West Reading, Pa.-based Tower Health reduced charges by an average of 30 percent at nearly all of its hospitals after reviewing a third-party report on costs at other regional hospitals, according to WFMZ.
The cost reductions affect a wide array of services, procedures, tests and medications at Tower’s hospitals in Brandywine, Chestunt Chestnut Hill, Jennersville, Phoenixville and Pottstown, all in Pennsylvania. They went into effect Dec. 1.
The prices at Reading (Pa.) Hospital will not change, as the independent report found that its charges were already in line with local competitors.
Highlighting a key implication of the rise in high-deductible health plans, both on the ACA exchanges and in employer-sponsored insurance, the article describes a question now commonly faced by doctors and hospitals—how best to collect their patients’ portion of the fees they charge? As one Texas doctor tells Bloomberg, reflecting the experience of the Maldonados from the other side of the equation, “If [patients] have to decide if they’re going to pay their rent or the rest of our bill, they’re definitely paying their rent.” He reports that the number of people dodging his calls to discuss payment has increased “tremendously” since the passage of the ACA. Another Texas doctor reports that his small practice had to add an additional full-time staff member just to collect money owed by patients, adding further overhead to his practice’s costs and making it more likely that he, like many other doctors, will eventually seek shelter by being employed by a larger delivery organization. That trend, as has been repeatedly shown, further increases the cost of care, exacerbating the increase in insurance costs for families like the Maldonados. This Gordian knot of increasing costs, rising deductibles, and growing premiums has left us with a healthcare system that’s forcing difficult decisions at every turn, for patients and providers.
Physicians, hospitals and medical labs are grappling with the rise in high-deductible insurance.
Doctors, hospitals and medical labs used to be concerned about patients who didn’t have insurance not paying their bills. Now they’re scrambling to get paid by the ones who do have insurance.
For more than a decade, insurers and employers have been shifting the cost of care onto their workers and customers, tamping down premiums by raising patients’ out-of-pocket costs. Last year, almost half of privately insured Americans under age 65 had annual deductibles ranging from $1,300 to as high as $6,550, government data show.
Now, instead of getting paid by insurance companies on a predictable schedule, health-care providers have to engage in an awkward dance. One moment they’re removing a pre-cancerous skin mole. The next, they’re haranguing patients to pay what’s become a growing portion of the total medical bill.
“It’s harder to collect from the patient than it is from the insurance,” said Amy Derick, a doctor who heads a dermatology practice outside Chicago. “If the plans change to a higher deductible, it’s harder to get the patients to pay.”
Independent physicians cited reimbursement pressures as their biggest concern for staying in business, according to a report by Accenture Plc in 2015.
“If they have to decide if they’re going to pay their rent or the rest of our bill, they’re definitely paying their rent,” said Gerald “Ray” Callas, president of the Texas Society of Anesthesiologists, whose Beaumont, Texas, practice treats about 40,000 people annually. “We try to work with the patient, but on the other hand, we can’t do it for free because we still maintain a small business.”
In 2016, Callas introduced payment options that allow patients with expensive plans to pay a portion of the bill upfront or on a monthly basis over several years. Even so, Callas said the number of people avoiding his calls after surgery has increased “tremendously” each year since the Affordable Care Act passed in 2010.
Derick instituted a “time-out” option a few years back that gives patients the billing codes before a procedure, allowing them to call their insurance companies for estimates. Even with the program, collection rates are slower, especially at the beginning of the year when insurance plan deductibles reset.
Even large medical companies with national operations are facing the problem. Quest Diagnostics Inc., the lab-testing giant, said 20 percent of services billed to patients in the third quarter of this year went unpaid, costing the company about $80 million in lost revenue.
“We certainly have a high bad-debt rate for the uninsured,” Chief Financial Officer Mark Guinan said in a telephone interview. “But really the biggest driver is people with insurance. It’s their coinsurance and their high deductibles, and they don’t always pay their bills.”
