When Bad Timing Equals Bad Debt: How Providers Can Maximize Revenue by Monitoring Deductible Status

Conventional revenue cycle management (RCM) wisdom used to call for streamlining documentation and billing processes so that claims could be submitted to payers without delay.

This practice of zero-day billing, — billing as soon after the date of service as possible — is meant to promote cash flow. When insurance plans with no or low deductibles were common, zero-day billing made sense; however, the commercial health insurance landscape has changed.

In recent years, the industry has seen a rise in high-deductible insurance plans. In 2021, 50% of covered workers enrolled in a plan with a general annual deductible of $1,000 or more for single coverage. That’s an increase of 294% compared to 2009 levels, according to the Petersen-KFF Health System Tracker.1

As patient out-of-pocket costs have ballooned, so too has the bad debt on healthcare providers’ books. Higher deductibles mean that many people will not satisfy their annual deductible until much later in the year than in the past. When claims are submitted too soon, before deductible limits are met, providers are forced to collect unpaid balances directly from patients. A new RCM approach that factors in deductible status is needed to optimize claim submission timing and shift primary financial responsibility back to payers.

Maximizing Revenue Capture Is a Game of Strategy, Not of Speed

While prompt billing still makes sense for some payers, like Medicare and Medicaid, the era of zero-day billing for commercial health insurance plans is over. Today, the goal is right-day billing — intentionally and precisely timing claim submission so that other providers (not you) run up against the patient’s deductible.

Payer mix (Medicare, Medicaid, commercial insurance, and patient self-pay) plays a key role in timing claim submission. For most healthcare providers, the highest rate of bad debt is associated with the self-pay category. This means that when an unpaid balance is categorized as self-pay, the likelihood of full payment on balances owed is significantly diminished.

Therefore, providers’ goal should be to prevent balances from falling into the self-pay bucket. To increase the probability of capturing maximum payment for services provided, it is critical to monitor patient deductibles and time claim submission based on when deductible limits are met. Doing so makes it much more likely that the payer will be responsible for reimbursement.

Automating Deductible Monitoring Reduces Labor and Drives Revenue

While deductible monitoring can be performed manually by repeatedly checking with individual payers or by utilizing clearinghouses to assist in this task, the approach is inefficient and complex. The most efficient way to monitor deductibles is to utilize technology that automates labor-intensive tasks and monitors deductible status to help RCM teams capture more revenue without adding to their administrative burden.

Automated deductible monitoring tools are game changers that make it possible to implement “right-day billing.” Best-in-class offerings, such as the ZOLL AR Boost® Deductible Monitoring tool, continuously track accounts to provide real-time intelligence about a patient’s deductible fulfillment, even submitting claims automatically, once the deductible is met.

Taking advantage of technology saves valuable time and helps RCM teams optimize processes for greater efficiency and effectiveness. Practicing right-day billing to precisely time claim submissions reduces bad debt and improves revenue capture. It also puts the majority of the financial responsibility on the payer, relieving the patient of undue financial burden and helping to increase their satisfaction.

 1“High deductible plans.” Peterson-KFF Health System Tracker website, www.healthsystemtracker.org/indicator/access-affordability/percent-covered-workers-high-deductible-health-plans.

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