Why hospitals should focus on front-line staff training when implementing payer contracts, consumer policies

Contracts with payers and policies that direct action with consumers play a key role in the hospital revenue cycle, where patient accounts are serviced from beginning to end of care.

Payer contracts

The contracts hospitals and health systems enter into with payers may include how and when the hospital should notify the insurer if a patient needs an inpatient stay, as well as if there is an authorization needed for a particular service, according to James Green, a leader of Advisory Board's consulting practice.

These contracts may also include carve-outs for particular devices, medications or services that are reimbursed at a separately negotiated rate, says Crystal Ewing, manager of data integrity at Louisville, Ky.-based ZirMed, a healthcare revenue cycle management company. Additionally, they may list the insurer's plans the hospital accepts and those it does not accept.

"For example if the health plan supports different plan types such as Medicare, Medicaid and commercial plans the provider may only contract for the commercial plans. This information is extremely important for front office staff to understand," says Ms. Ewing.

Consumer policies

Consumer policies may cover various items, including the method the healthcare organization uses to provide patients with out-of-pocket cost estimates and the price transparency tools the provider offers.

"It can include whether or not the health system provides estimates through online tools, from an employee, or a hybrid model of an employee using a tool," says Mr. Green. "The most progressive institutions go beyond providing estimates and give consumers visibility into their entire bill and entire episode of care on one consolidated bill, including ancillaries, professional and facility fees."

Some of these policies also include information about charity care and discount options that may be available for patients who do not qualify for charity care, according to Mr. Green.

Goshen (Ind.) Health CFO Amy Floria says her organization aims to help patients understand what care costs are covered and when their coverage started. She adds the coverage start date can be confusing for consumers because some coverage is backdated while other coverage is activated based on the day the patient pays the first premium.

"So I think all of those rules and details are so complex and growing that we really try hard to work with our patients to better understand what coverage they have when they hit their deductible," says Ms. Floria.

More hospitals and health systems are focusing on consumer policies, as patients take on more responsibility for the cost of their care and expect to know their out-of-pocket costs prior to service.

Provider organizations could lose business if they fail to inform patients of their out-of-pocket costs in a timely manner. This can occur when hospital staff doesn't have the information or technology needed to quickly provide the cost information patients request.

Ms. Ewing recommends hospitals use technology solutions that can help with contract management, rather than using traditional manual processes such as paper documentation, spreadsheets or an internal intranet, to ensure payer policies are transparent to employees in all areas of revenue cycle for the hospital, including scheduling, pre-registration, charge capture and coding and collections.

"Getting that information off the paper form and into a platform that makes it transparent and visible to the people that need it and also building that into certain workflow processes such as scheduling and registration to understand if the service will be covered and providing the patient with an estimate based on contract terms and policy guidelines can potentially increase revenue and patient satisfaction at the provider's institution and also build best practice processes," she says.

Revenue cycle staff plays a key role

The revenue cycle staff at a hospital or health system plays a key role in ensuring both consumer policies and payer contracts are properly implemented.

"Their savviness in understanding these policies and how to implement them can be the difference between a payment or no payment at all and a good or poor financial experience for the patient," says Mr. Green.

Regarding consumer policies, Peter Angerhofer, a principal at Stratham, N.H.-based consulting firm Colburn Hill Group, says hospitals should give revenue cycle staff the authority to negotiate with a patient who calls wanting a self-pay discount, but establish clear rules — maximum percentage or dollar amounts — around those discounts. That way he says staff clearly understand their negotiating limits and organizations are not presenting a basic, one-size-fits-all proposed discount, but rather tailoring it to the individual patient.

When it comes to payer contracts, front-line staff need insight into the terms of the contract when registering a patient or putting together a bill. This makes it vital for provider organizations to invest in the technology needed to provide this information such as verification systems and automated authorization systems, according to Mr. Green.

To ensure proper implementation of consumer policies and payer contracts, hospitals and health systems should put a strong focus on training and education programs for front-line employees, as their decisions can have a large affect on an organization's finances. The front-line staff at some provider organizations "make decisions based upon these policies that could make tens of thousands of dollars in difference in revenue," says Mr. Green. "So their understanding — not only the policy but why that policy is important and how it affects the organization's financial health — is really important."

However, some of the challenges associated with payer contracts can't be remedied through front-line-staff training. Receiving timely responses from payers is also an issue, according to Ms. Floria. Even when her organization follows proper policies and submits a clean claim on time, some payers fail to comply with contracted terms of paying within a certain time period, she says. When this happens, no action is taken on the claim until the hospital follows up.


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