How Your Finance Team Can Rise to the Challenge of the Ever-Changing Affordable Care Act

Over the last several weeks, the rapid spread of COVID-19 has disrupted nearly every industry, but especially placing hospitals under unprecedented financial as well as clinical stress. Hospitals and health systems are facing a critical challenge to both operations and overall business models. Issues involve everything from operating margins to revenue collection to reimbursement for treating patients with the virus. Hospital executives are looking to finance teams to help them consider options for ensuring short-term stability as well as long-term growth post-pandemic.

Beyond the current upheaval, other factors were already having an impact on healthcare providers and their finance teams. The Affordable Care Act (ACA) fundamentally changed how providers were paid, meaning that healthcare finance teams have already had to revamp their accounting practices several times. The ACA is again under scrutiny with more changes to come. Is your finance team ready to adapt for whatever comes next?

Impact on Healthcare Revenues    

The healthcare revenue cycle management landscape has been fundamentally changed by the ACA, moving from traditional fee-for-service to value-based care reimbursements with serious implications for healthcare finance teams. Collections have been restructured and revenue cycles refocused to maximize profit in a new value-based environment. To succeed in this changing scenario, organizations need more data analytics tools and better patient billing techniques.

Finance Practices Reimagined

Reimbursement, expenditures and cost of care have been transformed, with patients responsible for more upfront costs. However, with that change comes more burden on finance teams, who now need to monitor additional aspects of cost, such as managing collections more assertively for patients who do not—or cannot—pay their portion of the bill.

Finance teams need to carefully track and analyze expenditures to meet the mandate of increased customer care and satisfaction. They need to plan for different scenarios related to cost of care, as reimbursement is based on quality of care, rather than a set fee. They need data on everything from MRIs and laboratory services to hospitalization and physician charges. Your finance team needs to quickly access and analyze that data to withstand heightened scrutiny and adapt to changing requirements anticipated in the ACA.

Changes Ahead

Although the ACA has been in effect for just over a decade, the central provision of mandating that individuals must get coverage or face a tax penalty has recently been declared unconstitutional by the Fifth Circuit Court of Appeals. Many states refuse to implement ACA’s core elements and political opposition may result in significant changes. Modifications of the law may result in a substantial decrease in the percentage of those insured by 2026, further impacting revenue.

Healthcare organizations are already struggling, with mediating operating margins at 1.7 percent in 2018, against a sustainable rate of 2.5 percent. Effective revenue cycle management practices informed by data-based decision making are crucial to maintaining the fiscal health of your organization.

How to Prepare

Finance teams can focus on claims, compliance, and denials management to help maintain steady revenue. Maximizing claims revenue and monitoring claims management systems are key areas for finance teams. Yet, one-third of providers still use manual processes to manage claim denials, even though automated systems can better identify root causes of denials and result in fewer write-offs. Some steps your finance team can take toward maximizing revenue are:

• Contract analysis  Successfully negotiating with payers directly affects your bottom line. Financial teams need access to real-time data and the ability to drill down to details to make fiscally responsible counter proposals.

• Tracking payment compliance  The ability to gather granular baseline data on payment compliance will help your finance team analyze issues before making required changes. Accurate analysis of payment compliance will lower the amount of health claims incorrectly processed and contracted fees incorrectly paid, resulting in significant improvement on returns.

• Calculating accurate expected payments The ability to analyze data retrospectively and prospectively from claims reimbursement books to assess the accuracy of your expected payment and supporting data will allow you to minimize claim denials.   

Your finance team needs a solution that will facilitate close monitoring of claims performance in real-time and allow them to refine claims management processes to maximize revenue. The ability to move from manual, time-consuming report generation to automated report distribution is crucial for data-based decision making to enhance overall revenue cycle management. Easy access to ad hoc reporting will give teams the flexibility to access new information quickly, and to adapt to changing regulations and requirements. The ability to drill down and correlate data across multiple modules will provide a more holistic view of your organization’s financial health and uncover revenue improvement opportunities.

insightsoftware’s robust analytical and reporting solutions offer real-time integration across healthcare data from multiple ERP systems including Lawson and Sage to automate and accelerate financial and operational reporting processes, allowing you more time to focus on analysis and effective business decisions and increase your facility’s financial intelligence. Find out how by requesting your free demo today.

 

Healthcare teams that are still relying on manual processes are finding that reporting requirements are stretching teams thin and adding to already high administrative costs. This infographic shows how automated financial reporting can help better manage costs.