The 2019 CAQH Index reported that the healthcare industry is spending approximately $350 billion annually for administration due to its complexity, and that about one-third of that amount could be saved by automating administrative transactions. For many, the mind-boggling $13.3 billion in available cost savings cited in the study begs this question: If healthcare revenue cycle management (RCM) technology has been evolving for over two decades, and the point of most technology is to help processes run more efficiently, what is causing administration costs to be sky-high with such an enormous opportunity for savings?
This guide aims to explain the ins and outs of the Medicare claims process and outlines the necessary tools to make your life easier and help maximize your reimbursement.
As patient volumes declined drastically during COVID-19, facilities are eager to get more patients back into the office and provide the care that was delayed. Quadax personnel are speaking with clients about their own efforts to increase patient volumes and boost revenue.
CMS Administrator and industry experts say, YES!
It’s been a trend that’s been talked about and predicted to increase over the last decade, but it wasn’t until the world was hit with the COVID-19 pandemic for telehealth to really take off. The healthcare industry saw an unprecedented rise in telehealth amidst the pandemic, and this trend will continue, according to industry leaders at the Value-Based Care Summit | Telehealth20: Virtual Series.
As the United States prepared and responded to the COVID-19 pandemic, healthcare patient volumes drastically decreased, beginning in the second half of March. Elective procedures were postponed and telehealth skyrocketed resulting in record low healthcare visits.
The Decline
Operating room minutes fell 61% compared to April 2019, which is more than triple the declines seen in March. And, surgery room volumes saw the biggest declines, which was expected given the halting of elective procedures.
With the exception of New York City and San Francisco – two of the largest COVID-19 hotspots – health systems across the country experienced an average decline in patient volume of 56% between March 1, 2020, and April 15, 2020.
The Impact
The COVID-19 pandemic could cost Medicare between $38.5 billion and $115.4 billion over the next year, according to a new analysis from the National Association of ACOs (NAACOS). Officials at NAACOS noted that the final number will depend on factors such as severity of disease and hospitalization rates.
A recent analysis from Strata Decision Technology found that hospitals, on average, will lose about $1,200 per COVID case and up to $6,000 to $8,000 per case for some hospital systems, depending on their payer mix.
A big reason for the estimated loss in revenue is due to the margin lost from elective inpatient services deferred as hospitals make room for more COVID-19 patients. Elective cases are the primary source of revenue for many hospitals, allowing them to take a loss on certain other services while remaining profitable.
This reality is troubling for all healthcare institutions, but is especially worrisome for rural hospitals that were already facing financial hardship before COVID-19. Recent research from the Chartis Center for Rural Health found that more than 450 rural hospitals are vulnerable to closure. This will be a serious issue for state legislators because if these hospitals close, not only will they will lose the ability to respond to future pandemics, they’ll also lose an economic anchor because businesses typically won’t locate in an area without a hospital.
The Answer
Digital transformation may boost waning margins. A Black Book survey from last year showed that most CFOs and senior finance leaders (86%) who automated key financial processes at their hospital or health system reported a “substantial” return on investment.
According to a recent Black Book Research Survey, all of the healthcare CFOs asked said they expect their organizations to experience a significant revenue decline this fiscal year, which will prompt them to adjust budgets and spending in 2020. However, only 12% of senior finance leaders said they will need to reduce or defer spending on digital transformations for their financial systems.
“It would seem most CFOs understand what the pandemic has proved is the need to speed up digital transformation initiatives to not only survive but to prosper in the new normal,” stated Doug Brown, president of Black Book Research. “For CFOs eager to expedite their organization’s digital transformation, the standardization and simplification leaders want in their back-end processes are allowing for less complicated, faster adoption despite the times.”
Since the pandemic, healthcare organizations have taken stock of their financial technology. In recent months, 84% of hospital finance leaders and 79% of leaders at large physician practices have confirmed they performed audits on the state of their digital transformation.
A majority (93%) of those respondents identified missing capabilities, redundant technology, or conflicting systems. Optimizing the digital transformation of financial systems, however, could drive rationalization and acquisitions, the survey stated.
About 81% of responding healthcare CFOs and senior leaders said the absolute and immediate need for technology implementation and optimization is essential for the long-term survival of their organization.
Despite these statistics, in 2019, only about 20% of healthcare CFOs and senior finance leaders said hospital financial automation has reached a quarter of their processes.
If you work in one of the majority of healthcare institutions that hasn’t fully automated manual revenue cycle processes, now is the time to start evaluating.
Let’s Take on the Revenue Cycle Together!
With deep industry expertise and technology delivered through person-to-person contact, only Quadax gives RCS professionals the freedom to consistently add value to their company. Our clients spend less time fixing problems and more time pursuing the opportunities that move their organizations forward. Going from what feels like spinning your wheels to driving excellence in your organization — that’s the real value in partnering with Quadax.
Contact me today for more information on how you can start maximizing your net collections NOW.
Ken Magness is a focused healthcare professional with more than a decade of experience in helping clients understand the true value of automation in the revenue cycle management process. As the Strategic Initiatives Leader at Quadax, Ken and his team are passionate about connecting with healthcare providers to help them create and leverage the appropriate technology solutions to optimize the revenue cycle process and improve the experience of their patients and staff.
Read how The Ohio State University Wexner Medical Center partnered with Quadax to process claims more quickly and effectively.
