Medical Collectors Need to Move Up in the Cycle to Avoid Death

There’s a sea change occurring in medical collections, and ARM companies need to change with it or they will see a significant decrease in this part of their business, according to Tony Reisz, president and CEO of Ontario Systems, based in Muncie, Ind.

Two major government programs are driving health care providers to collect fees earlier in the process – the 2009 economic stimulus package and the 2010 health care reform legislation, Reisz explained.

The $787 billion stimulus package signed into law in early 2009 included $30 billion for electronic medical records. That enables health care providers and third-party firms providing office services better, quicker insight into the status of patient accounts, including monies owed by insurance companies and by patients (“CMS Proposed Rules to Receive Health IT Incentive Payments Too Inflexible, Says 53 Health Care Organizations,” May 21).

The health care legislation will drive up health care premiums in order to cover dependents to age 26 and those with previously existing conditions who would have been denied coverage before. So companies, which were already moving strongly to high-deductible plans, are moving even faster in that direction. The higher the deductible, the more the patient responsibility, and the more risk that fees will become delinquent.

“If ARM companies don’t move further up into the revenue cycle, they’re going to become disintermediated,” Reisz said. “More outsourcing companies are looking to take over the back office functions of hospitals, including billing and collections.”

With more “consumer-driven” care, these outsourcers and health care providers that continue to do their own billing and collections will seek to collect more of their fees earlier, including at the time of service, which heretofore has been rare in the health care industry. More typical has been waiting for insurance payment, then billing the patient for the remainder. But this has meant that payments didn’t start for months after treatment, and the longer the delay, the higher the risk of non-payment.

The more successful these efforts are, the less receivables will fall into the delinquency stages where ARM companies have tended to get involved, according to Reisz. “ARM companies need to imbed themselves higher in the revenue stream in order to protect themselves. ARM companies have not typically been proactive in this area.”

In order to move higher up in the health care revenue stream, ARM companies need to have good data, analytics, methodologies and practices, Reisz said, adding that outsourcing firms, including some that are subsidiaries of high tech companies have already moved aggressively in this direction.

<<< Return to Newsletter