4 Ways to Maximize Government Reimbursements

With Medicare reimbursements from the Centers for Medicaid and Medicare Services (CMS) accounting for approximately 32% of hospital revenue, it’s essential for healthcare leaders to comprehend the complexity of these payments.

However, as healthcare finance evolves, hospitals and health systems face significant challenges in maximizing reimbursements.

Let’s explore four key ways to improve government reimbursements in the face of complex regulations and changing rules.

1. Address Transfer Diagnosis Related Group (DRG) coding accuracy

A critical aspect of Medicare billing, Transfer DRGs ensure payments are accurate, fair and reflective of the care a patient received.

However, coding errors can put revenue at risk and expose hospitals to Medicare audits. According to a recent FinThrive analysis, the average Transfer DRG underpayment due to incorrect coding is approximately $2,800, with some underpayments as large as $70,000 for a single claim.

These underpayments put healthcare organizations at a high risk to miss out of significant revenue. Fortunately, finance leaders can minimize this risk by prioritizing better Transfer DRG coding accuracy.

Improved coding accuracy can reduce audit risk and payment takebacks, while also potentially increasing revenue by millions of dollars.

2. Collect all of your earned Medicare Disproportionate Share Hospital (DSH) reimbursements

Medicare DSH payments provide financial support to hospitals serving a high proportion of low-income inpatients, primarily covered by Medicaid. These payments aim to offset the additional costs associated with caring for a disproportionate share of financially disadvantaged patients and can make up a substantial portion of Medicare revenue for eligible hospitals.

Unfortunately, recent federal decisions are adding even greater financial strain for these healthcare organizations. CMS finalized a jarring $1 billion cut to Medicare funding for disproportionate share hospitals, despite evidence from the Congressional Budget Office suggesting a stable or even rising uninsured rate. Obtaining DSH reimbursements requires a complex, error-prone and time-consuming process of data analysis.

To improve Medicare DSH reimbursements, healthcare organizations can:

• Verify patient records to capture all Medicaid eligible days
• Stay updated on DSH regulations
• Improve coding accuracy to avoid under-coding or missed opportunities for more money
  
  

3. Identify all your Uncompensated Care

Uncompensated Care bridges the gap for patients who lack adequate coverage. As defined by CMS, it includes:

• Uninsured patients: Those lacking any health insurance
• Underinsured patients: Those with insurance but facing high deductibles, coinsurance or co-pays they cannot afford
• Self-pay patients: Those who could, but choose not to, pay their share of medical bills, resulting in bad debt for hospitals

RELATED: Four Strategies to Reduced Uncompensated Care

To address this, CMS reimburses a portion of a hospital's uncompensated care costs associated with these patient groups.

Unfortunately, hospitals and health systems usually lack the staffing or resources to maintain all the data and information needed to identify which patients are eligible and their write-offs.

Here are a few ways to get the most from Uncompensated Care reimbursements:

• Ensure your financial aid policy (FAP) matches how you write off uncompensated care. Each hospital’s FAP is different, so double-check!
• Find out if charity patients have insurance or not. Accurately reporting this can affect the reimbursement amount.
• Medicare Administrative Contractor (MAC) auditors follow similar, but different policies for auditing uncompensated care. Be prepared for each policy.
  
  

4. Manage your Medicare Bad Debt

It’s important to be proactive in managing any Medicare Bad Debt since there is still an opportunity to be reimbursed for a portion of any amount unpaid by a patient.

Currently, Medicare reimburses providers 65% of unpaid and uncollectible Medicare beneficiary cost-sharing amounts, which includes both coinsurance and deductible.

Major challenges exist, however, that make it difficult for hospitals and other organizations to claim Medicare Bad Debt reimbursement. Specifically, hospitals often lag in automating processes around these reimbursements.

Implementing automated systems can enhance accuracy and efficiency while simplifying the complex process of handling data related to Medicare Bad Debt. Look for technology solutions that can identify available Medicare Bad Debt and provide actionable analytics and summary reports. Doing this can help maximize efficiency and simplify government reimbursements.

RELATED: Revenue Cycle Automation Playbook

Now more than ever, it’s crucial that hospitals prioritize reimbursement efforts from Medicare, but each comes with their own set of challenges.

Finance leaders must stay informed about evolving regulations, conduct internal audits and invest in technology and expertise to navigate the complexities of government reimbursement successfully. By doing so, hospitals can secure the revenue they need to continue providing quality care to their communities.

Interested in learning more about how your team can better manage government reimbursements? Read our guide that details how to get the most out of your Medicare and Medicaid reimbursements.