Hospitals Are Shifting to Outpatient Services: What This Means for the Hospital Revenue Cycle
You can expect major changes to hospital billing this year thanks to the pandemic and shifts in patient behavior – but one of the most important that hospital and health system leaders should pay attention to is changes in use of outpatient services.
An analysis from the Guidehouse Center for Health Insights and Healthcare Financial Management Association (HFMA) addressed hospital and health system leaders including CEOs, CFOs, COOs, and other executives from 182 hospitals for insights into what they expect in the near future. It found that a full 95% of the executives surveyed expected higher outpatient volumes in 2023. As much as 40% of leaders expected increases of 10% or more.
But this shift isn’t happening on its own and those in charge of hospital coding and billing should pay attention. 41% of the leaders surveyed expected lower inpatient volumes at the same time, with 17% expecting that drop to be 10% or higher .
What’s Behind the Shift in Hospital Revenue Cycle
Hospitals and health systems have been navigating this flow of patients from inpatient to outpatient since the beginning of the COVID-19 pandemic – a period where patients were avoiding hospital emergency departments and many providers postponed or even canceled elective surgeries to slow the spread of the virus. HFMA has found that leaders believe that emergency department visits will increase, along with elective procedures, both at a rate of 10% or more. This is to be expected since, as things stand now, many providers still haven’t returned to pre-COVID patient volumes.
But many leaders will find themselves unprepared since they are still navigating issues with staffing and workforce problems. A full 96% of survey respondents said that their workforce issues are having a negative impact on growth strategy, and this impact isn’t minor. Among those who are having these issues, 62% report that the impact is significant. And while these problems are most prevalent on the clinical side, many are having issues on the administrative side also. Almost three out of four of the executives surveyed are looking for hospital revenue cycle, coding, and IT experts this year.
How to Adapt Hospital Billing to the Shift to Outpatient
As the “new normal” emerges, hospital revenue cycle leaders should be taking steps to adapt so that you stay ahead of the competition and in front of any future challenges you might face.
Assess Your Current State in Hospital Billing
Now is the time to look at your current revenue cycle processes and determine your baseline before you begin to make any changes. For example, does your staff understand outpatient billing well? Will they need additional training? Do your current workflows meet the needs of increases in outpatient billing and coding?
Now is also an excellent time to determine whether your approach to measurement will be sufficient to evaluate any changes you make in your hospital revenue cycle staffing and procedures. You might want to consider creating new KPIs to make sure you have solid insights into your decisions around outpatient changes.
Know that you’ll be doing the work of creating your own standards for using data to track outpatient claim statistics. There isn’t much of an industry standard and you’ll find considerable variation by payor and possibly even patient type, so a custom approach is best.
Improving Your Clean Claim Rate
When deciding on goals and standards, your outpatient clean claim rate will be a useful place to start. Most hospital revenue cycle departments aim for around 95%, so if you aren’t hitting that number now, it’s a good time to start investigating ways to improve your processes and numbers.
One of the first steps should be a focus on education and training, ensuring that your team on both the coding and billing sides understand what constitutes a clean claim for all payers on outpatient contracts. If you begin this process and realize that you have a significant amount of work to do to get your team up to the necessary standards, consider working with a medical billing and coding partner to supplement your hospital coding and billing needs.
Dive Into Denial Management
During times of change like these, denial management only becomes more important. Having a clear strategy to measure, identify, prevent, and address denials will be immensely helpful in developing a hospital outpatient billing strategy that keeps cash flows healthy and creates a positive work environment for your hospital billers and coders.
Know that denials are currently increasing and many hospitals and health systems are bleeding revenue as a result. But at the same time, the vast majority of denials are preventable. By appealing a majority of claims and aiming for a denials rate under 5% (or even lower), you can get a handle on outpatient billing issues before they even start.
Stay dedicated to identifying and rectifying root causes, and filling in with outside support where needed, and you’ll walk into a future of increasing outpatient volumes with confidence.
Consider Outsourcing Hospital Billing
Hospital leaders shouldn’t take on this type of unprecedented change alone. Many of your competitors are taking advantage of options in outsourced billing and coding to fill in gaps and create efficiencies that would be too difficult to achieve internally. They understand that outsourcing can stabilize revenue and reduce risk even while improving the patient experience.
When you’re ready to take a fresh look at your approach to outpatient hospital billing and coding, we would love to share our expertise and insight. Just contact us here to get started.
 J. LaPointe, “Hospital Execs Expect Greater Shift to Outpatient Care,” RevCycleIntelligence, 2 March 2023. Available: https://revcycleintelligence.com/news/amp/hospital-execs-expect-greater-shift-to-outpatient-care.
Biggest Risks in Physician Billing in 2023
Physician billing companies know a secret – keeping on top of risks in physician billing services is one of the most effective ways to keep cash flows healthy and practices functioning at their best.
That’s why we’re going to walk you through the biggest risks to physician billing right now in 2023.
