Kaiser Health News has an interesting article on safety net hospitals’ revenue cycles improving because of Obamacare:
At Seattle’s largest safety-net hospital, the proportion of uninsured patients fell from 12 percent last year to an unprecedented low of 2 percent this spring—a drop expected to boost Harborview Medical Center’s revenue by $20 million this year…
About 80 percent of the system’s new Medicaid patients had previously been seen by the hospital as uninsured patients, she said. Their enrollment in coverage means the hospital is paid more for their care and is able to direct them to outpatient services and preventive care.
She said that UAMS has also seen a drop in ER visits by uninsured patients — from 6,000 visits in first three months of 2013 to about 4,000 visits in first three months of this year, calling the decline “significant.”
Providers have their preferences as to what patients and insurance scenarios they see. Uninsured individuals have always been the least preferred by both the treatment/clinical side and the finance side for a multitude of reasons. Uninsured patients are more likely to present themselves with more complicated cases as they have been trying to avoid costly treatment for as long as possible so managable conditions tend to fester to crisis conditions and since cost is a massive barrier to follow-up care, uninsured patients tend to be more likely to avoid the full regimen of follow-up care. The finance department wants to avoid uninsured patients because they tend to have more complex and expensive interactions and they have the lowest expected value of payment.
Providers have clear account receivable preferences as to what patients they treat.
The ideal patient from an account recievables perspective pays a very high percentage of the billed charge with a high degree of certainty and a short turn around time and minimal haggling. Excluding celebrity rehab centers and $40,000/year per person coverage, there are few payers who meet this provider ideal. Everything else is a trade-off.
Large group, commercial insurers that offer low deductible plans are often the meat and potatoes of a practices’ revenue cycle. Low deductible means the provider is not chasing members for money after the service has been rendered, and commercial providers tend to pay fairly high reimbursement levels. Commercial providers can vary in the speed in turning around a claim from a week or less to several months. They are more likely to fuck around with a provider’s revenue cycle to eat float and manage their cash flow rather than optimize claims payment to minimize provider float. Medicare Advantage members with low deductible plans will also be “prime” members from an accounts receivable perspective.
Individuals with Medicare Fee for Service, especially beneficiaries with Medicare supplemental policies, often serve as the base of a practice. Medicare pays roughly the average cost of a procedure, so the reimbursement rate is fairly low, and the paperwork constraints are fairly high. Traditional fee for service Medicare will pay clean claims quickly. However, Medicare does tend to reject a high proportion of initial claims because there was either a keying issue, or Medicare won’t pay for certain codes. Supplmental policies, especially from major carriers where the providers know how to file clean claims, eliminate the deductible uncertainty and lag time. CHIP patients in most states will also be similar from an AR perspective to Medicare patients — claims pay quickly at a medium level with some hoops to jump through.
People with commercial insurance with high coinsurance but low deductibles are a twist. The provider knows that they’ll see 60% or 70% or 80% of their contracted rate charge fairly quickly from the insurance company. However, the remaining fraction will have some uncertainty attached as to the amount paid and how quickly it is paid. An individual hit with a cancer diagnosis with a 20% co-insurance and a $5,000 annual out of pocket limit will easily run up $25,000 in contracted rate charges in the first round of treatment. They might have 5G lying around, they might not. They’ll be in a similar situation as people with high deductibles who are described below.
People with commercial insurance but very high deductibles will see their contracted rates be fairly high. A provider has a low probability of seeing the entire deductible in a single lump sum within 30 days of service. The more likely scenario is that an HSA or FSA is emptied out to pay a significant chunk of the contracted rate lump sum, and then either a credit card payment is made (good for the provider, bad public policy) or $45/month for the next 5 years is used to pay the lump sum. That “works” as long as the family with a high deductible plan has no future major medical need. And since major medical needs are non-independent, non-random events, this is not a good bet. This calculation disapears when an individual goes over the deductible amount. At that point, the calculation for the marginal dollar from an AR perspective reverts to major commercial medical carrier — high payments quickly made.
The previous two scenarios – commercial insurance with high deductibles or out of pocket maximums driven by co-insurance — are most of the Exchange policies sold. Bronze plans and catastrophic plans are very high deductible plans. Silver without cost-sharing assistance is a medium to high deductible plans. Platinum, Gold and cost-sharing Silvers are closer in behavior to good commercial insurance in the first scenario. Since most people on the Exchange qualify for some subsidies, the probability of people having a full deductible in cash lying around is fairly low. This can explain some of the narrowness of networks as providers may not be willing to take either the lower than commercial but higher than Medicare contracted rates OR they are worried about their ability to get quickly paid in full so they opt out of some networks that are designed to be low premium cost but high out of pocket plans. Small group employer sponsored insurance with high deductibles will also fall into this bucket.
After this, Medicaid will pay quickly but at a low rate. Pre-PPACA, Medicaid paid significantly less than Medicare. Medicaid tends to pay the marginal cost of a service. Post-PPACA, there is a two year bridge fund to pay primary care Medicaid providers Medicare rates, but that is due to expire at the end of this year. I’m flipping a coin as to whether or not it will be extended. As a policy arguement, paying Medicaid PCPs more has signifcantly improved access and care, but it helps poor people and it is part of Obamacare, so I don’t see 218 votes in the House for an extension. Docs and providers will fill out their roster with Medicaid patients, or use Medicaid as a means of building out a practice when they are fresh out of Med School, but a practice that exclusively sees Medicaid patients will be in constant financial stress.
Finally, there are uninsured patients. The AR perspective is to avoid these patients as they are least likely to pay in full or even to Medicare rates in a short time period. There will always be exceptions, but as a class, the uninsured makes the finance people queasy.
As we saw at the start of this post, the uninsured rate, especially in Medicaid expansion states, is rapidly collapsing which will make the medical finance people happier (plus the side effect of improving material well-being and reducing stress and all of that other very good stuff that accrues to the person who is getting needed care at a needed time and place)