It’s no secret that the US healthcare system has very clear financial winners and losers. Over the decades, insurance payers and their lobbyists have intentionally created an unfair and predatory status quo that ensures big bucks for executives, shareholders, and the politicians in their pocket – while leaving everyone else holding the bag.
Consider these alarming (and frankly, infuriating) statistics shared by Wendell Potter, a former insurance executive now dedicated to healthcare reform:
Meanwhile, the situation grows ever more tenuous for American healthcare consumers, with 41% of adults in medical debt, along with 46% forgoing or delaying care due to inability to pay.
Premiums and deductibles continue to rise at rates that exceed inflation and wage increases, making healthcare progressively less affordable for individuals and families across the country. In fact, medical costs are among the leading causes of personal bankruptcy year after year.
The financial reality for consumers is grim, and all signs indicate that it’s only going to get worse.
While it’s generally common knowledge that Big Insurance is raking it in while egregiously shafting consumers, what’s less well known is the impact on healthcare providers, particularly rural hospitals.
Rural hospitals are already up against a perfect storm of challenges: lower patient volumes, high levels of uncompensated care, lack of Medicaid expansion, regulatory burden, and staffing shortages, to name just a few.
And naturally, insurance payers go out of their way with predatory and intentionally deceptive practices that significantly compound the problem.
In addition to so-called “cost sharing” in the form of ever-more ridiculous premiums, deductibles, and co-insurance, (more accurately called “cost shoving,” in my opinion, since all the responsibility is shoved onto patients), payers shamelessly pull all kinds of dirty tricks out of their bags.
Let’s take a look at two of the most insidious tactics they use to line their pockets.
If you’re a rural hospital leader, you’re already well aware that payers intentionally delay or deny payment for claims they absolutely should be covering. Worse, they often deny without even properly reviewing the claim.
To add insult to injury, and to make it easier for them to “justify” these denials, payers increasingly require preauthorization, even for standard, medically-necessary procedures. This gives them what they consider an excuse, no matter how flimsy, to immediately challenge the claim and keep for themselves the money that is rightfully yours.
Request for Information (RFI) denials are also on the rise, with private insurers denying claims at 12 times the rate of Medicare for things like missing a signature or some arbitrary piece of documentation.
While hospitals can get back a decent portion of what’s owed to them by fighting these unfair denials, they must still contend with a massive impact on their bottom line. Denials take extensive time and resources to challenge, and they prevent hospitals from having the ongoing cash flow desperately needed to stay afloat.
Of course, payers don’t care one bit, since all that matters to them is fattening their own coffers.
Another dirty trick played by Big Insurance is to leverage their substantial market power to push smaller hospitals into accepting lower reimbursement rates during renegotiations, making it nearly impossible to cover operational costs.
As a result, many rural hospitals find themselves with no choice but to join larger healthcare systems to secure better rates through collective bargaining power. While this may provide some short-term financial relief, it comes with significant long-term consequences, including the loss of local control and independence, as well as reduced services.
And of course, there is no guarantee of long-term sustainability. Consolidated hospitals are at the mercy of the larger health system, which could decide to downsize or even close smaller facilities at any time.
These kinds of self-serving practices are taking a clear toll on rural hospitals, and by extension, their communities.
Since 2005, nearly 200 rural hospitals have been fully or partially closed (mainly in the South, where most states have chosen not to expand Medicaid). Rural hospitals are often the economic backbone of their communities, supporting one in every 12 rural jobs and contributing significantly to local economies. Their closures not only reduce access to healthcare, but also lead to higher unemployment and lower income levels in these areas.
In short, everyone loses – except, of course, the payers.
I know it feels overwhelming to be up against our current reimbursement system. After all, it’s designed to make it as hard as possible to provide quality healthcare, not to mention simply keep your doors open.
But there is hope.
I’ve been in this industry for over two decades, and just like you, I’ve gotten progressively angrier at the sheer greed and gall of these companies. I suggest three critical actions you can take right now to not only improve your own bottom line and help you remain independent, but to also move the needle towards real, systemic change.
The first and most important thing to do is help spread the word about these unethical and exploitative payers.
No doubt you and your team are already sounding the alarm internally. But for real change to occur, and for your patients to understand what’s truly going on, you need to take it beyond the water cooler.