Another testing company, Laboratory Corp. of America Holdings, reported its first year-over-year uptick in unpaid bills in the first quarter of 2016. At the time, Chief Executive Officer David King said high-deductible plans, higher copays and greater incidences of non-covered services led to more dollars being shifted to patients. LabCorp declined requests for comment.
Northwell Healthcare Inc., a network of more than 700 hospitals and outpatient facilities, lost $106.9 million to unpaid services in 2015. Others have reported the same: Acute-care and critical-access hospitals reported$55.9 billion in bad debt for 2015, according to data compiled by the American Hospital Directory Inc.
“High-deductible plans have had a very big impact,” said Richard Miller, Northwell’s chief business strategy officer.
When it comes to reimbursement, a common denominator across the health-care industry is the archaic process through which bills are processed — a web of medical records, billing systems, health insurers and contractors.
High deductibles only add to the red tape. Providers don’t have real-time, fully accurate information on patient deductibles, which fluctuate based on how much has already been paid. That forces providers to constantly reach out to insurance companies for estimates.
Tarek Fakhouri, a Texas surgeon specializing in skin cancer, had to hire an additional staff member just to reason through bills with patients and their insurers, a big expense for an office of six or seven employees. About 10 percent of Fakhouri’s patients need payment plans, delay their skin-cancer surgeries until they’ve met their deductibles, or have to choose an alternative treatment.
According to a study earlier this year by the Journal of American Medical Association, primary-care physicians at academic health-care systems lose about 15 percent of their revenue to billing activities like calling insurance companies for estimates.
“It’s an unnecessary added cost to the health-care system to have to hire staff just to sit there on hold with insurance companies to find out what a patient’s deductible status is,” said Fakhouri.
Callas, Derick, and Fakhouri said they all know physicians who have left private practice altogether, some for the sole purpose of ending their dual roles as bill collectors. According to a study by the American Medical Association, less than half of doctors were self-employed as of 2016 — the lowest total ever. Many left their own practices in favor of hospitals and large physician groups with more resources.
To cope with the challenge, labs and hospitals are investing millions in programs designed to help patients understand what they owe at the point of care. Northwell has been implementing call centers and facilities where patients can ask questions about their bills.
“There’s a burden on both sides,” said Callas. “But health-care providers get caught in the middle.”
Health systems preferred Optum360 for end-to-end healthcare revenue cycle management software and outsourcing, while physician practices favored Waystar.
– The eighth annual revenue cycle management technology and outsourcing solutions survey from Black Book recently uncovered the top client-rated healthcare revenue cycle management vendors for health systems, hospitals, and physician practices.
The market research company polled nearly 4,500 hospital and health system CFOs, VPs of Finance and Revenue Cycle Management (RCM), Controllers, Business Officer Managers, and other financial staff. Another 3,660 physician office business managers and 941 staff from outpatient, alternative care, clinics, IDN physician practices, and ancillary facilities also participated in the 2018 ratings.
The survey showed that providers are investing in healthcare revenue cycle management solutions as health system margins shrink to less than three percent nationwide and providers in all settings transition away from fee-for-service.
“The latest wave of challenges accompanying the shift to value-based care find most providers navigating through empowering virtual health, initiating highly patient positive experiences and sinking margins,” stated Black Book’s Managing Partner Doug Brown. “Revenue cycle management is now the most pressing strategic focus in health systems nationwide with system transformation vendors, solutions optimization consultants and RCM outsourcing firms in huge demand.”
Based on 18 indicators of client experience, loyalty, and customer satisfaction, the survey revealed the top-rated RCM solutions for various parts across the entire healthcare revenue cycle.
In terms of end-to-end revenue cycle management software, health systems and large hospital chains preferred Optum360, followed by Waystar, Change Healthcare, Recondo, and Conifer.
Health systems named Optum360 as their top end-to-end revenue cycle management software solution for the second year in a row.
Waystar and Optum360 also took top spots for hospitals with 101 to 200 beds, while small hospitals favored the RCM software from Trubridge and large hospitals ranked Change Healthcare as number one.
