Assessing COVID-19 Revenue Cycle Considerations for Health Systems
These are uncharted waters for the healthcare industry as our providers work to combat the novel coronavirus. While the most important and immediate concern is the safety of healthcare workers on the frontlines of patient care, we expect downstream effects to the healthcare revenue cycle and other financial operations. It’s difficult to pinpoint exactly how the revenue cycle will be impacted by this pandemic; however, our revenue cycle practice experts have identified a variety of challenges that we anticipate our hospital and health system clients to encounter.
Beyond the political and macro-economic factors surrounding this global COVID-19 outbreak, we highlight some key indicators of a challenging revenue cycle landscape and our recommendations on how to respond.
A New Virus to Treat
While this observation is apparent to healthcare and non-healthcare professionals alike, the revenue cycle impact may not be so obvious. With the identification of a new virus, comes an influx of new ICD-10-CM codes (i.e., Diagnosis Codes) that hospitals and health systems must incorporate into their revenue cycle operations.
Limited guidance has been provided around billing and coding on the testing and treatment of COVID-19. This leaves hospitals and health systems to choose between billing claims today, with a high likelihood of coming back as a denial for billing/coding errors, or leaving claims in discharged, not final billed (DNFB) until receiving clear direction on billing and coding standards.
Not to mention, hospitals and health systems run the risk of receiving experimental denials on submitted claims, as an antiviral medication nor a standard of care have been established for this new virus.
Frequently monitor CMS and Commercial Payer updates to ensure your revenue cycle is operating with the latest and greatest billing and coding information.
Collaborate with local hospitals and health systems to share knowledge and methods on the COVID-19 response.
A Shift in Service-Mix
It is no surprise that service-mix plays a significant factor in hospital and health system revenues. We’ve seen a heavy shift in service-mix, as non-urgent or elective procedures have been postponed allowing for additional capacity to treat patients with COVID-19. Hospitals and health systems are already feeling the financial impact of this shift, and we anticipate further downstream impacts to cashflow. With healthcare labor costs averaging at over 50% of revenue, many hospitals and health systems have already started to furlough non-clinical staff members in order to reduce expenses.
As hospitals and health systems continue to feel the financial squeeze of this pandemic, revenue cycle and financial leadership will need to discover ways of accelerating cash during this COVID-19 surge, and after the surge subsides.