Health IT’s Role in COVID-19: Addressing the Financial Impact

May 11, 2020
A discussion on the post-COVID RCM strategy for cash-strapped facilities

Data from more than 800 hospitals shows that operating margins have dropped over  100 percent relative to last year. While this statistic is alarming, it’s only an initial data glimpse at the financial impact of COVID-19. In part one of this two-part COVID-19 series, we addressed IT’s role in patient care support during the pandemic. Now, in part two, we will focus on IT’s role addressing the financial impact of COVID-19 within the framework of the overarching revenue cycle management (RCM) plan. With essentially all non-emergency patient care visits and procedures previously stopped across the country as a precaution to limit the spread of the virus, healthcare facilities are now in dire need of cash flow. That sudden drastic drop of high-payout surgeries leaves many organizations drowning. As hospitals across the country grapple with the grim financial forecast ahead, let’s discuss the post-COVID RCM strategy for cash-strapped facilities, starting with claims coding and submission.

Claims submission The hospital billing process is ever-evolving with COVID-19. New CPT codes, diagnosis codes and grouper logic for COVID-19 care have emerged, and software vendors have had to rush to get these CMS-approved updates to figure out how to deploy that logic out to healthcare facilities. IT and revenue cycle teams are scrambling to align with the changes for filing claims, pre-testing updates and working to understand how new rules and logic apply to their organizations. These processes take time, as claims must be submitted under the proper code designations to be processed and accepted for payout. Any IT and business office transition delays or errors can hinder claims submissions for new income. With the lack of regular patient-care revenue coming in, every claim counts for another month of survival.

During the chaos of the pandemic, many healthcare organizations have been holding claims. This is a major red flag and cause for many of the post-COVID financial hits organizations are already seeing. When facilities hold claims, it stops cash flow. This grinds revenue cycle processing to a halt, so then facilities have no influx of insurance claims payments. The peak optimal health system cash flow is then immediately reduced at this point, which causes facilities to rely on guarantor or self-paid funds that are much slower for payout and less reliable. Cash on-hand, dependent on the organization’s size, can only float facilities for a limited time.

Reimbursement amount misalignment In the worldwide economic crisis, with so many individuals losing employment, they lose their employment-based health insurance. Without insurance and wages, these individuals will likely rely on Medicaid. However, provider reimbursement amounts from Medicaid are typically very small compared to Medicare and commercial insurance. With the utmost priority being patient care for all, hospitals and clinicians will continue to take a hit from the reimbursement source shift.

Downsizing and prioritization

COVID-19’s impact on healthcare system balance sheets will drive reduction efforts for quite some time. The long-term strategy must focus on re-evaluating all aspects of care delivery for sustainable cross-organization cost improvement plans. Considerations for such plans include:

  1. Pivot to virtual care. It is vital for survival. IT infrastructure and governance must be in place, so telehealth enablement and data coordination can thrive even as shelter-in-place orders adjust. The state-by-state pandemic response is rapidly changing, so telehealth needs to act as a stable billing source for providers. Part of this enablement includes working creatively to help those who don’t have IT access. For example, many local facilities’ IT teams are establishing telehealth visits within designated areas in their parking lots for those who lack at-home Wi-Fi access. 
  1. Be cognizant of claims holds. Even prior to COVID-19, insurance payment had lag time, with primary payers taking anywhere from seven to 60 days post-claim receipt depending on the payer source. Payout turnaround will likely be elongated post-COVID, especially for those with dual insurance coverage and unemployment transition, so business offices should realistically strategize accordingly. Facilities will need to put claims out with the new COVID-19 codes but should realize the impact that this delay will have on immediate cash flow. The business office and IT teams need to work hand in hand to get regulatory applies into their system as quickly as possible. IT is absolutely pivotal in rolling this out.
  1. Engage with flexible partners. With hospitals struggling with cash-on-hand shortages and no immediate relief in sight, downsizing will ultimately need to occur across non-essential areas. When deciding what to phase out while still moving priority projects forward on the IT side, many hospitals are relying on managed services and outsourcing partners to trim overhead expenses, with resources that can support multiple applications concurrently for on-demand ramp up or transition as needed. Look to IT partners who are nimble enough to adjust and evolve support services that each specific facility is going to need. 

Healthcare organizations transitioning into this next phase of COVID-19 financial response must acknowledge that this is not just optimization; it’s more dire than that. The U.S. debt surge will take hold of the healthcare industry’s direction for years to come. While many work on short-term remedies, they need to plan, knowing that there is no return to what we previously considered “normal.” Instead, they should consider where their organizations can take action to recoup revenue and continue operating effectively.

Joncé Smith is the vice president of revenue cycle management at Stoltenberg Consulting

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