resources and staffing required to follow-up and to, to some extent, chase payments from payers is an additional cost for providers which is not being reimbursed. As the overall health system evolves towards value-based payments, the demand for even more data and information to support payment will only increase, to a potentially untenable level.
In addition to securing payments from payers, both government and commercial, patients facing higher deductibles and larger co-insurance payments are also taking center stage as hospitals must now also collect a higher portion of payments from patients and families. While the recent Inflation Reduction Act takes aim at reducing prescription drug prices, a study released in March, conducted by Ipsos in conjunction with PhRMA, showed that Americans are even more concerned with the spiraling cost of insurance premiums, co-pays, deductibles, and co-insurance payments.
For hospitals, health systems, and physician practices traditionally collecting payments from commercial or government payers, the transition to collecting payments from patients and families directly is not only a new challenge requiring additional administrative resources, but also one that can cause rifts between providers and patients as the patient’s share of the cost of care spirals upward.
Increasing Administrative Costs are a Concern for Everyone
While technology and outsourcing are alleviating some of the administrative requirements for hospitals and health systems, the complex nature of care requires a hands-on approach for many cases. The Patient Financial Services meeting, taking place live online this October 11 & 13, will address many of these issues, through presentations and discussions led by industry leaders including an incredibly relevant discussion on reimbursement to be facilitated by Ryann Bradley of Heritage Valley Health System and Alexander Safavi of Children’s Hospital of Philadelphia. With more than 20 facilitators leading conversations over the two half-day program, attendees can share experiences, benchmark progress, and become part of the equation for change.
The administrative burdens like the no surprise act cause providers to incur more costs in following the letter of the law but I can see why protections are necessary. The no surprise law protects people who may unknowingly be seen by an OON doctor, or even worse, transported by an OON air evacuation chopper and face the ridiculous bill, whose arbitrary cost is listed in the charge master.
That is not to say that the cost containment / utilization management (euphemisms to be sure) at insurance companies are not trying to keep costs down through ever more complex requirements and policies. This causes providers to have to then hire whole departments to combat the bureaucracy. Any increase in payments a provider sees is spent on this arms race.
The sad part is that I would say the majority of the hassle providers go through to obtain the payment to which they are entitled is not insurance companies trying to withhold payment, although that happens,; it is the result of a bloated system where the complexity of coverage and hierarchy of denials cause claims adjudication systems to deny legitimate claims. Think about the recent trend for doctors to sell their practices to health systems and just draw a salary without having to worry about all the staffing that would bankrupt them if they were on their own.
I also think that new treatments are part of the problem driving up premiums, but there is more to it than that. Dependent children are now covered until age 26, regardless of student status or gainful employment. I knew people in their early 20s who turned down employer sponsored plans because they were still covered by their parents family plan. That means fewer people paying in and more taking out.
Additionally the elimination of the preexisting condition clause (which was cruel, but served a purpose from an actuarial standpoint) along with the abrogation of the coverage mandate means the population that has medical insurance is on average sicker than in the past. Sicker people cost more to insure.
Ok, stream of consciousness over. Here is the conclusion: our system is broken in a lot of ways. From insane charge masters to endless battles to the shift of the cost of care to the patient, Americans spend twice as much on healthcare than other western countries on a per capital basis without better outcomes.
Except for the Blues most payors are for profit and answer to shareholders.