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Don’t Forget About Uncompensated Care Reduction in Your Year-End Review

UPDATED:
December 21, 2023
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As 2023 comes to a close, hospitals and health systems nationwide are filled with busy finance teams strategizing and making plans to hit the ground running in 2024 for their best year yet. However, before you can look forward, you need to look back. 

A year-end financial assessment of what worked and didn’t work is a key first step to creating a plan. This year, consider paying close attention in these assessments to the impact of uncompensated care costs and the overall effectiveness of your revenue recovery efforts to combat it. Improving these two factors could be your springboard to success in 2024. 

Uncompensated care in 2023

We’ve discussed previously that uncompensated care costs are staggering and still rising steadily, with the American Hospital Association (AHA) reporting losses in the billions each year. According to the AHA’s annual survey, hospitals have lost more than $745 billion in uncompensated care to patients between 2000 to 2020. 

This year, uncompensated care costs have been even higher due to the Medicaid redetermination, the process by which the Centers for Medicare and Medicaid services reinstate Medicaid renewals following the COVID-19 pandemic. Since March 2020, patients have had their coverage automatically renewed. This year, that process stopped, leaving thousands without coverage for varying reasons. 

Consequently, hospitals have begun to see a rise in self-pay patients this year and a subsequent rise in uncompensated care. According to AHA, uncompensated care rates rose from 6.4% in Q1 of 2023 to 8.7% in July 2023, a one-third increase. 

AHA also found that more than half of hospitals saw negative operating margins at the close of 2022. For your hospital’s profitability, recovering reimbursement is more important than ever.

What can be done to improve for next year? 

Any good assessment starts with a simple audit. Not all services are created equal, and what was high performing 1-2 years ago could be underperforming today. Running a performance audits will help flag areas for improvement in the coming year. 

This process is even easier when you already have reporting procedures in place. But you may need to pull data for the first time. Start small by analyzing recovered revenue and underpayment recoveries in comparison to lost revenue. This will give you a good idea of where your organization stands overall in relation to uncompensated care.

Assessing insurance discovery

Insurance discovery, or the process of combing all available insurance sources for a claim with unreported insurance, is a main source of revenue recovery. Ineffectively searching for insurance (or not searching at all) can drastically increase uncompensated dollars. 

When evaluating your insurance discovery solution, be sure to examine the following:

  • Hit rates: The success of the insurance discovery solution. What did the solution find, or how many “hits” did it get for your claim?
  • Claims recovered: How many previously uninsured claims were recovered after running through insurance discovery?
  • Overall financial impact: Basically, is your solution worth the money? Is the investment paying for itself in its success, or is it having zero effect on your bottom line?

Analyzing assessment results

Once you have conducted audits, crunched numbers and analyzed appropriate data, you can take these findings and use them as the foundation for your 2024 strategy. When you can back up your choices, it becomes easier to make decisions and justify changes to the wider team. 

And changes will almost certainly be necessary. The healthcare industry is always evolving. This causes points of failure in technology that demands continuous innovation. If not treated as a “living” solution, cracks will form causing revenue leakage.

To better assess whether your insurance discovery solution is underperforming, adopt a run-behind solution like Office Ally’s Insurance Discovery. This software can work alongside existing processes and solutions without interruption to help you find missed revenue recovery opportunities.

Get a free Insurance Discovery assessment

Kick off your 2024 with a free Insurance Discovery assessment from Office Ally’s industry-leading team of specialists. With just a basic file export, Insurance Discovery will automatically demonstrate for you what it does best: completing an exhaustive search for potential coverage among government and commercial payors.

This assessment is 100% risk-free. There is no upfront cost, and you only pay if Office Ally helps you recover revenue. Implementation is simple, and results in a complete and trusted back end revenue recovery loop with guaranteed results.

Start the new year strong by aligning your revenue recovery efforts with the hospital’s budget and financial goals. With the right tools and strategies, 2024 can be the year your team takes control of uncompensated care.