The average American family of four is getting another record increase for annual healthcare expenditures in 2013, and this trend can have a definitely negative impact on a hospital’s Days in AR, cash flow and write-offs.
Health Leaders Media reports that “the 2013 Milliman Medical Index (MMI) pegs the annual cost of PPO coverage at $22,030, a 6.3% (up $1,304 from the previous year). Of the total cost, that the family pays ranges from 37% to 42% while the employer accounts for between 58% and 63%, (which is comparable to their 2012 cost sharing)”. 1
Although the rate of cost increase has slowed, the actual cost to the average family can be overwhelming. To help put these figures somewhat in perspective…
|• The Total Cost ($22,030) (1) is almost as much as:
• The Employee Payroll Deduction ($5,728) (1)
• Additional Out-of-Pocket Cost ($2,423) for co-pays, coinsurance, and other cost sharing is:
with their employees by offering plans with higher co-payments and deductibles.
According to an employer survey report from PwC's Health Research Institute, 44% of companies are considering high-deductible health plans as the only benefit plan options they will offer…That shows us that high-deductible health plans are here to stay and really driving consumers toward building cost into their healthcare decisions. 1
Since patients are faced with an ever-increasing financial responsibility for their health care, the desire for easily understood pricing information is increasing. Transparency of a hospital’s charges can be beneficial, yet it often does not answer the patient’s primary concern: “What is my out-of-pocket expense?” Providers need to consistently communicate the patient’s prospective financial obligation before they receive medical services.
Typically the self-pay component may be only 5 percent to 6 percent of total net revenue, BUT it’s driving 16 percent to 17 percent of the outstanding accounts receivable, resulting in self-pay having a disproportional impact on the cash flows and financial performance of the facility. 8
Procuring and combining the information needed to produce an accurate estimate will come from a number of sources:
• Data from the Chargemaster
• A hospital’s own retail price and a contracted rate with a payer
• ligibility and benefit information for that particular patient
• Information relating to the actual treatment or procedure 8
Often, some of the processes involved in collecting this information, are not always readily available at the right time or incorporated into the workflow in a way that influences the financial estimate.
One approach proven effective in producing more accurate estimates has been centralization using the concept of a pre-service center. The center combines preregistration and insurance verification with a Medical Records Coder who verifies and clarifies physicians’ orders, makes certain that the correct ICD-9 and CPT codes are applied and the submissions are accompanied with supporting insurance verification.
“When patients have a fairly significant liability…contact them in advance.” 8
“Set expectations up front“…tell patients…”what you expect the outcome of the financial encounter to look like…create a high-integrity financial relationship with them.” 8
“When you…” follow up with clear and correct billing, you increase the likelihood of payment.” 8
Medical Recovery Services of Kansas City is uniquely positioned to assist you to:
1. Quickly & Accurately Estimate Patient Responsibility (with our proprietary Patient Estimator*)
2. Correct Faulty Pricing
3. Implement the effective use of Charge Master
4. Streamline the Revenue Cycle (reduce your days-in-AR )
5. Negotiate New, Competitive Managed Care Contracts
6. Prevent Revenue “Leakage” through:
a. Completion of Unworked or Unbilled Claims
b. Initiating Post Payment Claim Reviews
7. Conduct a detailed Business Process Review
8. Organize & Implement Employee Training
* In the current environment of higher deductible plans, the patient is now the bearer of a larger portion of the financial responsibility of the claim. Estimating the amount the patient will be required to pay, and requesting some or all of the estimated payment up front, allows the hospital to capture immediate cash flow and reduce the potential burden of collection following the payment of the claim by the insurance company. Our Patient Estimator tool allows the hospital to address this growing issue, generating an Estimate Report that can be provided to the patient prior to service.
We are committed to enhancing the financial viability of small community and critical access hospitals by providing a full range of services at exceptionally affordable rates. We sincerely believe the benefits of our services should outweigh the cost and be designed to maximize the positive financial impact for each hospital’s specific circumstances.
1. Margaret D. Tocknell, Health Leaders Media, June 18, 2013
2. homeguides.sfgate.co, May 28, 2013
3. truecar.com, May 28, 2013
4. www.adiamor.com July 17+, 2013
8. HFMA Roundtable - Patient Payment Responsibility:
Real-World Perspectives, May, 2009
For additional information, or to contact Medical Recovery Services, go to:
or call Donald Tapella at (816) 229-4887, ext.111