Hospital Billing Outsource Strategy
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Changed Your Service Lines? It’s Time to Rethink Your Hospital Billing Outsource Strategy

In the wake of COVID, budget crunches, and labor shortages, many hospitals and health systems have been making the smart decision to rethink their service lines. But what many haven’t had the space to consider is the impact on hospital billing, hospital coding, and how their decisions should impact outsourcing strategy. 

If you are a billing or coding leader in a hospital, it’s time to review your approach to outsourcing to determine whether you have an opportunity to make changes that will positively impact your profitability as well as patient and employee experiences. 

Why Service Lines Are Volatile Today
Hospitals have lost billions in recent years, resulting in threats of service line closures and even systemic collapse without support. 

One hospital, Main Line Health, saw its expense per admission jump by 26% – significantly more than their revenue per admission, which was only increasing by 14% per admission. While they had budgeted for a $6 million loss, they actually lost $20 million. Hospitals that have seen issues like these have been closing services like obstetrics, leaving mothers who were ready to deliver facing a three-hour drive to find a hospital [1]. In 2022, hospitals cut services including obstetrics, converted pediatric units to ICU, closed emergency departments, inpatient care at a Children’s hospital, behavioral health services, at least one even temporarily closed an ICU [2].

Why Evaluating Service Lines is Important to Hospital Billing
Service lines are groups or populations of patients with similar traits based on encounter attributes. This includes DRGs, ICD groups, HCPCS codes, inpatient or outpatient status, and MDCs. Planning service lines is a way of evaluating the performance of a hospital or health system, where patients are engaging with multiple departments during a visit. By focusing on service lines, hospital leaders can gain deeper insights into the contribution that each line is making to the organization’s financial health as well as community well-being. 

Consider that, in cases where a hospital is only providing services that are highly profitable, they might not be best serving their community. And if they’re only providing the services that the community prefers, they might not be meeting the long-term health needs or supporting the health of the organization. This type of question has caused hospital leadership to change their approach to service lines in recent years. But the questions can’t stop there. 

When service lines shift, finances and revenue cycle are impacted. Every change to a service line can impact stakeholder groups including patients, providers, and other administrative departments, but especially hospital coding and billing. Hospital billing leaders must also ask whether they’re receiving appropriate and market-comparable reimbursement from all payer types, including employers, managed care, and government. 

How to Offer or Cut New Service Lines
When an organization is considering changing service lines, they have to go through a few considerations [3].

What Do We Need?
Hospitals and health systems are rethinking the revenue potential of many service lines after experiencing constraints due to COVID-19. Some add lines to gain market share, increase patient volume, or even generate new revenue. When this happens, the impact on hospital billing should always be considered.

What Are Our Operational Concerns?
Any shift in service lines will impact your labor force, the physical space different departments use, and the need for medical staff specialties. Beyond this, leadership should also consider the impact on hospital billing and hospital coding. This is because new service lines could mean different coding processes, shifts to relationships with payors, and new approaches to follow up. 

What Will the Financial Impact Be?
Adding or subtracting service lines will have a direct impact on the finances of a facility. It will be crucial to plan ahead for this. This includes understanding your starting point and ensuring you have the right metrics to properly evaluate the financial impact on your organization. These measurements also apply directly to your revenue cycle processes, where you’ll need to ensure you have efficient hospital coding and billing workflows that are ready to adapt to change. 

How Service Line Changes Impact Outsourcing Hospital Billing 
Outsourcing hospital billing in particular can be a smart option for managing this type of volatility. The Healthcare Financial Management Association (HFMA) found that over one out of every five revenue cycle leaders manage their inpatient revenue cycle, but have shifted to outsourcing for ancillary and outpatient services. Meaning that if you are considering service line adjustments in these areas, outsourcing could be a smart decision [4]. 

While 22% of survey respondents who managed RCM internally reported outsourcing some RCM services, 12% of leaders were interested in taking this step in the future. And a notable number want to go even further – 10% said they want to outsource all of their ancillary or outpatient services. The most common services outsourced were:

Survey respondents were most likely to consider outsourcing services for:

The best news is that most organizations that outsourced their RCM services were satisfied with the outcomes, and that leaders who outsourced more than one function were more highly likely to outsource more. 