Physician practices and groups rated Waystar as their top RCM software vendor, followed by Change Healthcare, Allscripts, Cerner RevWorks, and athenaCollect.
Optum360 was also the highest ranked revenue cycle management outsourcing solution for health systems and large hospital chains shifting their financial and business functions outside of their organizations.
However, top revenue cycle outsourcing solutions was a mixed bag for standalone hospitals and physician practices.
Small hospitals identified Trubridge as their top outsourcing solution, while medium-sized hospitals preferred Gebbs and large hospitals liked Cognizant Trizetto.
R1 RCM was the highest rated end-to-end RCM outsourcing solution among physician practices and groups.
Additionally, the survey found the highest ranked vendors for other parts of the healthcare revenue cycle, including patient payments, provider contract management, and claims and denials management. Notable rankings included:
Patient payment solutions: InstaMed
Complex claims solutions: Cognizant Bolder
Patient access solutions: Recondo Technology
Hospital claims and denials management: Experian Health
RCM optimization consultants: Hayes Management Consulting
RCM business intelligence and decision support: Dimension Insight
Provider organizations of all sizes are seeking healthcare revenue cycle management solutions to optimize all parts of their financial and business processes.
Revenue cycle management optimization was a top priority for hospitals, according to a September 2017 Black Book survey. Almost three-quarters of struggling hospitals prioritized revenue cycle management over other initiatives key to the value-based reimbursement transition, including population health, data analytics, and patient engagement.
The hospital and physician practice leaders surveyed said they planned to allocate 2018 capital resources for revenue cycle management upgrades, including dashboards, data analytics, and business intelligence solutions.
Revenue cycle management optimization investments are likely to continue well into the near future as provider organizations face more competition, greater patient financial responsibility, and a shifting healthcare environment.
“Healthcare providers will have no choice but to evaluate and optimize their solutions end-to-end in a future state that leverages analytics and enhanced connectivity with payers, all keeping pace with the advances in healthcare technology,” Black Book’s Brown stated in 2017.
Cerner’s new bookings fell short of expectations in the third quarter of 2018, leading to lower than expected revenue for the period. While sales of licensed software grew 43% from a year ago to $1.59 billion, the EHR vendor didn’t match the second quarter’s $1.78 billion.
Third quarter revenue totaled $1.34 billion, up 5% from the same period the prior year.
The earnings report comes as Cerner is under fire again for its performance on a Department of Defense contract. According to Politico, independent investigators for the Pentagon gave the company poor marks on its MHS Genesis EHR implementation, calling the system “not effective and not suitable” and “not interoperable.” The low assessment echoes an April DOD report.
Cerner attributed the lower-than-expected software bookings to timing and pointed to a strong pipeline of potential business hookups. Technology resales were also somewhat off in the third quarter.
“There isn’t anything that’s forcing clients to go get deals done,” Cerner CFO Marc Naughton said during a Thursday earnings call. “The market is still active. We just didn’t get much of it in Q3.”
Cerner also said it is not yet seeing the full impact of government contracts. Nonetheless, officials called it a strong quarter with solid results.
“We continue to have good contributions from our key growth areas” of population health, revenue cycle management and health IT outsourcing, said Chief Client Officer John Peterzalek, who replaces departing President Zane Burke starting next week.
“As we look at our portfolio and our investment plans, there’s some transformation of our own that we need to do to make sure we’re positioned well for the opportunities in front of us,” said Cerner Chairman and CEO Brent Shafer. “Part of that work is creating an operating model that is really designed to support innovation at scale. We are at scale now and want to continue to scale.”
Meanwhile, Cerner faces fresh competition from commercial health giant UnitedHealth, which is expanding into EHRs with a fully integrated system in 2019. During a recent earnings call, UnitedHealth CEO David Wichmann said the company will launch a “fully individualized, fully portable” EHR early next year leveraged off its Rally mobile wellness platform.
