You’re a hospital administrator faced with the complex task of dealing with insurance reimbursements. How does this process work? Essentially, your organization provides medical care to policyholders who make payments through their premiums.
The critical step in getting funds from insurers back into the healthcare system is quite complicated but crucial for maintaining financial health and stability within your institution. This guide aims to demystify that convoluted journey, unraveling how hospitals receive reimbursement from insurance companies.
Submitting Claims for Reimbursement
In the context of hospital operations, submitting claims for reimbursement is a key operational task. You must navigate this complex process with care to avoid any setbacks. Remember that each claim must contain accurate patient information: name, medical history, diagnosis, and treatment codes. This data directly affects your ability to receive the correct reimbursements from insurance providers. Your staff should understand how to correctly assign diagnosis codes following standard requirements (like ICD-10), and, if they also code hospital outpatient services they will need knowledge about Current Procedural Terminology (CPT) coding used in billing.
The electronic submission of these coded claims is the next vital step, which occurs through specialized software systems designated by respective insurers or payors. Staff should be monitoring payor correspondence and remittance to promptly identify payment issues, facilitating quick action for resubmission without delay. Remember, time plays an essential role here, fast resolution equals faster cash flow into your system!
Understanding Payment Methods
Hospitals often receive less payment than the amount listed on their chargemaster. This happens due to negotiated discounts known as “contractual adjustments.” Payment rates vary significantly among payors. Additionally, the chargemaster assigns a price to every individual hospital service, but most payors offer a bundled payment rate for hospital inpatient services. This may be a per day rate or a per admission rate. The per admission rate is the most common inpatient payment methodology.
Take Medicare, for example, a federally run healthcare program that sets specific service payments. Hospital charges could amount to $37,000 for a three-day inpatient admission, but Medicare’s inpatient payment mechanism is the Medicare Severity Diagnostic Related Group (MS-DRG), a per admission rate payment. If the associated MS-DRG has a payment rate of $10,000, that is all Medicare is required to pay!
Although it may appear that the hospital is losing money when payors reimburse admission services at a rate lower than total charges, it is unusual for anyone to pay the total of hospital charges. Even for patients without insurance benefits, referred to as self-pay, are usually offered a discount off the total charges.
Denial Management Processes
Educating your team about denial management processes can give them a winning edge. Regular workshops, webinars, and classroom-style teaching sessions work wonders in this regard. These educational activities keep the staff informed of any changes or updates within the healthcare sector and also provide insights into best practices in revenue cycle compliance regulations that could decrease claim denials.
Additionally, data analytics play an instrumental role, as it helps recognize patterns causing repeated payment rejections. Advanced revenue cycle systems generate insightful reports on trends and highlight improvement areas for consideration by hospital administration to significantly reduce future instances of denied claims.
Strategies to Maximize Hospital Reimbursements
To maximize hospital reimbursements, focus on patient outcomes. By shifting attention to what patients need rather than the volume of services provided, increases in efficiency are possible. You’re not just supplying medical care but delivering high-value treatment with a significant impact on your revenue cycle.
In short, put patient needs first, streamline service delivery based on those needs, and prioritize quality over quantity, all while aiming for overall system improvement. Reimbursements naturally follow suit when these steps intertwine, ideally within any healthcare organization looking to maximize its potential financial gains.
Navigating insurance reimbursement can be tough. With Brundage Group‘s expertise, such complexities are streamlined for a smooth process on your end. We work diligently to handle denials, following up rigorously with payors and mitigating future issues by analyzing trends in denial causes.
Trust us. We’ll advocate passionately for the financial health of your hospital.
