Medicare for All benchmarking data

Report examines potential impact of “Medicare for All” on hospital revenue

Crowe hospital data analysis estimates projected reimbursement rates

7/23/2019
Medicare for All benchmarking data

CHICAGO (July 23, 2019) – Medicare for All has dominated headlines since the 2016 presidential race and is gearing up to be another hot-button topic in the 2020 Democratic primary and presidential election. Using net revenue data gathered by the Crowe Revenue Cycle Analytics (Crowe RCA) software, a Crowe report, “Who Gains From Medicare for All? Not Hospitals,” helps hospital and health system leaders understand the potential impact of such legislation on hospital revenue.

Crowe is a public accounting, consulting and technology firm with offices around the world. The Crowe RCA solution captures every patient financial transaction in more than 1,000 hospitals nationwide. In this report, Crowe analyzed a portfolio spanning 45 states, including 605 hospitals within Medicaid expansion states and 409 hospitals in nonexpansion states. The metrics measured include accounts receivable (AR), denials, bad debt, credit balance and cash to expected pay. Crowe used net revenue data to understand the impact of “Medicare-only” reimbursement.

“Medicare for All is often praised for positive changes it might bring about if enacted, such as improved access to care, simplicity of administrative activities and reduced spending,” said Brian Sanderson, managing principal of healthcare services at Crowe. “Politics aside, we wanted to examine the impact such legislation would have purely on hospitals’ top-line revenue, which hospitals rely on within an already razor-thin operating margin.”

Currently, many hospitals and health systems rely on a strong, well-negotiated managed care payer mix to cover the revenue shortages from other payer groupings. According to the Crowe data, the equalization of reimbursement to Medicare-only rates would result in:

  • Average outpatient reimbursement would drop $143 per case for hospital-based services.
  • Average inpatient reimbursement would drop by less than 1%, due to many hospitals already adopting a Medicare-oriented payment methodology such as diagnosis-related group (DRG) reimbursement.
  • Ninety percent of hospitals would experience a decrease in net revenue.
  • Across all U.S. hospitals, hospital reimbursement would decrease by approximately $200 billion.
  • True accounts receivable would decrease from the 2018 average of 53.5 days to 37.6 days.
  • Revenue cycle costs, or “cost to collect”, likely would decrease from approximately 3.5% of net revenue to approximately 2% or less, as fewer variations in coverage, benefit plans and payer interactions would require fewer personnel and unique technologies.

“Eliminating some of the administrative complexities of today’s healthcare system is a common goal, but the cost savings of simplicity do not appear to offset the net revenue decreases of a Medicare for All environment,” Sanderson said. “Despite some political support for a broad one-size-fits-all approach, it is more likely that incremental change will continue to nip at the margins of health systems. To combat this, even competing health systems could collaborate with each other on creating the most efficient finance and revenue cycle operations.”

To download a copy of the report, please visit www.crowe.com/insights/asset/w/who-gains-from-medicare-for-all-not-hospitals.

About Crowe Revenue Cycle Analytics (Crowe RCA) benchmarking data
More than 1,000 U.S. hospitals use the Crowe RCA solution to capture every patient transaction for purposes of automating hindsight, accounts receivable valuation and net revenue analyses. The benchmarking database spans 45 states and comprises 605 hospitals within Medicaid expansion states and 409 hospitals in nonexpansion states as of 2018.

About Crowe
Crowe LLP (www.crowe.com) is a public accounting, consulting and technology firm with offices around the world. Crowe uses its deep industry expertise to provide audit services to public and private entities. The firm and its subsidiaries also help clients make smart decisions that lead to lasting value with its tax, advisory and consulting services. Crowe is recognized by many organizations as one of the best places to work in the U.S. As an independent member of Crowe Global, one of the largest global accounting networks in the world, Crowe serves clients worldwide. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.

 

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