When we think of healthcare and hospitals, we primarily think of the patient experience as it relates to individual health and wellness. However, another important part of the patient experience involves the finance and billing departments of healthcare organizations. The moment a patient checks in for an appointment, they enter into this system of payment and processes and the journey ends when all claims and patient payments have been received either from the patient or from their insurance company. This sounds like a simple, linear process, but it’s much more complicated than that. To help organize these financial processes, organizations rely on healthcare revenue cycle management and software to process this constant influx of important data.
As the healthcare industry continuously changes, revenue cycle management policies and software are changing with it. Healthcare IT Leaders Revenue Cycle Lead, Larry Todd, CPA, discusses the changes happening in the industry and the trends to watch in 2018 with revenue cycle management.
Mergers driving new implementations
Healthcare systems are getting bigger as more organizations are merging. Many legacy systems are beginning to sunset, and there is a need for organizations to implement a new system to support the growth of the organization. “It’s important for organizations to consider how they will sunset their legacy system and embrace the new system during a revenue cycle implementation,” says Todd. “Organizations need to take a step back before the implementation to consider how to build a holistic system. Without proper integrations, many organizations will be challenged to manage their reimbursement processes.”
Organizations seek to improve denial and reimbursement processes
Claim denials and documentation to support appeals are areas where the revenue cycle marketplace continues to struggle, says Todd. “Organizations are seeking innovative ways to improve these processes and reduce denial rates, through either third-party systems, or, if possible, within the host system.”
CFOs must stay engaged in implementations
“Any implementation will affect the revenue of the organization so it’s very important for CFOs to be involved in the implementation project and to be informed of key parts of the project that could put the organization and its revenue at risk,” says Todd.
As a former CFO and trained accountant, Todd says it’s a mistake for CFOs to disengage once an implementation is underway. “These are highly technical projects, so there is a tendency to hand over the reins to IT or the software vendor, but financial executives need to stay engaged throughout the project, including weekly implementation status updates.”
Clients should form a revenue cycle action team that includes the CFO and puts all of the revenue cycle stakeholders at the table, including clinicians, says Todd. Having the CFO involved in this process ensures critical executive oversight regarding decisions that impact AR and Cash.
User training and adoption are critical
As healthcare organizations transition from a legacy system to a new system, they need to consider how they will handle the change management for their staff. “Some employees have been using these systems for more than 10 years. Properly training employees on the new system is a top concern for executives and managers,” says Todd.
Organizations will rely on outside expertise for implementations and integrations
As organizations integrate their new system and implement changes, a key recipe for success is to hire experts who understand the technical and operational aspects of the the software and organizational processes. “It’s very valuable to work with a consulting firm that employs real consultants – people who have worked in operations for years and truly understand the unique challenges of implementing revenue cycle solutions” says Todd. “At Healthcare IT Leaders, we all have unique perspectives and experiences that we bring to the table thanks to this approach.”
Whistleblower lawsuits had alleged that the Florida-based wound care specialist knowingly filed bogus claims to Medicare for services that weren’t needed.
Healogics, Inc. will pay up to $22.51 million to settle whistleblower allegations that billed Medicare for medically unnecessary and unreasonable hyperbaric oxygen therapy, the Department of Justice said.
Jacksonville, FL-based Healogics manages nearly 700 hospital-based wound care centers across the nation.
The settlement resolves allegations that from 2010 through 2015, Healogics knowingly submitted false claims to Medicare for medically unnecessary or unreasonable HBO therapy, DOJ said.
Healogics will pay $17.5 million, plus an additional $5 million if certain financial contingencies occur within the next five years, for a total potential payment of up to $22.51 million. The company has also has entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General.
“When greed is the primary factor in performing medically unnecessary health care procedures on Medicare beneficiaries, both patient well-being and taxpayer funds are compromised,” said HHS OIG Special Agent in Charge Shimon R. Richmond.
The settlement came as the result of whistleblower lawsuits filed by a former executive at Healogics, and a separate suit filed by two doctors and a former program director who worked at Healogics-affiliated wound care centers. The four whistleblowers are expected to share $4.2 million of the settlement.