Last week, I sat down with Professor Thomas Campanella, Director of Health Care Economics at Baldwin Wallace University, and we recorded a webinar about the steps hospitals need to take to prepare for life after COVID-19. This blog is a synopsis of that conversation. (Please note, these views are Thomas Campanella’s and are simply excerpts from the recorded webinar. For our entire discussion, please view the free webinar.)
The traditional ‘hospital’ model must be reinvented.
The largest financier of healthcare is the government (through Medicare & Medicaid), followed by employers and consumers. The unique relationship between the consumer of healthcare services and the funding provider (i.e., government, employer) has driven a true lack of competition within the healthcare market and has allowed prices to continue to soar without any emphasis placed on the true value of services. This buyer/consumer relationship is unique to the healthcare industry.
As demand in outpatient centers and homecare services continue to increase, due to escalating healthcare costs, hospitals have the most to lose because of the traditional fee-for-service model and their current reliance on the federal government bailouts as a result of COVID-19. The financial packages that are part of the Financial Recovery effort will dramatically increase the already historic highs in the national deficit.
Hospitals cannot go back to “business as usual.” They need to focus on their high fixed costs which includes infrastructure, technology and employee salaries and determine the optimal combination of these factors to allow them to be successful in the new world of healthcare.
Who’s to blame for the trouble hospitals are in?
Hospitals aren’t at fault for the situation they are facing. The fault lies with the payers who historically were not demanding value in return for their healthcare investments. This doesn’t mean consumers because they have mostly been insulated from the cost implications of their healthcare purchases. The government and employers, as the top financiers, are to blame.
Medicare and Medicaid account for approximately 50% of our healthcare costs. Medicare payment methodologies, policies and regulations influence all of the other payers that service the employer and individual markets. These policies and regulations have helped stifle competition within communities in different ways, including paying hospital-based outpatient services and procedures at least twice as much as their local competitors.
A couple of other issues that have contributed to the challenges facing hospitals are the lack of malpractice reform and the lack of interoperability between electronic medical records (EHRs). Malpractice laws in conjunction with inflationary payment methodologies incent over-utilization in the name of “defensive medicine.” The lack of “real” interoperability between EHRs not only negatively impacts cost and quality, but it is an obstacle to a more competitive environment where patients could potentially seek care from multiple providers in the community.
How can hospitals get back on solid ground?
Ideally, Medicare needs to take the lead in transitioning our healthcare system to be more value-based. The focus has been on value-based care for quite some time, but the reality is that fee-for-service is still the primary engine fueling our healthcare system. Lobbyists present a big challenge because focusing on value and bending the cost curve will negatively impact the revenue of healthcare stakeholders.
However, as a result of COVID-19, tough decisions that need to be made may now be made. Medicare has been hit especially hard by this pandemic. It is likely that we will see more of an increased focus on transitioning to Medicare Advantage Plans so the government can pass along some of the financial risk to a third-party carrier. In turn, those plans will likely have added incentives to pass along to providers to ensure their profitability, which will support the transition to more value-based care.
More employers are starting to move from fully-insured health insurance plans to self-insured as a result of escalating healthcare costs. This trend will result in employers demanding much more value in their investments and will incentivize their employees to transition into a more prudent purchaser of healthcare services.
As Tom has noted in previous webinars and blogs, the trend of declining hospital inpatient admissions and increased acuity of the patient will escalate as a result of the pandemic. Outpatient settings and care in the home will increasingly be the location where healthcare services and procedures are provided. These care settings allow for more completion as payers are increasingly searching for value and enhanced cost/quality transparency.
Mostly because of the lobbying efforts at the state and national levels, hospitals have previously avoided the disruption in healthcare by still embracing the status quo. However, COVID-19 has disrupted healthcare and the effects will be lasting. Enlightened health systems will need to embrace this new reality rather than holding on to past business models and look to collaborative relationships in different forms. It may make sense for physicians to enter into collaborative relations with independent physician groups within the community. The new reality in the healthcare industry will create competitive challenges for integrated health systems that are already burdened with high fixed costs (e.g., personnel, infrastructure, technology).
Empowering physicians to lead the necessary change.
Physicians are the brightest of the bright and they can be change agents. This may be the opportune time for hospitals to provide selective physicians more administrative roles to help lead the design of the new business models needed to be successful in this new world of healthcare.
There is a potential for the utilization of Centers of Excellence (COE) for certain inpatient services. The packaging of these services to regional and national self-insured employers and commercial payers could create both additional revenue for the hospital as well as employment opportunities. In certain communities with regionally or nationally recognized hospitals, they could be more focused on treating the high-risk patients within their communities, as a result of COVID-19.
Finally, hospitals and hospital associations must play a leadership role in working with government at all levels to ensure that we, as a society, are prepared for similar types of catastrophic events as the COVID-19, because they will occur.
Up until now, in many communities we have seen individual organizations trying to solve big health problems, like social determinants of health, in a piecemeal way. The collaboration we’re seeing today has shown that maybe it’s better to work together, and hospitals should take a lead in this arena.
Collaboration will be the key to sustainable, successful and leading healthcare systems as we move into the world of the “new normal.”
Ken Magness is a focused healthcare professional with more than a decade of experience in helping clients understand the true value of automation in the revenue cycle management process. As the Strategic Initiatives Leader at Quadax, Ken and his team are passionate about connecting with healthcare providers to help them create and leverage the appropriate technology solutions to optimize the revenue cycle process and improve the experience of their patients and staff.
