America’s healthcare payment system is unlike any other goods/service payment system in the world. Normally, when someone is receiving a good or service, they pay up front, receive the service and then leave. Not so with healthcare. In healthcare, payment is only processed after the service has been provided. With Fee-for-Service, which is currently the most common reimbursement model, payment is based on the number and amount of services provided to the patient. This complicates the process immensely, and can lead to a lot of issues that must be resolved over an extended period of time. Here’s how it works.
Documenting the details
When the patient has completed treatment at a hospital or clinic, it is up to the clinical staff to add the details of the treatment and the care services rendered into the patient’s electronic health record (EHR). This secure file also contains physician diagnoses and the treatment plan that has been laid out for this particular patient.
Along with this process, the staff member who records this information is in charge of translating the patient’s treatment and care needs into medical codes for more efficient review and analysis. From there, the healthcare organization can create a cost claim that defines how much they determined the treatment was worth.
Submitting a claim
Once the codes and diagnoses are put into the EHR and a payment claim is created, the healthcare organization can then submit that claim electronically to the payers: the patient and their insurance. The claim then comes under review.
Depending on the healthcare organization’s billing process, they may also submit the claim to a healthcare clearinghouse or other third-party claim reviewer. This third party will review the report for inaccuracies and necessary edits. If any changes are required, they will send the claim back to the healthcare organization. The healthcare organization can make adjustments and corrections and then submit a clean claim for review to the payers.
Reviewing the claim
During the review process, any number of problems can arise. If the clinical staff still inaccurately reported patient information, treatment procedures or clinical codes, the claim may be denied based on inaccuracy. The payers can also dispute the information, the fee and any other part of the claim. These rejections, or denials, can depend on any number of factors, such as billing policies from the clinic or the insurance company, standard payment amounts, the timeframe of the care and the medical necessity of certain aspects of treatments.
The amount that the insurance company and the patients each pay depends on how the claim is reviewed and finalized. This shared responsibility for payment then determines how much the patient’s copay will be.
This entire billing process can take months, depending on the speed of the billing system, the number of claims being filed and reviewed and the accuracy of the medical reports and claims. But it isn’t even over then. Paperwork may still be required for record-keeping purposes, and billing mistakes may still be discovered after the fact, leading to discussions on how to get the correct amount of money back into the right hands.
A healthcare organization’s revenue cycle management and profit needs rely on this process to go smoothly. But it often doesn’t, especially when communication among the clinic, the insurance company and the patient doesn’t occur effectively. That’s why accountability, set procedures, quality communication and an effective reimbursement system are of utmost importance when going through the billing and claims processes.
It’s for this reason that many healthcare industry officials and government leaders are pushing new methods of reimbursement other than Fee-for-service. One such method is Value-Based Care, in which a healthcare organization’s reimbursement rate is determined by quality of care given rather than quantity.
The way that Medicaid reimburses healthcare organizations is, like the program itself, determined by a combination of state and federal regulations. Since Medicaid uses taxpayer money, it usually has set reimbursement rates for care services, and currently relies heavily on Fee-for-service and managed care models (though this is slowly changing with hybrid models). Therefore, a bill that Medicaid pays will look different than a bill that an non-Medicaid patient pays, because it’s only committed to paying a certain amount for a service, no matter how much the healthcare organization charges for it.
This means that if a healthcare organization relies on Medicaid—or Medicare, for that matter—it needs to figure out ways to offset costs and be more efficient in order to save money. Medicaid does, however, sometimes give out supplemental payments (reliant on the individual state’s regulations and Medicaid waivers) and disproportionate share hospital (DSH) payments to reimburse healthcare organizations above and beyond the standard reimbursement.
How DECO can help
Revenue cycle management, determining patient insurance eligibility and running a smooth reimbursement system are our specialties. We work on the front lines with healthcare organizations and patients (on behalf of the healthcare organization) to ensure that the entire billing and claims process works smoothly. If your healthcare organization needs reimbursement help, contact us today!