One quick way to join the fight and have your voice heard is by participating in our ongoing survey of rural hospital leaders. The purpose of this survey is to evaluate insurance payers in terms of their ease of interaction and the fairness of their reimbursement practices towards rural hospitals. We already have 50+ responses, which is going a long way towards shining a light on these predatory practices.
I’ve been speaking at health and provider conferences all over the country, sharing the truth about exploitative payers and advocating for change. With your help, I can sound the alarm even more urgently, press for policy and legislative measures, strengthen your hand in contract negotiations, and continue building an army of loud, angry, and determined hospital leaders.
Will you take 15 minutes to complete the survey today? Once we have 100 participants, we’ll compile the findings in a report to be shared with you, along with an invitation to a webinar discussing results and next steps.
Payers are notoriously secretive about their denial rates, despite regulatory reporting requirements put into place by the Affordable Care Act. In a 2023 investigative effort, ProPublica estimates a 10% – 20% denial rate on average, based on the limited data available.
In addition, survey results show an overall 10% – 15% increase in denials year over year since 2020. Of course, this is no accident. Insurance whistleblower Wendell Potter notes, “Refusing payment for medical care and drugs has become a staple of their business model, in part because they know customers appeal less than 1% of denials.”
Unbelievably, these denials often aren’t substantively reviewed by doctors, or by any humans at all. Cigna, for example, uses an algorithm to flag what they consider “mismatches between diagnoses and what the company considers acceptable tests and procedures for those ailments,” according to ProPublica. “Company doctors then sign off on the denials in batches,” 50 at a time with a single click.
Of course, none of this is news to you. Every day, your team sees denial after denial and does their best to fight them – while juggling an already-full plate of administrative tasks.
For a comprehensive discussion of the process our team follows to challenge these ridiculous denials, feel free to review this article on denial management strategies, published by our sister site.
If you’ve previously tried outsourcing your billing or denial management processes, then you’ve probably already seen how that often leads to further complications. Most outsourcing partners operate on a contingency fee basis, so their focus is on the low hanging fruit. But as you well know, rural hospitals require comprehensive management of the entire reimbursement forest.
We do things differently, by lending you a team member with a big-picture view. We leverage decades of experience, ongoing payer representative relationships, a vigilant awareness of sneaky policy changes, and the ability to spot an unfair payment evasion a mile away.
When Chuck initially contacted us, he was dealing with rapidly declining and delayed insurance reimbursement, causing a good deal of justified anger – not to mention the mental and emotional strain due to the critical state of his cash flow. He feared it was just a matter of time before the hospital would have to shut down for good.
When we described our model of providing a fractional worker and explained how it would work, Chuck’s face flooded with visible relief. He had known he needed a specialist, but there was no budget for a full-time worker, and no one with the necessary experience to train them. But a fractional worker could slide right into the job and get to work from day one.
The sole responsibility of Chuck’s newly-hired fractional worker was to monitor and recover insurance payments. Unlike the many hats worn by other team members in a busy department, the fractional worker had one role and one role only. She wasn’t pulled in multiple directions or chasing shifting priorities. As an expert, she had deep knowledge and experience in claims and reimbursement processes, and she knew exactly how to get around the dirty tricks some of the big carriers play when denying coverage. She was a single point of accountability for success, making it easy for Chuck to assess her performance and value. Finally, her hours could be adjusted according to the level of support he needed at any given time, ensuring cost efficiency and low overhead.
Within a matter of days, Chuck’s hospital received a much-needed cash boost to the tune of nearly $200,000. Not bad, considering the fractional worker was paid $1500 for the same time period. That’s an ROI of over 13,000%. And the reimbursements have rolled in reliably ever since. In fact, the hospital went from being forced to close their doors in just a matter of weeks, to now being comfortably in the black.
With the ongoing influx of cash, Chuck is not only able to forecast accurately; he’s in a much better position to compete with other employers, update his facility, and expand his services. He no longer feels the unending daily stress and frustration of wrangling reimbursement, and is thrilled to focus his energy on the work that matters most – leading a thriving and vibrant hospital that is the heartbeat of the community.
Ultimately, I’d prefer that we didn’t have to offer this service at all, and that payers would operate fairly and ethically. But until that’s the case, we’re here to fight for you.
