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As Insurance Pays for Less, Hospitals Seek Outside Help

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IOWA CITY, Iowa - As hospitals increasingly look outside their walls for help managing the relationships involved in securing payment, a number have turned to a process known as revenue cycle management. It typically begins shortly after the patient is admitted or referred for treatment, with a focus on education and communication rather than demands or threats.

The weak economy has led to an increase in the patients without access to health insurance, even as more employers have boosted employee co-payments and deductibles in an effort to keep health insurance premiums under control.

Iowa Health System, the state's largest network of hospitals and clinics, pointed to the trend in its most recent quarterly financial statement, saying "current economic conditions have made it difficult for certain of the system's other patients to pay for services rendered."

As employers adjust health plans or more patients become unemployed, "services provided to self-pay and other payers may significantly impact net patient service revenue," Iowa Health System reported.

Revenue cycle management has become a high priority at St. Luke's Hospital, an Iowa Health System hospital in Cedar Rapids, involving more than 50 employees in areas such as medical enrollment and registration.

St. Luke's Director of Revenue Cycle Jeni White said that understanding the insurance and other resources available for payment early in the process vastly improves the odds of payment.

The process begins the minute a request for services comes in through the central scheduling office, White said, with schedulers identifying insurance coverage for the patient and obtaining approvals from the insurance company when necessary.

But insurance is leaving a bigger hole as employers whittle down their health plans to cope with rising insurance costs. That leaves health care providers spending more time working directly with patients on things such as payment plans.

"Pretty much across the board everybody's out-of-pocket payments are going up," White said.

Iowa Health Systems takes over the payment issues after the services are provided and billed. White said St. Luke's doesn't use an outsourced revenue cycle company, but that could change if the hospital's current staff can't handle the volume of demand.

MediRevv in Coralville and Revenue Cycle Partners in Cedar Rapids are Corridor companies helping medical providers secure payment. MediRevv President Chris Klitgaard says that due to the rise in "self-pay," the company's business model has been shifting from helping medical providers work with insurance companies to helping them work directly with patients.

MediRevv is one of the Corridor's fastest growing companies, with revenues up 292 percent from 2008 through 2010.
MediRevv doubled its employment to 70 over that period, Klitgaard said.

Klitgaard explained that the business runs much differently than a collections firm, trying to help the patient understand the bill, why they owe at least a portion of it and possible ways of paying it.

"A better-educated patient is much more likely to pay their bill than someone who does not understand it," Klitgaard said.

Lori Born, operations director of Revenue Cycle Partners, said complexity of health care bills, expanding regulation and the increased share of health care spending shouldered by consumers has made it burdensome for hospitals to keep up.

"Many health care providers are concluding that their core mission is to provide health care, and that running ever larger and more complex billing and customer service operations is not necessarily something that makes sense for them to continue doing," Born said.

Medical providers are typically more attuned to dealing with health insurance companies and government programs such as Medicare than with self-pay patients who lack coverage.
Klitgaard said they also tend to lack technology such as predictive dialers and patient Web portals that MediRevv can offer.

MediRevv typically can increase a provider's patient payment balance by 30 percent to 40 percent, Klitgaard said. The company, owned by seven individual investors including Klitgaard, has at least 16 active contracts with health care providers.

Revenue Cycle Partners is part of Moline, Ill.-based Avadyne Health, which employs almost 400 nationwide and about 75 in the Cedar Rapids area. It serves more than 125 hospitals in 25 states.

Born says staff training is a key to Revenue Cycle Partners's abilities. Employees are trained in using a leading customer service software system, then go through preparation, testing and certification in health care billing.

The companies look for employees with backgrounds in medical billing and the ability to communicate complex insurance issues to patients and their families. Klitgaard said more than
90 percent of the company's employees who deal with patients have at least a bachelor's degree.

The growing number of health insurance options available has increased the difficulty of explaining a patient's responsibilities, Klitgaard said.

"There's a formula of every plan. Once you have that formula, it's the tweaks to that plan that have to be memorized," he said.

MediRevv plans to relocate in the late summer or early fall to a new 18,000-square-foot facility at Cross Park and University Parkway in the Oakdale Research Park, under development by Build to Suit Inc.

Klitgaard said the facility will provide room for more growth and more amenities for employees.

Local medical providers served by MediRevv include the University of Iowa Health Care Community Medicine Service affiliates. The company recently signed a contract with Iowa Health System.

Klitgaard expected medical providers to require even more help from third parties such as MediRevv in the coming years because of changes that will steepen the learning curve for those who bill and collect for medical procedures.

Those changes include a new diagnosis and procedure coding system, ICD-10, being stipulated by the Department of Health and Human Services in late 2013, and provisions of the federal health care reform law.

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