Managing payer mix challenges during the COVID-19 crisis

MGMA Stat - July 14, 2020

Billing & Collections

Credentialing

Reimbursement

Andrew Hajde CMPE

The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders, “Has your practice's payer mix changed amid COVID-19?” The majority (74%) responded “no,” while 26% said “yes.”

The poll was conducted July 14, 2020, with 589 applicable responses.

Among practices reporting payer mix changes, the most-frequent change came from:
  • Medicaid (41%)
  • Self-pay (24%)
  • Commercial (20%)
  • Medicare (13%)
  • Other (2%)

Unprecedented job losses have contributed to a shift in who pays for healthcare, as millions of Americans move from employer-sponsored, commercial health coverage to plans on Affordable Care Act markets or state Medicaid programs, or become uninsured altogether. Changes in health network coverage can be a major factor for patients searching for a new physician during a pandemic, though a majority of healthcare leaders have reported a drop in new patient volume during the pandemic, per a July 7 MGMA Stat poll.

Substantial numbers of Americans are poised for changes in their health insurance coverage. A Families USA analysis released this week estimates that about 5.5 million people who lost their jobs from February to May amid the COVID-19 crisis also lost health insurance. That analysis did not account for family members who may have been on the same employer-sponsored plan as the workers who lost their jobs.

According to an Urban Institute estimate, more than 10 million people will lose employer-sponsored health insurance as a result of pandemic-related job losses between April and December 2020. This will have a dramatic impact on both the payer mix and the number of patients seeking care if they no longer have health insurance through an employer.
Action steps for managing payer mix changes
Healthcare leaders should work closely with their front office and billing staff to ensure extra care is taken to confirm the insurance and eligibility for patients. It is also a good time to review practice procedures and policies on upfront copay or coinsurance collections, payment plans, self-pay discounts and charity care as applicable. 

Patients who have been hard hit by the pandemic may request more flexibility on paying their balance, especially if they are covered under a high-deductible plan. Ongoing communication and transparency with patients before, during and after their visits on any balances that are the patients’ responsibility will improve the overall practice collections and patient experience.

Significant changes in payer mix will alter a practice’s collection ratio and may result in a reduction of net revenue. Practices with a significant shift away from commercial insurance to Medicare or Medicaid generally will experience an overall decrease in revenue. Administrators should be regularly tracking multiple key performance indicators (KPIs), including payer mix as compared to the historical norm. This allows a practice to trend the changes and determine the financial ramifications for future payments. 

There are a handful of steps practices can take to respond to these payer mix changes:
  • Administrators should be regularly tracking multiple key performance indicators (KPIs), including payer mix, as compared to the historical norm. This allows a practice to trend the changes and determine the financial ramifications for future payments.
  • If your practice is experiencing a drop in net revenue from your payer mix, it may be time to evaluate and renegotiate rates on your commercial contracts.
  • You may need to adjust your office hours or see more patients per day to achieve the same level of revenue based on your new practice payer mix.
  • Using benchmarking data, tracking KPIs, evaluating payer contracts, increasing access and maximizing A/R collections are more important during periods of decreased patient volumes.

MGMA is here to support your organization with the advocacy, consultants, experts, data, tools and other resources you need to continue to thrive in any environment.

Access the MGMA COVID-19 Recovery Toolkit
MGMA Stat
Would you like to join our polling panel to voice your opinion on important practice management topics? MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. Results of other polls and information on how to participate in MGMA Stat are available at: mgma.com/stat.
Additional resources

About the Author

Andrew Hajde
Andrew Hajde CMPE
Assistant Director, Association Content MGMA Englewood, Colorado
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