The healthcare industry is undergoing an extraordinary transformation with the implementation of the Affordable Care Act and the Transition to ICD-10. Talk about "a double whammy"! Healthcare providers, practice managers, and billing staff should expect to see dramatic impacts to revenue, insurance reimbursement, and patient collections.
In fact, it is predicted that providers will face up to a 25 percent decline in revenue over the next five to ten years due to reductions in reimbursement in an ever changing healthcare marketplace. Existing fee for service models will continue to decrease as a percentage of practice revenue while value based payments become a dominate part of the "payer mix." Accountable care models will reimburse providers on their ability to achieve defined performance metrics. Revenue will be linked to clinical outcomes, quality, and cost efficiencies, and less dependent upon patient volumes.
Knowing what lies ahead and being prepared for these dramatic changes will help to mitigate these challenges and maximize the opportunities. Here are some things you can do - now-to improve cash flow and survive the impacts of "reform and transition."
Regarding ICD-10
The transition to ICD-10 is not optional! With a compliance deadline of Oct. 1, 2014, the new medical coding system will affect coding, reimbursement rates, and billing. Not preparing for and implementing the new ICD-10 codes will cause payment delays and denials. Proper planning, education, and training can limit disruptions in workflow and reimbursement. If your organization has not already developed an action plan for ICD-10, the time to start is now!
A good place to begin is by doing an assessment of your current clinical documentation. Properly captured documentation will ensure that the future ICD-10 code choice will be justified-medically necessary-and less likely to be rejected or denied by the payor!
(Providers will need documentation training and coders will likely need (depending on practice specialty) more extensive training on coding, anatomy, and physiology. This will take time. It is also important for everyone on your staff to get some baseline education and training in order to fully understand and effectively handle the transition to ICD-10.)
Another important step is to identify and assess ICD-10 transition impacts on other areas of the practice. Think of it this way: wherever an ICD-9 code currently intersects with the practice, there will be an impact-from reception to revenue! Evaluate order entry forms, super bills, referrals, insurance authorization, and pre-certification. Be prepared to dual code in both ICD-9 and ICD-10 as not all payors are required to accept only ICD-10.
Make a list of your vendors, including PM, EMR, Clearinghouse, and Payors. Find what they are doing to be ready to accept the new code sets. When will they be ready to test? Will there be additional charges for updates or software upgrades, and so on.
Post-implementation planning should also be considered. You'll want to have plans in place to accommodate the productivity and cash flow decreases that are expected while the industry learns to resolve the issues associated with ICD-10 billing-from increased denials to adjudication challenges.
"Front End" Solutions to Collections & Cash Flow
Over the past five years, deductibles, co-pays, and out of pocket expenses have risen. Expanded coverage under health reform will continue this trend as patients choose high deductibles and co-pays. Some patients may elect to go without insurance altogether.
In the last few years, the healthcare industry has seen a significant rise in self-pay and bad debt as patients have lost insurance or insurance coverage has shifted the cost to the patient.
16% of all covered employees were enrolled in a high-deductible plan, up from 13% the year before, and all indications pointed to an even faster adoption rate ahead.
Deductibles on traditional PPO plans are rising on non co-pay applicable services (labs, imaging, therapies, minor surgeries, etc.).
Given these trends, it is more critical than ever for healthcare providers to implement financial policies that more closely reflect the way consumers prefer to pay (or make payments). Optimizing opportunities at point of service is critically important-getting good patient information and explaining and clarifying responsibilities regarding out of pocket expenses. Good financial outcomes can be linked directly to the entire patient flow, beginning at pre- registration, scheduling, registration, treatment, claim submission, and, if needed, collection.
In order to enable and improve point of service collections (and reduce the potential for bad debt after service), front office staff should have the tools and training with which to do this. On-line payment portals, point of service payment estimators, and consumer driven mobile applications are some of the tools being implemented, very successfully, by providers nationwide.
While the impacts of healthcare reform and ICD-10 transition are significant, they can be neutralized with proper tools, education, and planning. Providers and staff should be "modern" in their thinking when it comes to the business of healthcare. Taking a proactive approach to collecting payments "up front" will be necessary in order to mitigate both bad debt and the decreases in cash flow that will invariably occur in the transition to ICD-10.
Jerry Bridge is a nationally recognized motivational speaker and educator for the healthcare industry. Over the past 25 years, Jerry has worked with thousands of providers, practice managers, and staff nationwide on a variety of practice management issues ranging from billing and collections to customer service and communication.
Jerry has written two books on these subjects. The latest is The ICD-10 Transition Planning Guide: Making a Successful Timely Transition.
To learn more, please visit healthcarecollections.net or contact Jerry directly: 760-918-6701 or Jerry@lifeworkseducation.com
