4 Strategies for Handling the Increase in Patient Responsibility

By Tracey L. Coyne, CPA, CHFP; Blake D. Evans, CHFP; and Daniel G. Gautschi
| 2/21/2017
Since the Affordable Care Act (ACA) was signed into law in 2010, several provisions of the act have led to a rise in uncompensated care and an increase in patient responsibility. Hospitals’ revenue cycles have experienced significant changes resulting from the ACA, including increased numbers of formerly uninsured patients who now have access to healthcare coverage, a rise in high-deductible health plans (HDHPs), a rise in uncompensated care in states that have chosen to not expand Medicaid, and adjustments based on the qualifications for Medicare Disproportionate Share Hospital (DSH) payments.

For hospitals that qualify for the Medicare DSH payment adjustment, it should be noted that calculations for the reimbursement for disproportionate share payments going forward will be based on uncompensated care. Historically, the formula for DSH payments was focused on the hospital’s Medicare Supplemental Security Income (SSI) ratio and Medicaid ratio. Under the ACA, 75 percent of the formula now is based on the hospital’s share of uncompensated care compared to all hospitals nationally.

While the impacts of the ACA are unavoidable, organizations can take steps to mitigate financial risks caused by the increase in patient responsibility. Here are four revenue cycle strategies for handling the increase in patient responsibility.

1. Be Prepared

As the industry continues to see a rise in patient responsibility, hospitals must prepare to address potential challenges at every step in the revenue cycle. Many organizations today are investing in patient access process improvement, including ramping up registration accuracy, point-of-service (POS) collection programs, and financial screening to decrease denials caused by front-end revenue cycle issues and to reduce uncompensated care.

Revenue cycle and operations teams also should work side by side with financial counseling staff. At any given point, an organization should have a good understanding of how many uninsured patients have come through the organization and, of those patients, how many were screened by a financial counselor to assist with identifying a payer source. Healthcare organizations should consider having financial counseling available at all significant access points to help circumvent uncollected payments. Assessing the organization’s overall vendor management strategy and process is also necessary to identify whether the right technologies are in place to support key revenue cycle functions.

2. Use the Right Data

Having good data – and making good use of that data – can aid in identifying sources of uncompensated care. Whether the organization analyzes data internally or invests in outside analytic resources to assist with reviewing data, it should have access to insightful information and the ability to perform root cause analyses on reported metrics.

Analyzing data can help hospitals identify sources of revenue leakage. For example, reviewing bad-debt files can reveal if there is a recurrent bill amount that frequently gets transferred to bad debt. This could indicate that a certain service is not covered by an insurance plan and is ending up in the patient responsibility category. In this case, the organization may want to incorporate that type of service into its POS collection program.

Good data also can help the organization identify where it may need to provide more financial counseling at various touch points in the revenue cycle. For example, the data can be used to identify repeat bad-debt offenders. When those patients whose accounts frequently end up in bad debt are identified, they can be flagged in the hospital’s system – which can trigger registration staff to have financial counseling conversations with the patients before they receive service.

3. Consider Presumptive Medicaid and Charity Eligibility

Presumptive eligibility is a process that allows qualified hospitals and other entities to determine if an individual is eligible for short-term Medicaid. The presumptive Medicaid coverage option can speed up eligibility processes – and potentially speed up cash flow – for providers. However, while it has its advantages, presumptive Medicaid is a complex program. Because each state has different rules and requirements, it’s important for relevant hospital staff to be familiar with the state website’s content. On most state websites, hospital staff can identify the requirements of the presumptive eligibility program and check eligibility for their patients.

Hospitals also can use propensity-to-pay technology to help determine patients’ ability to pay and to qualify them automatically for the organization’s charity program. Currently, in order to demonstrate that a patient qualifies for charity, hospitals must have documentation that shows a patient is unable to pay and therefore meets indigent guidelines. Because documentation is needed, it’s important for revenue cycle staff to consult with the organization’s finance and reimbursement teams to make sure these patients are being recorded correctly on the cost report.

4. Focus on Consumerism

Today’s patients have a choice of where they seek healthcare. Hospitals, therefore, should be focusing on creating a culture of customer service at every point of the revenue cycle. Following are some strategies for creating a customer service culture:

  • Make sure you have the right people in place to handle the patient population, from prescheduling and preregistration to insurance verification and registration.
  • For outside vendors such as bad-debt agencies and early-out vendors, provide scripts to use so they are properly representing the message and voice of the organization when communicating with patients.
  • Give patients several payment options, especially as paperless billing continues to rise.

Navigating the New Normal

As the market continues to see an increase in patient responsibility, HDHPs, and uncompensated care, healthcare organizations must address these issues proactively to preserve their financial well-being despite the challenges that can arise. Four strategies can assist in mitigating financial risk and will go a long way toward helping organizations navigate the new post-ACA normal:

  • Be ready for change.
  • Make good use of data.
  • Consider presumptive eligibility.
  • Build a customer-focused culture.

Contact us

Tracey Coyne
Tracey Coyne
Blake Evans
Daniel Gautschi
Principal, Healthcare Consulting Leader