The main takeaway is that, if you’ve had any service line changes, outsourcing hospital billing should be on the table for your organization. If you’d like to discuss which service lines could be a good starting point for you, or what changes you should consider after dropping service lines, contact us and we can help.

References
[1] D. Muoio, “‘Unsustainable’ losses are forcing hospitals to make ‘heart-wrenching’ cuts and closures, leaders warn,” Fierce Healthcare, 16 September 2022. Available: https://www.fiercehealthcare.com/providers/unsustainable-losses-are-forcing-hospitals-make-heart-wrenching-cuts-and-closures-leaders.
[2] A. Ellison, “13 hospitals cutting services,” Beckers Hospital Review, 14 July 2022. Available: https://www.beckershospitalreview.com/care-coordination/10-hospitals-cutting-services-712.html.
[3] Center for Optimizing Rural Health, “Implementing New Service Lines: Strategies and Tips You Should Know,” 8 December 2020. Available: https://optimizingruralhealth.org/implementing-new-service-lines-strategies-and-tips-you-should-know-2/.
[4] V. Bailey, “22% of Revenue Cycle Leaders Outsource Outpatient RCM Services,” RevCycleIntelligence, 13 July 2022. Available: https://revcycleintelligence.com/news/22-of-revenue-cycle-leaders-outsource-outpatient-rcm-services.

Revenue Cycle management Services
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Medicaid Disenrollment Means Providers Should Rethink Revenue Cycle Management Services

Medicaid unwinding has been a critical topic around revenue cycle management services for months now, and this is because providers will be directly impacted. Most providers should expect to see serious upheaval in their revenue cycle management services as patients are kicked off Medicaid rolls.

Medicaid Unwinding Explained
During the height of the COVID-19 pandemic, enrollment in Medicaid increased, largely thanks to the continuous enrollment provision that prevented people from having their coverage removed. For providers, this meant an unprecedented stability in the Medicaid enrollment in their care communities. But since the end of the public health emergency (PHE) this has changed. The Kaiser Family Foundation (KFF) estimates that anywhere between 8 million to 24 million people will lose their coverage as the continuous enrollment provision unwinds [1]. 

Providers such as hospitals, health systems, home health agencies, and physician practices will need to pay attention, possibly even considering working with a revenue cycle management company. But first, it will be important to understand the possible outcomes during the unwinding. 

How States Will Be Impacted
Not every state will see the same issues, so providers should be working to understand their individual risk. 

For example, Utah is expected to have the highest proportion of members who are taken off the rolls, with a possible percentage difference of 32.5%. After that is Indiana at 28.1%, Minnesota at 27.2%, and North Dakota at 26.5% [2]. States with the lowest impact include:

  • Nebraska
  • Connecticut
  • Kansas
  • Alabama
  • Alaska
  • New Mexico 

Providers in each of these states are already working on plans to adjust. Indiana University Health, for example, is offering personal assistance to members to help them keep their benefits or find a path to new coverage. They’re doing this through financial counselors at their hospitals and cancer centers as well as through community outreach events. 

Florida’s Memorial Healthcare System is in a state that could see around 1 million people disenrolled during the unwinding. The health system is working on auto-enrolling based on information gathered by the state but is also aware that work and preparation will need to happen for people who aren’t able to auto-enroll and who might need support looking for alternative coverage. 

The Uninsured Challenge
During the three-year period of continuous enrollment (February 2020 to March 2023) Medicaid enrollment increased by around 20 million people. This was the reason the uninsured rate fell to its lowest level at the beginning of 2022. Unfortunately, according to the recent KFF survey, only about one-third of states had the ability to project coverage losses around disenrollment, meaning providers will face multiple challenges in establishing revenue cycle management services that align with their needs as uninsured populations rebound [3]. 

Providers should expect that, while renewals resume for Medicaid enrollees, they will see substantial uncertainty around how many people will lose Medicaid coverage, how many will find their way to other coverage, and how many will become uninsured. That said, most providers can be sure that they will see an increase in their uninsured rates, on top of increases in enrollment in CHIP and private health insurance. 

