Changes in the Healthcare Landscape Affecting Collections

It is imperative that healthcare organizations respond to the significant challenges of today’s healthcare economy by opening themselves up to cultural change. Moreover, to ensure such change is sustainable, healthcare organizations should consider several key questions focused on aligning program incentives with new demands:

• What impact will potential legislative changes, such as a repeal and replacement of the Affordable Care Act (ACA) with its expansion of Medicaid and proliferation of self-pay, likely have on shifts in payer mix?
• Has the organization appropriately addressed the requirements identified in Internal Revenue Code (IRC) Section 501(r) to include self-pay collection and financial assistance policies?
• Does the organization’s insurance verification software provide a timely response to immediately facilitate accurate price estimation?
• What patient estimation technology (either homegrown or bolt-on) does the organization possess to assist in transformation efforts?
• Does the organization’s collections infrastructure align front-line staff behavior with strategic objectives using incentives linked to performance bonuses and career progression models?

Planning for the future can be difficult when considering the uncertainty of potential legislative changes. Nonetheless, provider organizations can look to the ACA as a starting point. At its heart, the ACA is payment reform. Thus, providers should plan around the impact the potential gain and loss of insured patients will have on their business. As of today, millions of previously uninsured patients now have insurance, but patients may not understand they will still be responsible for shouldering a potentially significant portion of the cost of care.

The recent efforts of tax-exempt 501(c)(3) hospital organizations to meet their compliance deadlines for IRC Section 501(r) effects also will prove important moving forward. The potential impacts of this regulatory change continue to be far reaching, with revenue cycle, payment, and tax implications.

For example, the new Section 501(r) regulations have imposed requirements relating to reporting, policy and procedures, and collection limitations. Specifically, organizations are expected to have completed their required reviews and updates of existing financial assistance policies to reflect the guidance on charge limits and amounts generally billed. They now should prepare for the public scrutiny of their compliance with Section 501(r), which is likely to be focused most intensively on compliance with the restrictions on the use of extraordinary collection actions.