Unpaid Medical Bills and Health Care Initiatives Increasing Demand for ARM Help

A recent survey of hospital financial executives showed that the vast majority of medical business leaders believe implementing information technology and outsourcing more of their receivables management is the best strategy to reduce their administrative costs. Even better news for revenue cycle managers is that most health care providers surveyed expect to do so in the coming year.  

Hospital financial executives are turning to outside help because of the growing number of patients who are unable to pay their medical bills, according to a survey by Louisville-based revenue cycle management firm MedAssist, Inc. And with the national unemployment rate near 10 percent, these executives say securing payments from uninsured or underinsured patients is their greatest challenge.

Hospitals executives have had to deal with lower revenues during tough economic times before.  But many see the escalating costs of health care and anticipated changes from health care reform as a challenge that will require expertise offered by ARM professionals, said Brenda Snow, MedAssist’s executive vice president of strategic planning and analysis.

“Right now providers are seeing things as a threat of the unknown,” she said. “Many in healthcare are just seeking answers to what’s going on.”

HFMA Spokesman Richard Gundling told insideARM that while health care providers are hopeful that health care reform will secure coverage for all Americans, they fear it will bring lower reimbursements from public and private insurers.

“They are not opposed to new legislation, but they fear the details,” Gundling said. “Greater coverage for everyone is good.  But if we cover everyone and pay below cost, that’s a big challenge for hospitals.”

To help mitigate the impact of lower reimbursements in the future, hospitals and the Obama Administration Wednesday announced a deal for hospitals to accept $155 billion less in Medicare and Medicaid payments over the next 10 years to help fund healthcare reform. In exchange hospitals were promised that if legislation includes a public health insurance plan, it will reimburse hospitals at rates higher than what Medicare and Medicaid pays.

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Regardless of whether federal lawmakers pass health care reform legislation, lower payments remain a possibility because public and private insurers are beginning to tie reimbursement to patient care outcomes.

“Medicare is driving ‘no pay for never events’ and requiring quality reporting too,” said Lauren Coste, a Fitch Ratings director covering For-Profit Health Care Facilities. “(Insurers) are starting down that road and that’s clearly where they want to end up. It won’t be overnight, but it will happen eventually and gradually.”

That trend has more health care providers focusing their attention on prevention and quality programs that will position them for higher reimbursements, Coste said. At the same time, falling revenue and staff cuts have left many hospitals with inadequate resources to ensure claims are properly submitted and received in a timely manner, creating new revenue cycle opportunities for ARM professionals, Snow said.

“Just to be able to get paid is going to become harder,” Snow said.   

Falling revenues is why more than 80 percent of survey respondents say they’ll also turn to technology to help reduce administrative costs.

Jim Lacy, CFO and general counsel of ZirMed, a Louisville-based revenue cycle firm, said the company is benefitting from a renewed focus by health care providers to use technology to become more efficient.  He said technology firms, however, should not expect hospitals to invest in software they can’t afford or that does not address their industry specific needs.

“Many hospitals have made the point that there is no (capital expenditure) budget this year,” he said, adding that hospitals may want everything, but will have to make a commitment to find solutions that most fit their needs. Likewise, hospitals must realize to maximize revenue they need to utilize the same tools regular retail merchants use to collect payment, including self check-out terminals and on-line bill payment options.

“Most hospitals don’t give you the ability to pay online,” he said. “With more high deductible accounts most patients have to pay with a credit card for their Health Savings Account to cover the bill.”