Most providers, rural hospitals included, spend a lot of time and energy collecting payment from patients – payment the insurance companies are responsible for, but have shoved onto the patient.
The administrative burden just adds to your already stressed-out team, who are juggling multiple responsibilities while likely contending with high turnover. Effective patient communication, system integration, technology challenges, ongoing training, regulatory compliance – all these factors and more make collections a challenging endeavor.
And let’s face it: Collections aren’t any fun for anybody. It’s demoralizing for your team, and it’s off-putting for patients, even risking their loyalty and relationship. This is because, usually, patients see you as the villain. They think you’re raking it in at their expense, setting higher and higher prices to see what you can get away with. You know that nothing could be further from the truth; why not tell patients that?
In other words, make sure you collect your money, but also make sure they know who to blame.
What I recommend is being totally transparent with patients about the state of our healthcare system. Go ahead and tell them who’s really responsible for their outrageous healthcare costs. Explain that you understand their frustration, and explain that you’re at the mercy of the payers as well; far from rolling in the dough, you’re just trying to keep your doors open.
If you don’t already have a strategic early-out program that balances patient education and empathy with improving your bottom line, you can find some straightforward pointers on getting started with early-out here.
We’ve had great success with our clients by leveraging a strategic early-out and debt collection process alongside a script that explains exactly how insurance companies are hanging everyone out to dry but themselves – and we have hundreds of 5-star patient reviews to show for it.
When patients understand that you are not the enemy, and are in fact doing all you can to stay afloat so you can continue serving them, everything changes.
The goal is to get them to see your hospital as a partner in care; a crucial community institution that deserves their support – and that may not be there without it.
Diane, the CEO of a rural hospital in Georgia, is a great example of this. She and her team found that the process of collecting payments internally was bad for retention and morale. Hounding their neighbors left her staff feeling awful at the end of the day, creating a negative culture with high turnover. Desperate to stop the demoralizing feelings all around, Diane decided to outsource the process to a collection agency. But the next thing she knew, the hospital was facing a non-stop barrage of negative online reviews. Word quickly spread that the collectors were predatory robots not taking no for an answer.
Community members even started approaching Diane during Sunday church services to air their grievances. She even considered giving up church to avoid this weekly embarrassment and stress. Diane felt stuck with a tough choice: continue down this path to collect whatever payments she could, or let the hospital fail. That’s about the time she reached out to us.
On our first call, we helped Diane realize that saving the hospital or saving her reputation was not a binary choice. She really could do both.
We suggested to Diane that her team could establish rapport and overcome patients’ fight or flight responses, while positioning hospital staff as advocates instead of adversaries – and we trained them to do just that. Diane took back control of collections, and everything changed, with immediate and remarkable impact.
Armed with their new mindset and a new plan to handle calls, staff members picked up the phone and started dialing. They were filled with relief at being empowered to help rather than harass. Morale improved dramatically, and the team enjoyed coming to work instead of dreading it. Staff turnover was no longer a concern, saving her additional money in recruitment and training costs.
And it wasn’t long before Diane started to see the effect on her hospital’s reputation and bottom line. Patient satisfaction and online reviews significantly improved. Cash collections from patients increased nearly 20%. The revenue generated increased Diane’s hospital budget, allowing her to invest in expanded services that benefit patients across her community.
More importantly, Diane’s life changed dramatically as well. She and her family stopped feeling like pariahs at church. And she could finally focus on the work that mattered most, with a happy staff, a successful hospital, and an end to the relentless daily stress.
Just like with denial management, we would vastly prefer if we didn’t have to offer this service. In the perfect world we’re striving for, insurance payers operate fairly and ethically, and hospital staff focus their energies on caring for patients. We will keep fighting until that day arrives.
The time of sitting passively by and letting Big Insurance walk all over us is over. How much longer are rural hospitals going to stay quiet while manipulative payers stack the deck against patients who desperately need care and the providers who offer it? No more.
Tackle the payers on all three fronts: Getting loud, fighting denials, and educating patients.
And while we’re happy to help you with denial management and payment collection, what I especially urge you to do is share your own experience via our survey. With rural hospital leaders nationwide joining forces, we can expose unscrupulous payers and enact real, lasting change.
Will you join us?
Interested in learning more about beating the payers at their own game? Schedule a call with me today. Let’s do this together!
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