Optimizing the Patient Bill Lifecycle:

Best Practices for Billing and Collection Policies

Ensuring that each patient’s medical records are translated into an accurate, complete bill is one of the most critical processes in healthcare financial management. The patient bill lifecycle extends from the moment of intake to long after treatment has concluded.

Failing to capture pertinent data at any point in the process can result in substantial lost reimbursement opportunities.

Healthcare Payment Specialists Director of Client Development Joe Gumbert outlines
best practices to maximize your hospital’s revenue throughout the patient bill lifecycle.

The Inception of a Patient Bill

The patient bill lifecycle begins as soon as a patient enters the hospital or calls to schedule an appointment.

If a new patient walks in the door seeking medical attention for an undiagnosed condition, the hospital needs to start capturing data immediately during intake at the registrar’s desk. From a billing perspective, the most important details are the patient’s identity and insurance (especially whether the patient is covered by Medicare), their current healthcare status and history, and other relevant demographic information.

In the case of a returning patient setting up an appointment or coming in for scheduled treatment, it is easier—but still important—to confirm or update existing records. Any changes in the patient’s insurance or health prior to the visit could affect billing and payment processes.

Diagnosis, Treatment, and ICD-10 Codes

After getting the patient’s basic information verified and into the hospital’s system, the next phase of the bill lifecycle is recording all of the tests, procedures, and clinical observations conducted at the hospital.

For the facility to receive the full reimbursement deserved for these services, every aspect of the patient’s diagnosis and treatment needs to be entered into their medical record using appropriate ICD-10 codes to ensure the most accurate diagnosis related group (DRG) assignment.  

In the transition from ICD-9 to ICD-10, the number of medical codes grew from less than 15,000 to more than 65,000. This change dramatically increased the complexity of coding for busy healthcare workers—and the opportunity for error in the medical record and on the final patient bill. If a care provider uses an incorrect code, or even a less-specific code for a procedure, the oversight can result in sub-optimal reimbursement for that service, delayed payments, or denied claims.

The Patient Bill Lifecycle After Discharge

When treatment is complete and the patient has been discharged, the medical record will be finalized, translated into a bill, and sent to Medicare or the insurer. However, this is not the end of the patient bill lifecycle. There are still a number of actions hospitals need to take to ensure full reimbursement.

Transfer DRGs

What happens to the patient after discharge can affect the hospital’s reimbursement. For example, a patient’s episode of care may involve a post-acute care transfer for follow-up treatment at a different facility. In these cases, a portion of the total reimbursement will be allocated to the second facility. However, if the patient does not actually go for follow-up care or if a skilled level of care is not given at the second facility, the hospital that provided the original treatment may be entitled to receive the entire reimbursement.

Eligible reimbursement is dependent on a number of factors including:

  • DRG
  • Length of stay
  • Discharge disposition
  • Type of post-acute care facility

Medicare Bad Debt

Subject to strict CMS regulations, hospitals can receive reimbursement from CMS for patient debts such as unpaid Medicare coinsurance or deductible amounts. Currently, Medicare Audit Contractors will reimburse hospitals to 65% of the bad debt incurred.

This is a potentially huge source of revenue for many U.S. hospitals. However, recognizing opportunities and complying with CMS procedures for receiving Medicare Bad Debt payments is challenging when hospitals lack the resources to re-review outstanding patient bills and identify eligible amounts.

Medicare Bad Debts are split into three general categories, each with a different set of sub-rules by which hospitals must adhere.

  1. Traditional bad debts relate to patients who have no insurance secondary to Medicare.
  2. Indigent bad debts include patients who have no insurance secondary to Medicare, but who partake in the hospital’s financial assistance program.
  3. Crossover bad debts are set aside for dual eligible (Medicare/Medicaid) patients.

Understanding and applying CMS regulations to capture bad debts accurately includes a thorough analysis of state specific Medicaid payment methodologies in order to assemble the crossover portion of your bad debt listing.

Medicare Disproportionate Share (DSH) Payments

Capturing and tracking information about Medicaid patients is also important for the purpose of tracking DSH eligibility and maximizing revenue for the care provided. Finding each and every DSH-eligible day puts a hospital closer to the threshold—and each day above that level is worth a material amount of money.

As audits become more stringent over time, it is important to be able to prove the patient’s Medicaid eligibility, type of coverage, and funding source for the programs involved.  The best way to realize and protect your DSH reimbursement is to match your patient file against state run Medicaid databases, retain your eligibility files, and re-match your patient file at least once before your cost report is audited.

Optimizing Your Patient Bill Lifecycle

Many hospitals are forfeiting millions of dollars in reimbursements because they lack the resources to re-review large volumes of patient bills—even when there’s a gut feeling that reimbursements are being left on the table.

When your Medicare claims are generally being accepted and the hospital is getting paid, underlying reimbursement issues can go unnoticed. Medicare Audit Contractors aren’t searching for opportunities to increase payments. It’s up to hospital leaders to find ways to maximize revenue by managing data more effectively throughout the patient bill lifecycle.

Discover additional best practices and solutions to optimize Medicare reimbursement across a range of payment issues and increase revenue from sources that are often underutilized.

Read more healthcare payment news and analysis.

Healthcare Payment Specialists

Healthcare Payment Specialists

Founded in 2002, Healthcare Payment Specialists (HPS) provides technology enabled solutions for health care eligibility, government reimbursement and compliance to hospitals and healthcare systems across the country. Using its STINGRAY software platform, HPS delivers solutions on a software-as-a-service (SaaS) basis or through outsourced service engagements.
Healthcare Payment Specialists