Healthcare is a complicated business. Hospitals can lose money for a number of reasons: lower surgical volume, increased expenses associated with new procedures or new technologies, and from debt write-offs. Reducing write-offs, in particular, can make a huge difference. When a healthcare center doesn’t receive payments for the full cost of a service, the difference becomes a write-off. For smaller operations, balancing those write-offs is difficult, especially with growing self-pay populations. A business process outsourcing company with experience in the healthcare sector can help eliminate write-offs.
While the Affordable Care Act is creating a massive shift in how healthcare is handled, many hospitals are left to fend for themselves with write-offs. Partnering with a BPO company to manage payment processing and billing can allow a healthcare center to redirect efforts on improving provider/patient relationships.
The write-off problem
A patient’s ability to pay isn’t a determining factor for whether they receive service. As a result, healthcare is a business unlike any other. Eventually, something has to give.
The proliferation of medical data is turning data management into risk management.
Every healthcare provider must be aware of the security risks when handling patient information. For instance, on May 14, 2012, federal prosecutors charged a medical technician with violating HIPAA (Health Insurance Portability and Accountability Act). Over a 17-month period the technician used her position to access patients’ names, addresses and Medicare numbers. She then attempted to sell their information. Earlier, in an unrelated event, this same hospital notified more than 34,000 patients that their medical data had been compromised. A contractor downloaded the patients’ files onto a personal laptop, which was then stolen from the contractor’s car. The data on the laptop was password-protected but unencrypted, which means anyone who cracked the password could have accessed the patient files. Core measures established under HIPAA and the HITECH Act require all parties who touch private medical records to conduct a security risk analysis to be compliant and qualified for incremental government financial incentives.
A trusted BPO provider, knowledgeable of HIPAA and HITECH compliance issues, is the best solution for providers looking to streamline back-office processes while maintaining the highest security standards.
The real penalties for bad processes
Failing to comply doesn’t just mean a loss of incentives, there’s a real cost with civil and criminal penalties and fines for lax security processes. The old adage “an ounce of prevention is worth a pound of cure” is especially true here.
As the deadline for HITECH compliance approaches, the BancTec iBPO blog will continue to focus on issues of interest to healthcare organizations. Last week, we looked at the opportunities available with an improved document management solution for EMR. This week, we will explore the challenges to financial administration in healthcare and new payment trends.
The Centers for Medicare are Medicaid Services (CMS) presented the Bundled Payments for Care Improvement initiative, an innovative new payment model. Under the Bundled Payments for Care Improvement initiative, organizations will enter into payment arrangements that include financial and performance accountability for episodes of care. These models could lead to higher quality, more coordinated care at a lower cost to Medicare.
Four Bundled Payment Models
Bundled payments have been proposed as a “middle ground” between fee-for-service reimbursement (where providers are paid for each service) and capitation (providers are paid a lump sum regardless of how many services are given). In this approach, reimbursement to providers is based on the expected costs for clinically-defined episodes of care. CMS established four broad models for care:
1. Retrospective Acute Care, Hospital Stay Only — Medicare will pay the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare will continue to pay physicians separately for their services under the Medicare Physician Fee Schedule.
This upward trend is supported by an improving overall economy and rising revenue in the human resource, finance and accounting, customer relations management and insurance sectors. All provide a large portion of BPO business.
“Additionally, rising wages and increased operating costs associated with the passage of Patient Protection and Affordable Care Act (PPACA) helped drive employers to BPO companies as a method of cost control,” says Stephen Morea, IBISWorld Industry Analyst. As a result, in the five years through 2014, BPO Services industry revenue is expected to increase at an annualized 4.1 percent to reach $127.4 billion and includes a 4.5 percent increase in 2014 alone.
IBISWorld is an independent source of industry and market research. It offers a comprehensive database of information and analysis on every US industry.
This study mirrors findings from August 2013. According to a study released by Markets and Markets, the U.S. healthcare outsourcing market has great potential for growth owing to the measures taken by the government to curb the ever-increasing healthcare costs.
BancTec predicted such an impact from the Affordable Care Act, which IBISWorld now confirms. Read our blog post The Affordable Care Act Simplified and Its Impact on Outsourcing or our ebook Untangling the Administrative Knot of the Healthcare Industry for more information.
When it came to healthcare, in the past, there were two options: either the doctor made a house call and came to you or you went to the doctor. However, virtual care may become an increasing significant third alternative. In many regards, patients are already turning to virtual solutions — with or without the actual doctor. Two-thirds of all U.S. broadband households have visited a healthcare website in the past year. Thirty-six percent visited a health portal like WebMD. Sites like these can be tremendously helpful. However, they can also confuse patients when a symptom like “dizziness” could lead to such varied conclusions as middle ear infection, carbon monoxide poisoning, or diabetes.
Providers are exploring virtual healthcare technology to better serve patients. Virtual health kiosks and portals, remote consultations, and electronic personal health records present new opportunities. These digital doctor-patient visits could create a new healthcare claims conundrum. In these instances, an experienced healthcare BPO company can improve efficiency and reduce costs.
According to Forbes.com, by 2018, 22 million households will use virtual healthcare, up from less than a million in 2013. Average visits among these adopter households will increase from 2 per year in 2013 to 6 per year in 2018, which include both acute care and preventive follow-up services in a variety of care settings—at home, at retail kiosk or at work.
October may seem far off, but for physicians and hospitals, the rush is on to comply with HITECH (Health Information Technology for Economic and Clinical Health Act). This mandate requires the adoption of electronic records by the Fall 2014 deadline. If hospitals fail to do so, they face penalties in the form of reduced Medicare/Medicaid payments.
Adopting EMRs (electronic medical records) is a no-brainer for doctors and hospitals. Electronic medical records allow doctors to work more efficiently. However, as reported by Forbes.com, some doctors find that EMRs hinder them.
First and foremost, physicians want reliable electronic medical records. The Atlantic reported on one such error. According to Dr. Richard Gunderman:
An intern recently presented a newly admitted patient on morning rounds, reporting that the patient was “status post BKA (below the knee amputation).” “How do you know?” the attending physician inquired. “It has been noted on each of the patient’s prior three discharge notes,” replied the intern, looking up from his computer screen. “Okay,” responded the attending physician. “Let’s go see the patient.”
When the team arrived in the patient’s room, they made a surprising discovery. The patient had two feet and ten toes. Where did the history of BKA come from? It turned out that four hospitalizations ago, the voice recognition dictation system had misunderstood DKA (diabetic ketoacidosis) as BKA, and none of the physicians who reviewed the chart had detected the error. It had now become a permanent part of the electronic medical record — as if written in stone.
The intern’s mistake highlights a growing concern about government-mandated electronic medical records. Will doctors spend more time in front of computer screens and less time with patients?
The U.S. federal government’s partial shutdown entered its seventh day as of Monday. More than 800,000 federal employees across dozens of agencies were furloughed, causing certain service-providing departments across the country to shutter. Additionally, preschool programs like Head Start, government contractors, and hotel/tourism businesses dependent on national parks have all been impacted. Lockheed Martin began furloughing roughly 3,000 employees this week. Since the shutdown began as an attempt to defund key parts of the Affordable Care Act, the shutdown could shape healthcare and some aspects of healthcare business process outsourcing.
Here’s what you need to know about how the shutdown will affect healthcare in general:
- Ironically, the most prominent part of the healthcare law is not affected. Eligible uninsured Americans are still able to sign up for online healthcare exchanges. Most of the money for the Affordable Care Act comes from new taxes and fees, as well as from cost cuts to other programs like Medicare and other types of funding that will continue despite the government shutdown.
- The most dramatic impact that the shutdown could have on the healthcare law would be to make it harder for the government to address bugs in the online health insurance exchanges. This is especially problematic when it comes to the young adult demographic, who have the highest expectations for purchasing products online and are expected to be a key part of the Affordable Care Act buy-in.
- The National Institutes of Health will stop accepting new patients for clinical research and stop answering hotline calls about medical questions.
- The Centers for Disease Control and Prevention will stop its seasonal flu program and have a “significantly reduced capacity to respond to outbreak investigations.”
- New applications for Medicare and Social Security benefits will not be able to be processed.
How the shutdown may affect healthcare BPO:
The 8th annual National Health IT Week is being held this week, September 16th to 20th. The week consists of events in Washington DC and across the country. It’s a collaborative forum where public and private healthcare constituents work in partnership to educate industry and policy stakeholders on the value of health IT. Approximately 200 public and private sector organizations are participating in the event — vendors, provider organizations, payers, pharmaceutical/biotech companies, government agencies, industry/professional associations, research foundations, and consumer protection groups — to express the benefits that health information technology brings to U.S. healthcare.
Comprehensive healthcare reform is not possible without system-wide adoption of health information technology. And as a result, healthcare business process outsourcing coordinates with health IT to play an important role in improving the quality of healthcare delivery, increasing patient safety, decreasing medical errors, and strengthening the interaction between patients and healthcare providers. BPO can do so by easing the medical records transition from paper to electronic records.
“Meaningful Use” sets the standard for electronic records
The transition to electronic records is especially important to stakeholders in health IT. A quality BPO company can convert paper records to electronic files with medical-specific scanning, indexing, sorting and archiving. Such companies can also convert microfilm to an electronic format. The conversion would help providers and hospitals to eventually achieve “meaningful use” standards.
Meaningful use is the set of standards defined by the Centers for Medicare & Medicaid Services Incentive Programs that governs the use of electronic health records and allows eligible providers and hospitals to earn incentive payments by meeting specific criteria.
The benefits of the meaningful use of EHRs include:
On October 1st, less than two months away, the health insurance exchanges portion of the Affordable Care Act (ACA) will go into effect. The ACA is a large and complicated law – nearly 1,000 pages long. Some portions went into effect as of 2010 with major provisions phased in by 2014 and remaining portions by 2020. Changes in the healthcare industry have led to a growth in healthcare BPO. But how exactly will the Affordable Care Act impact outsourcing?
First, it’s important to understand the key provisions. The ACA will consist of:
- Basic benefits package defined by the federal government
- Increased Medicare payroll tax on upper income earners
- Penalty for employers (with 50+ employees) who do not offer healthcare
- If an employer doesn’t offer insurance, people will be able to buy it directly in the Health Insurance Marketplace.
- Tax credits to small business – by 2014, 50 percent of the employer’s contributions.
- The Medical Loss Ratio. At least 85 percent of all premium dollars collected by insurance companies for large employer plans must be spent on healthcare services. For plans sold to individuals and small employers, at least 80 percent of the premium must be spent on benefits.
- Eliminating annual limits on insurance coverage for new plans and existing group plans.
- No out-of-pocket for many preventive services. All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance.
- Children up to age 26 can stay on their parent’s health insurance plan.
- No denial of coverage due to a pre-existing condition.
- Insurance companies cannot limit the coverage someone receives over his or her lifetime.
- Expand who will be eligible for Medicaid. States will receive 100 percent federal funding for the first three years, phasing to 90 percent federal funding in subsequent years.
- The law provides consumers with a way to appeal coverage determinations or claims to their insurance company.
- Tax credits for middle-low income uninsured. These individuals may also qualify for reduced copayments, co-insurance, and deductibles.
- The Individual Mandate. People who are not already covered or fully subsidized will be required to purchase coverage or face a penalty – with some eligible to receive subsidies towards private insurance premiums.
Four observations on how the Affordable Care Act will impact healthcare BPO:
With the ever-changing landscape of the U.S. healthcare system, the U.S. healthcare business process outsourcing market is undergoing a significant transformation. This year, the U.S. healthcare payer, provider, and pharmaceutical outsourcing markets are valued at $11.1 billion, $6.8 billion, and $65.6 billion.
According to a study released this month by Markets and Markets, the U.S. healthcare outsourcing market has great potential for growth owing to the measures taken by the government to curb the ever-increasing healthcare costs.
Other factors that have led to the growth of the market include developments and innovation in information technology and regulatory changes. Approximately 75 percent of U.S. healthcare companies outsource their work to external locations. This is due to the shortage of qualified staff in key positions, such as nurses and coders, and due to the new set of rules and regulations that they need to comply with. Some services that are commonly outsourced are insurance claims processing, adjudication and receivables management, billing and coding services, radiology reporting, transcription services, and clinical outsourcing, among others.