Many providers wonder what effect PPACA will have on their practice revenue. For those who don’t have time to read and digest the 1000+ pages of bureaucratic rhetoric, here are some of the basics.
Expect lower and slower insurance reimbursements:
The first thing to understand about PPACA is that reimbursement rates and payment timing will now be under government control. The entire health care industry will be under the supervision of the United States Secretary of Health and Human Services (HHS).
One of the tasks assigned to HHS is to order the equalization and standardization of the fees charged for all medical procedures. To put this in context, imagine a world where, regardless of the insurance company, every procedure performed would come with a price for government employees. Providers who have had to deal with reimbursement rates for Medicare and Medicaid claims understand this nightmare.
The reimbursement rates on which a practice has structured its price and income expectations are subject to immediate and even retroactive change. PPACA is expected to reduce insurance revenue receipts by an average of 10-25%.
Expect an increase in the patient’s A/R:
The second thing to expect from PPACA is an average increase in patient A/Rs of 27.5%. This is important because most practices do not have an effective and/or efficient way to deal with patient A/R recovery. Nationwide, carrying out patient balances is the weakest link in the medical revenue cycle. This is mainly due to a lack of resources, experience and technology.
When ObamaCare’s prototype program, Romney Care, was introduced in MA several years ago, the subsequent increase in patient accounts receivable (30% on average) effectively broke the revenue cycle for most medical providers. This was because a significant number of patients chose to “opt out” of coverage and instead pay the penalty and move to a self-pay status.
For the first time, recoveries from the patient’s portion of A/R liability became a priority focus. The lack of solutions available in the industry became apparent. In reviewing the options, many providers found that (a) most early-exit and collection agency “pre-collection” programs were unacceptable for practices focused on maintaining a patient-friendly community image , and (b) internal patient collections proved to be very costly, difficult to implement effectively, and did not produce the desired results.
Because PPACA is changing the way medical providers earn revenue in the new regulatory environment, using 21st century revenue cycle solutions will become a necessity for sustained profitability.
