Healthcare Reform Puts a Squeeze on Revenue Cycle

Rene Letourneau, for HealthLeaders Media , June 26, 2013

Perhaps the biggest challenge, Nguyen says, is the uncertainty surrounding the health insurance exchanges and how they will operate once they are up and running. "You can do analytics all day long, but the state and federal governments are still learning how to run it. Nobody knows. Right now it is all speculation. But you can't just sit there and wait; you have to try to anticipate what is going to happen because there are concerns like cash flow and budgets. … The scary part is we don't really know. There are a lot of challenges here," he says.

One strategy Palomar is employing to meet these challenges is to increase its level of automation. Nguyen says his budget for the next fiscal year includes funds to buy software that will allow the health system to automate the processes of determining whether patients are eligible for insurance through the exchanges, getting authorizations before procedures are performed to make sure the health plan will consider it medically necessary, and estimating patient deductibles and copays.

"Our team has to be really tight on determining eligibility and authorizations for these people who were previously uninsured but who are now able to buy insurance through the exchange. … Even with the software, it will still be a hybrid model. Staff will still play a role, but it will make their job a lot less complex and less confusing. The software can be loaded with all the health exchange tier details. Without that, the process would be more inefficient and time intensive."

Marlene Zurack, senior vice president of finance and chief financial officer for New York City Health and Hospitals Corporation, a municipal integrated healthcare delivery system with $7.1 billion in total operating revenue when combined with HHC's MetroPlus health plan, is also doubtful that the insurance exchanges will result in a net benefit to her organization.

HHC currently serves 1.4 million people per year, 475,000 of whom are uninsured. "We are not sure whether our uninsured patients are going to be able to participate in the exchanges," Zurack says. "There are a lot of requirements that they might not be able to meet, and, also, there is the cost sharing."

Regardless of how many more patients obtain insurance coverage, HHC is likely to lose revenue in the end, Zurack says, due to cuts being made to Medicaid's Disproportionate Share Hospital program, which distributes payments to qualifying hospitals that serve a large number of uninsured individuals.

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