But exact predictions will be difficult. Consider that, since Medicaid enrollment was automatically sustained through the height of the pandemic, some people who are currently listed as enrollees through administrative data could have started working and might now have insurance coverage under an employer. At the same time, the federal surveys that measure uninsured rates (through self-reporting) show smaller increases in enrollment than administrative data. 

Hospitals Could See Mixed Results
Hospitals will need to pay close attention to their revenue cycle outcomes. Hospitals now are dealing with changes from the end of the PHE including shifts in bad debt and charity care as well as other factors tied to the end of the continuous coverage requirement. 

Kaufman Hall reports that the April increases in bad debt and charity care could be directly tied to Medicaid disenrollment. They also report that hospital volumes have dropped, including both inpatient and outpatient. These decreases combined with increases in charity care and bad debt could be a signal that widespread disenrollment is at hand. Erik Swanson, senior vice president of data and analytics believes there is a link. “With states conducting their Medicaid eligibility redetermination, it’s predicted that hundreds of thousands of people will ultimately become uninsured. The data indicate that we may already be seeing the effects of disenrollment materialize with patients less likely to seek out the care they need and a continued rise in bad debt and charity care.” [4]

Hospitals will be navigating these changes while paying more for supplies and labor, stressing the importance of looking for a revenue cycle management company who can help them ride out these trends in the best way possible. 

Nursing Homes Are Waiting to See Outcomes
Even as hundreds of thousands have already been removed from Medicaid rolls, the impact hasn’t been severe for Medicaid-dependent nursing home residents according to McKnight’s Long-Term Care News. Their survey of a dozen sector associations about the end of the COVID-19 PHE and Medicaid unwinding found reports of no significant impact. As a result, members are following their standard processes to continue serving their Medicaid-eligible residents. That said, in Oklahoma, where 70% of disenrollments have been a result of procedural issues (vs. proven ineligibility), neither the Oklahoma Health Care Association or LeadingAge Oklahoma could comment on the situation in nursing homes [5].

How to Approach Revenue Cycle Management Services
This is a time of ongoing uncertainty for providers. Cash flows will undoubtedly be impacted even as expenses are increasing. Providers should be taking a step back to examine their approach to revenue cycle management services, assessing whether they have the ability to monitor and respond to this type of unprecedented change. Most will also need to consider partnering with a revenue cycle management company to navigate the coming changes. To learn more about a revenue cycle management company that can help you in this process, start here.

References
[1] J. Tolbert and M. Ammula, “10 Things to Know About the Unwinding of the Medicaid Continuous Enrollment Provision,” KFF, 9 June 2023. Available: https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/.
[2] R. Wilson, “How many people could lose Medicaid coverage, state-by-state,” Becker’s Healthcare, 31 March 2023. Available: https://www.beckerspayer.com/payer/how-many-people-could-lose-medicaid-coverage-state-by-state.html.
[3] A. Burns, E. Williams, B. Corallo and R. Rudowitz, “How Many People Might Lose Medicaid When States Unwind Continuous Enrollment?,” KFF, 26 April 2023. Available: https://www.kff.org/medicaid/issue-brief/how-many-people-might-lose-medicaid-when-states-unwind-continuous-enrollment/.
[4] J. LaPointe, “Hospital Finances Break Even as PHE Ends, Medicaid Unwinds,” RevCycleIntelligence, 31 May 2023. Available: https://revcycleintelligence.com/news/hospital-finances-break-even-as-phe-ends-medicaid-unwinds.
[5] J. R. Towhey, “As Medicaid disenrollments surge, concerns about nursing home residents persist,” McKnight’s Long-Term Care News, 5 June 2023. Available: https://www.mcknights.com/news/as-medicaid-disenrollments-surge-concerns-about-nursing-home-residents-persist/.

Hospitals Are Shifting to Outpatient Services What This Means for the Hospital Revenue Cycle
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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 revenue cycle 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 [1].

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. 

 

References

[1] 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.

 

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