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August 4, 2021
David Burda
Economics Outcomes System Dynamics

Death by Revenue Cycle

I would bet my family annual out-of-pocket maximum of $3,000 under my Blue Cross HMO that no other industry spends more on billing and collections than healthcare. You may know billing and collections as revenue cycle management, and hospitals, health systems and medical practices spend billions of dollars each year to make sure patients and/or their health plans pay every dime they owe. 

Providers have gotten so good at revenue cycle management that they’re even charging and collecting money from patients who don’t owe them anything. 

That’s my facetious takeaway from a new study in the journal Preventive Medicine. You can download the study here

Two researchers from Boston University wanted to know whether commercial health insurers were still charging people with employer-sponsored insurance out-of-pocket deductibles for preventive care some 10 years after the Patient Protection and Affordable Care Act eliminated those deductibles.

Under the ACA, private insurers are supposed to include the cost of preventive services recommended by the U.S. Preventive Services Task Force in the premiums they charge employers and their employees for coverage. Providers, in turn, are supposed to offer those services to employees and their dependents free of charge, meaning no co-pays or deductibles. The idea, of course, is to encourage people to have things like wellness visits, cancer screenings and immunizations.

To find out, the researchers analyzed health insurance claims from nearly 31 million people—adults and children with employer-sponsored insurance—in 2018. They looked at whether the members received a covered preventive service and whether they paid anything out of pocket for that service.

Overall, about 36 percent of the 31 million people had a claim for a preventive service in 2018. Of those with a claim, anywhere from 19 percent to 32 percent paid an out-of-pocket charge for their preventive service, depending on the service, the care setting, the market and what state they were in. The median charge ranged from $20 to $23.

In total, the researchers estimated that people with health insurance through their employer paid $75.6 million to $219.4 million out of pocket for preventive care in 2018 that should have been free.

So, what’s going on? One possible explanation, according to the study, is revenue cycle management.

“They (continued cost burdens for preventive services) may arise from inadvertent miscoding at the practice or provider level, aided by a lack of standardization in insurer guidelines for preventive service claims or increased complexity of billing codes,” they said. 

And the impact on population health? Even insured patients won’t seek preventive care, per the study.

“These bills may lead patients to believe that the promise of free preventive care is a false one, making increasing adherence to clinical prevention guidelines more challenging,” the researcher said. 

When you put the two together, overzealous or incompetent revenue cycle management is killing us.

I mean, given the billions of dollars that healthcare providers and health insurers spend on sophisticated technology and financial wizards to bill, pay and collect precisely the right amount for services rendered, how hard would it be to put a big FREE tag in bold red letters in the spreadsheet cell next to the covered preventive service? I could probably do that in a few hours and two cups of coffee. 

This is what happens when you’re not really patient centric, and this is why we desperately need healthcare consumerism. It’s obviously up to us to know what care we should and shouldn’t pay for. 

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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