Volume and Resource Fluctuations Continue
While the worst of the pandemic-related volatility is likely behind us, physician billing will still need to adjust for unpredictability. This is because physician practices are dealing with COVID-19 challenges in addition to the waste and abuse issues that were entrenched well before the pandemic. So now physician offices are dealing with yesterday’s problems on top of longer visits, more visits for therapies and early refills, COVID-19 diagnoses, and disbursement of excess pharmacy and durable medical equipment. These things make billing volatile and complex and are why many practices are considering working with physician billing services.
And while volumes have returned to normal for many, this is only part of the story. Some payers are reporting increases in deferred care, but not quite at the rates expected, while others are seeing more than projected. Labor challenges also continue to rage on, with many practices still figuring out their approach to remote work and retention and considering physician billing companies. This is happening with both providers and payers.
These issues have contributed to an increase in payment errors and billing inaccuracies in many areas. To minimize risk, providers should be ready to address these issues both on their end and on the payer side .
Don’t Overestimate AI in Physician Billing Services
Medical billing has been heralded as one of the best use cases for artificial intelligence (AI) in healthcare, and for good reason. Medical billing and coding rules are constantly being changed by payers, documentation requirements are always shifting, and coders are constantly inundated with new code sets. All these issues slow down reimbursement, contributing to denials and clogging up the appeals process. AI has been hit or miss in clinical areas, but since medical billing and coding are text-centric, they could hypothetically be a perfect fit, allowing smaller teams to work on claims that are more complex than their norm.
But much of the optimism hasn’t turned into reality. Organizations who’ve stepped out early into AI have had significant growing pains, especially in terms of data quality. AI models live by the principle of “garbage in, garbage out”, so that even practices that are excited about the promise of AI are learning that they have to do significant work to assess their coding practices and making sure they’re getting highly correct information from the beginning. They also need enough data points or sets to make sure prediction models are accurate since using amounts that are too small can dilute the power an analytics technology needs for success .
So, while the promise of AI is on the horizon, most physician practices will need to take an honest assessment of their goals, resources, and current state of tech readiness to avoid the risk of adopting solutions before they’re ready.
Upcoding in the Age of COVID Can Cause Problems
One of the more grounded and classic risks that physician offices will face in 2023 is the problem of upcoding – a problem that, if too extensive, can trigger allegations under the False Claims Act, leading to potential audits and financial penalties.
Upcoding is simply submitting a claim with higher or more extensive medical coding than the documentation or circumstances support, usually to get higher reimbursement rates than lower codes provide. A classic example is evaluation and management (E/M) codes being billed at a higher level (such as five when documentation only supports a level two). For example, telehealth fraud was found to have increased through improper billing and upcoding during the COVID-19 pandemic. State and federal regulators had relaxed restrictions to allow increased access to telemedicine, resulting in an 11,000 percent increase in virtual appointments during the pandemic and Medicare primary care visits jumping by more than 43% in the first three months of the pandemic. But in early 2021, the Department of Justice made an announcement that it had brought in over $2.2 billion in judgments and settlements from fraud and False Claims Act cases with more than 80% of False Claims Act recoveries in FY 2020 coming from the agency resolving fraud and enforcement actions .
But upcoding doesn’t require direct malicious intent. A practice can be at risk of upcoding practices simply because of poor training or bringing on an employee who previously worked at a less scrupulous organization. This is why many practices work with physician billing services to level out the risk.
The Risk of Audits Continues
While connected to upcoding, it’s worth looking at audit risk on its own, even if you work with physician billing companies.
Consider that the Office of Inspector General (OIG) plans on reviewing E/M services provided by physicians in the emergency department. The agency is keeping a close eye on how physician practices are being billed in 2023. While this example is in emergent settings, physician practices should take it as a warning. It can be helpful to have someone review your claims, or you might even consider working with a physician billing company to minimize risk.
Use these points as a checklist to bump against your own processes and best practices. As you move forward, you’ll find areas for improvement, but also areas where it might be smart to start looking at physician billing companies that you can partner with to improve financial outcomes. When you’re ready to take that step, start here.
 S. Mantha, “Addressing 3 pandemic-induced payment integrity challenges,” Industry Dive, 30 January 2023. Available: https://www.healthcaredive.com/spons/addressing-3-pandemic-induced-payment-integrity-challenges/640583/.
 J. LaPointe, “Medical Coding is the Next Stop for Artificial Intelligence in Healthcare,” TechTarget, Inc., 3 October 2022. Available: https://revcycleintelligence.com/features/medical-coding-is-the-next-stop-for-artificial-intelligence-in-healthcare.
 P. Giancola and C. Stedman, “Telehealth Fraud Triggered by COVID-19 Pandemic,” JD Supra, LLC, 16 February 2021. Available: https://www.jdsupra.com/legalnews/telehealth-fraud-triggered-by-covid-19-8657616/.
Tips for Pediatric Billing and Coding in 2023
As 2023 kicks off, now is a great time for pediatric revenue cycle leaders to take a step back and review ways they can set themselves up for success, reevaluating some of their priorities and best practices. For many leaders, this can involve everything from renewed focus on efficiency to reviewing your relationship with pediatric medical billing companies.