The United States Senate this week proposed a bill that would constitute a major overhaul of the US healthcare system. It has some potential major implications for medical billing.
Our editorial mission does not include coverage of politics, we are not partisan, and take no stance on partisan politics, so we will not cover many aspects of the bill like the cost of health insurance for individuals, the percentage of their income required, who pays for it the health insurance, whether and how much are any potential tax cuts, or any other details of the plan that do not directly impact on outsourced revenue cycle management.
The Senate bill has some components that would impact on our clients’ revenue cycle management. They are in summary:
- Elimination of the personal mandate
- Reduction in Medicaid coverage
- Potential changes to required coverage
Elimination of Personal Mandate
The first and perhaps most significant change is the elimination of the personal mandate for health insurance. This provision requires patients to pay for health insurance, even if they do not need it. The likely impact of this is that there will be less insured individuals, which the CBO estimates will be approximately 7 million people. Less covered individuals means instead of doing medical insurance billing, you will be billing the patient directly for services rendered. As medical billing companies and providers know, while it is not easy to get money out of insurance companies, it is even harder to get it out of patients, with lower average net collection rates. Even when the CBO comes out with its estimates of the number of fewer patients that will likely be insured, it will be hard to estimate the potential reduction in revenue, but we know we can anticipate a drop for physicians who are billing for patients covered under ACA plans.
Most economists believe that there is a “downward spiral” associated with what is called adverse selection in health care. The theory goes that healthy individuals who are not mandated to purchase insurance opt out, which leaves a pool of overall sicker individuals left getting health insurance. In order to pay for more services for these on average sicker individuals, insurance companies raise rates to remaining people. As rates go up further, the healthiest individuals opt out of insurance and the cycle continues. Ultimately the sickest people are left and pay the highest rates, while a large portion of the population is not insured and pays cash or does not receive services.
Less Medicaid Patients
The second similar implication is that any reduction in Medicaid coverage to states will result in fewer patients covered by Medicaid plans. For any providers who accept Medicaid, this will result in fewer patients with insurance, which will result in less overall collections. Medicaid patients by definition have few financial resources, so they are very unlikely to be able to afford medical services on their own. The CBO now estimates that approximately 15 million fewer people will be insured by Medicaid under this bill.
Going to the Emergency Room
One significant implication for revenue cycle management is that as less people have insurance and a larger portion of the poor are left uninsured, they are likely to avoid preventative care and general healthcare services that are not acute and potentially wait until their condition is more severe. This results in a larger number of patients shifting their care from outpatient services to the emergency room. Less insured patients arriving in the emergency room means that emergency billing as a whole will do less insurance company billing and more patient billing. Emergency care is required by law even if the patient does not have the ability to pay. As noted earlier, patients are harder to get to pay provider bills, and patients eligible for Medicaid in particular are not able to pay. This means that the Senate bill is likely to push services from outpatient insured to emergency room uninsured care.
Additionally, since urgent care billing is not covered under EMTALA, meaning it is not required to be covered regardless of the patient’s ability to pay, we are likely to see less patients going to urgent care and shifting this to the emergency room. Most urgent care centers have gotten pretty adept at billing for cash patients and charge a simple flat case rate. If 22 million less people have insurance, that is going to impact heavily on urgent care billing, and most heavily on those located in middle and lower income areas.
Less Coverage of Health Care Services
The last notable aspect of the Senate bill is that there are likely to be less required services. This means that insurance companies may offer cheaper plans that offer less benefits for insurance. This would also leave more physicians billing patients instead of insurers for services, or patients avoiding care until it is is emergent and then visiting the ER.
While there are potentially tax cuts included in the Senate bill, they are spread across all affluent members of the U.S., while the reduction in payments for services for health care are concentrated among the health care providers like affluent physicians. In summary, there will be less Medicaid payments to physicians and other healthcare providers and more care is likely going to be pushed to the ER and be unreimbursed. This means that on the whole healthcare providers will likely on average be significantly worse off financially as a result of this bill since there will be less money paid through government payers to providers and any tax cuts will not offset this reduction in revenue.
About Apache Health
Apache Health is a revenue cycle management (RCM) analytics, benchmarking, and auditing company. The founders of Apache formerly ran a large RCM company that was acquired by a private equity group in a rollup. Apache’s predictive analytics will benchmark billing performance and project exactly how much more revenue you should earn from your existing volume of patients. Using many factors and a blend of artificial intelligence and specialty specific benchmarks, the model projects whether changing the billing process would improve collections for your particular mix of procedures and payers. Apache Health can help you evaluate whether to outsource the billing, determine which billing company to select to maximize performance, or track inhouse billing performance improvement over time. For more information contact: