By Juli Forde, Director of Strategic Partnerships, ZOLL® Data Systems
Emergency medicine physician groups face a revenue and profitability crisis in 2021. In the U.S., most emergency medicine groups have a profit margin, on average, of less than 10%. That, in addition to the volume decline due to the COVID-19 pandemic, puts emergency medicine physicians in a challenging position. There is also an expectation that with the expanding use of telehealth, additional volume will migrate away from the emergency department.
Emergency medicine providers are also facing the possibility of new federal legislation designed to protect patients from surprise medical bills, also called “balance bills.” It is currently unknown what the impact of the legislation may be to emergency medicine reimbursement. Balance bills typically arise when payers cover out-of-network care at a rate less than the cost of the care provided leaving the patient to bear unanticipated additional costs. Balance bills also occur in situations where out-of-network care is not normally covered but the selection of provider is outside the consumer’s control, which is often the case in emergency medicine. In states where balance billing legislation has passed, emergency medicine physician groups have seen a decline in revenue because payers don’t have the same incentives to reimburse claims at a fair market rate.
Despite the Challenges, How Can Emergency Medicine Providers Maximize Revenue?
Looking forward to 2021, emergency medicine providers anticipate a growing number of uninsured patients due to higher unemployment rates due to COVID-19. What can providers do to maximize revenue from all patient encounters?
- Advocate and comment on final federal balance billing rule or legislation.
- Optimize revenue cycle management (RCM) best practices.
- Deploy insurance discovery and demographic verification to maximize the ability to be reimbursed by payers.
- Implement adaptive financial assistance and charity screening.
- Evaluate staffing costs and alternative staffing options, e.g., employees versus contract staff.
- Prepare to request subsidies from their affiliated hospitals to continue providing the quality care the community needs.
- Expand into urgent care and telehealth.
- Directly contract with local employers (i.e., when employers are the payer) as an additional source of revenue.
- Consider risk-based contracts, in which the provider has a financial incentive to reduce the number of emergency visits by at-risk patients (“frequent flyers”), while delivering the same quality of care.
Based on their own solutions data, ZOLL Data Systems has found that implementing automated insurance discovery and demographic verification provides an additional 29% billable coverage, on average. Assuming an average emergency department volume of 30,000 visits per year, this use of technology can secure an additional $500,000 in revenue.
How Will Patients Be Affected?
While a portion of these uninsured patients will be able to apply for Medicaid in states that offer it, some states have already announced that Medicaid benefits will need to be adjusted, because the states do not have funds to cover the surge in eligible patients.
Patients and emergency medicine providers alike are concerned that the economic impact of these trends may cause a degradation in the patient experience. For example:
- Will patients experience the closure of additional rural hospitals?
- Will emergency medicine no longer be tenable in some hospitals due the economic need to reduce coverage hours? How would that affect the ability to deliver the same quality of care?
- Will inner-city patients lose critical access to care because these hospitals have such high numbers of patients on Medicare that they cannot afford to employ additional physicians?
Increasing numbers of uninsured patients do not have a primary care physician and go to the emergency room for non-emergent care. At the same time, the number of unemployed patients with limited ability to pay for services is increasing. The combined impact of these factors may force high-volume emergency departments to reduce clinician hours. In addition to longer wait times for patients, this situation puts additional pressure on emergency departments to continue providing quality care to the community with significantly lower revenue to support them.
Tips for Emergency Departments Preparing for 2021
Based on the uncertainties confronting emergency medicine providers, it’s crucial to:
- Deeply understand the current state of the emergency department financials.
- Create a pro forma for 2021 financials illustrating a best-case and worst-case scenario based on the uncertainties including state and federal balance billing legislation, uninsured population, potential reimbursement changes, etc.
- Deploy the technologies and services available to help drive additional revenue capture and improve bottom line.
- Understand and build a plan to comply with the rules that will be reinstated at the lifting of the public health emergency.
- Urge legislators to waive the budget neutrality requirement for calendar years 2021 and 2022 to avert the cuts that pose a significant threat to emergency medicine physicians and the healthcare safety net.
- Counsel legislators on the need to structure any new federal balance billing legislation to benefit all impacted constituents (i.e., patients, providers, and payers).
- Be proactive in creating and implementing strategies to meet this revenue challenge, within the constraints of regulatory requirements.
Physician groups need to ensure that any eligible insurance policy is billed. While collecting from payers has its own set of challenges, collecting from an increasingly financially at-risk patient population is much more difficult. Demographic verification helps ensure more clean claims up front, as well as efficiently invoicing patients when there is an outstanding balance. Deductible monitoring enables timing the billing of patients for their responsibility after the deductible has been satisfied, capturing the payment. Together these capabilities can have a positive effect in counteracting the proposed 2021 Medicare PFS cuts.