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Bracing for the silver tsunami: Maximizing revenue while facing a shifting payer mix

Insight Article - June 17, 2021

Benchmarking & Forecasting

Reimbursement

Data Analytics & Reporting

A high tide of Medicare-age patients are closer to the metaphorical beach for healthcare providers than ever, with no signs of ebbing soon.

Talk of dealing with a “silver tsunami” as the Baby Boomer generation ages and shifts from commercially insured to Medicare beneficiaries has been around for more than a decade — similar phrases and metaphors for the sizable cohort of aging Americans have grown in popularity dating back to the 1980s.1

As Tim Ruse, MBA, FACHE, CMPE, vice president, client business services, abeo, noted in his session at the 2021 Medical Practice Excellence: Pathways Conference, there are significant macroeconomic and microeconomic impacts of this demographic change, especially for medical group practices and their revenue cycle management.

“A lot of times we look at payer mix as a point in time, or maybe compared to a prior year, but there’s a lot of value in looking at how that evolves over time,” Ruse said, especially as healthcare leaders attempt to look ahead to future years.



Medicare enrollment has grown each year (see Figure 1), but 2020 definitely changed the trajectory of that growth: “COVID has been quite the outlier” in tracking payer mix data for one practice he works with, Ruse noted (see Table 1).



From the time Ruse started working with the practice, the share of Medicare in the payer mix jumped from less than 27% in 2011 to 35.3% in 2019. The COVID-19 pandemic proved an outlier for this growing payer mix shift, as Medicare dropped to 34.8% in 2020, with almost corresponding increases in Medicaid and self-pay last year.

“With the reduction in elective procedures happening in March 2020, we really saw a drastic difference in the case mix and specialty for several months — things like GI, endoscopy, those cases really fell off in late March and April,” Ruse said. Other cases in urology and anesthesia saw “pretty deep cuts” to volumes until things began to recover in summer 2020, Ruse added.

But what Ruse noted wasn’t so much the sustained growth year over year — about 1% on average — but rather the steep increase in the growth of newly enrolled beneficiaries (as seen in the 2018 data point in Figure 1). Despite the practice featured in Table 1 having grown by almost 40% during the time period shown and doing far more cases in 2019 than 2020, the payer mix shift from various buckets to Medicare “has impacted their strategic planning,” Ruse added.

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