Identifying dual eligibility can slash bad debt and boost revenue by more than a half-million dollars for the average mid-sized hospital.
That could translate to more than $500,000 in recovered revenue from Medicare bad debt and Medicaid secondary over a three-year period for the average mid-sized hospital.
Despite the promise of increased revenue, many hospitals are leaving this money on the table.
"Medicare bad debt is a significant revenue opportunity for many hospitals; however, claiming these payments is complicated," Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare, told HealthLeaders via email.
The new TransUnion Healthcare analysis included more than 50,000 cost reports over a 10-year period from more than 100 mid-sized hospitals, which represent those institutions with 250 to 350 beds.
This analysis also confirms other TransUnion Healthcare findings showing that between one to five percent of self-pay accounts written off as bad debt actually have billable insurance coverage, the authors say.
We asked Wiik to shed some additional light on this often-overlooked issue and what revenue cycle managers can do about it.
HealthLeaders Media: Why is this so often overlooked?
Jonathan Wiik: Medicare bad debt (MBD) is a significant revenue opportunity for many hospitals; however, claiming these payments is complicated. Hospitals must accurately identify potential coinsurance and deductible amounts, eliminate non-eligible amounts and cross-match the remaining amounts against the hospital's own bad debt write-off information.
Given this complexity, many hospitals lack the internal resources and/or technology to accurately determine eligible Medicare bad debt reimbursement. Hospital revenue teams must understand the difference between allowable vs. un-allowable bad debts as well as complex rules regulating Medicare bad debt processes and reporting.
Many hospitals struggle with compliantly reporting the bad debts recoveries accurately, and often have competing priorities for resources, leaving...protected revenue on the table.
HLM: What are practical steps revenue cycle leaders can take to prevent these unneeded bad debt write-offs?
Wiik: Practical steps include:
- Performing an assessment to quantify the opportunity (to understand buy vs. build, resources, and priority of other projects). Third party assessments and technology have a nice fit here, as many run behind revenue cycles once the partnership is created.
- Root cause analysis: Once engaged, understanding the documentation and revenue opportunity is important. Ensuring coverage is identified (Dual eligible) as well as documentation for MCD is critical – these are very complex tasks, and again, leveraging technology here can quickly drive revenue recoveries.
- Audit and updated reporting: Submitting the bad debt logs, adjusting the S10 c H for the next reporting period, and having a go forward documentation and insurance discovery strategy is integral to recover protected revenue.
HLM: Once patients are IDed as Medicaid eligible, what steps should a hospital take?
Wiik: Once Medicaid eligibility is discovered there should be a coupling of the data to the MBD performance to maximize recoveries. This matching can prove very difficult in most hospital A/R systems and reporting. Considering a point solution here can accelerate revenue recoveries, and ensure an accurate and timely yield.
HLM: Is there anything else leaders should know?
Wiik: Accurate identification of dual eligibility from an insurance discovery standpoint helps organizations in recouping earned revenue from unrealized payment sources. This helps hospitals get into a better financial position to continue to deliver care to their communities and move bad debt into revenue.
Alexandra Wilson Pecci is an editor for HealthLeaders.
Identify insured patients who are also Medicaid eligible to slash bad debt.
Understand the difference between allowable vs. un-allowable bad debts.