Healthcare administrative costs are a component of the healthcare system in the United States that many know exists, but only few really understand. Trying to understand the ins and outs of medical coding and what administrative services you are paying for once a medical bill is received can be overwhelming, especially if you are already facing a stressful medical event.

Healthcare administration includes all activities related to coordinating health and medical services, such as scheduling, billing, and claims processing. According to the Center for American Progress, U.S. payers and providers will spend $496 billion on billing and insurance-related administrative costs in 2019. In the United States, healthcare administrative costs make up roughly 30% of all medical bills received. From a monetary perspective, if you receive a $500 medical bill, $150 of that total will likely be from a variety of healthcare administrative tasks. With healthcare administrative costs constantly being monitored, here are three ways that can help ease the burden of those costs.

Proper Medical Coding

Proper medical documentation is an important aspect of billing within the revenue cycle process in the healthcare industry. Providers use these medical records to validate their reimbursements to different payers when a conflict with a claim has been issued. If a procedure or treatment is not correctly documented in the medical record by a provider or their hospital staff, the health organization could receive a denied claim. When records contain incomplete or inaccurate information, a lot of manpower, time and money must go into correcting the inaccuracies within the document. When incorrect medical coding is happening on a grand scale within a healthcare system, the stress put on the revenue cycle process can cause major issues for the provider’s bottom line and overall financial well-being. By ensuring that documentation is correct before it is sent to the payer, the revenue cycle can go uninterrupted and healthcare administration costs can be kept at a minimum. 

A/R Follow-Up

Another way to improve the overall efficiency and lower healthcare administrative costs is by continuously monitoring accounts receivable, also known as A/R follow up. With the variety and ever-changing services that physicians, hospitals and long-term health clinics provide, each patient that is seen will owe a specific amount to the provider based on the treatment that was given. Keeping those payments organized is essential for proper medical billing, not just for the providers but also the patients. The A/R  follow up process ensures that healthcare organizations have a way to recover overdue payer or patient payments. A/R follow up responsibilities include looking after denied claims, exploring partial payments and reopening claims to receive maximum reimbursement from the insurance companies.

Improving Patient Safety

In the past, the focus of patient care and how an individual is billed after visiting their provider has been primarily based on the volume of care a patient receives, also known as fee-for-service. With the implementation of the Alternative Payment Models (APMs) and value-driven care becoming a more popular option, the focus on improving patient safety outcomes play a bigger role than ever before. Federal policies from CMS and major payers are pushing APMs which are payment methods that rewards providers for delivering high-quality care at reduced costs. By implementing APM and having the patient’s outcome tied directly to a provider’s reimbursement, patients receive a higher quality of care and have a more positive experience. When both instances occur, patients usually see better long-term health outcomes. When patients receive customized care based on their individual needs instead of a prescribed one size fits all method, healthcare costs are lower because hospital readmissions, repetitive or unnecessary treatments and all of the expensive administrative tasks during the billing process can be greatly decreased or avoided all together. 

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