Anyone who works in healthcare billing knows that different insurance types net different payments for similar services. Private, commercial and public insurance and self-paying patients all reimburse at different rates for the same medical billing code. The number of patients for each payer type determines your practice’s payer mix. And your payer mix is critical to the revenue cycle and bottom line for your healthcare practice.
Commercial insurance typically pays at higher rates than government plans do, and that differential can be critical for the financial health of your practice. And this is important with government insurance plans on the rise.
As a high number of people lose employer-based health insurance, more patients are changing to self-pay status or seeking Medicaid benefits to cover medical visits. In turn, when a greater percentage of patients are on federal health insurance or self-pay, this can affect the practice’s revenue cycle.
“Approximately 70% of hospital and health system leaders are preparing for an increase in self-pay consumers and Medicaid beneficiaries post-COVID-19,” Healthcare Financial Management Association reported in October of 2020. “Around this same number foresee a decrease in commercial reimbursement.”
At one mid-size specialty practice, commercial insurance paid 25% more for an in-patient knee replacement than Medicare. So, as their payer mix changed to a higher percentage of Medicare patients, their operating margin suffered.
“We found that payer mix, the percentage of patients with private insurance coverage, is the key driver of a hospital’s financial health,” Behavioral Science and Policy Association recently stated. “This is important, because a hospital’s financial health influences its quality of care and patient outcomes.”
Clinic-ology knows that as the population continues to age into federal healthcare plans like Medicare, and as Medicaid expands, the payer mix at many healthcare practices and specialty clinics will adjust away from commercial insurers. So taking a proactive approach to the payer mix of your practice becomes even more essential.
Determine your payer mix.
Payer mix is a function of how many patients you have for each payer and how much each payer reimburses at a CPT code level. To understand the payer mix at your practice, pulling out patient payment data is the first step:
Start with a specific time period, such as the most recent two year period.
Separate active patients by payer-type.
Determine the payer mix percentages.
Repeat the process for the total number of patient visits.
Negotiate for higher reimbursements.
This is one way to improve your operating margin — and your bottom line — as your payer mix changes. Here, the data collected above proves valuable, as it points to which insurer-types have the most influence over your practice’s financial outlook. And the busier your practice is, the more leverage you will have in negotiating higher reimbursements from these insurers:
Request higher fees from private and commercial insurers in return for not limiting patients from that insurer.
For medical billing codes where the insurer pays below market rate, request a higher rate of reimbursement.
Recruit patients with higher-paying insurance plans.
Practices can change their payer mix to one that focuses more on patients with private insurers, —leading to higher rates of reimbursements — through active patient recruitment:
Target zip codes where patients of specific private insurers congregate.
Target employers who offer a specific private insurer to their employees.
Provide incentives, or start a social media campaign, for referrals to family and friends from privately insured patients.
Prioritize your collection efforts.
Review how your clinic allocates its back-office billing resources. Is more time spent on fighting for dollars from insurers who are slow to reimburse? For an overall shorter revenue cycle:
Determine which insurers are easy to work with for faster reimbursements.
Align your billing and collection efforts to collect from these insurers first.
Focus on private insurers identified as easy to work with before spending billing time on insurers that take more time and effort.
Ultimately, having a clear understanding of the payer mix of your healthcare practice can be crucial to maintaining a successful practice. At Clinic-ology, we know how important pulling the right data from your practice is in determining your payer mix. This is the critical first step in improving it for greater financial and patient outcomes.
To get started, explore your options today: www.clinic-ology.com
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