The Life of an Anesthesia Claim in the Age of COVID

Summary: 

The coronavirus has impacted much more than surgical volumes; in fact, it has had a dramatic impact on every aspect of our lives. While OR volume is beginning to get back to normal, we are just starting to see how it has affected our ability to get paid for the work performed.

There has been so much discussion about the drop in surgical volume resulting from the Covid-19 virus. Many of our clients saw a decrease in case volume of as much as 80 percent during the months of March and April. This of course, resulted in a serious drop in collections. Now that surgical volumes are increasing, our clients are optimistic that collections will eventually return to normal levels. Needless to say, we have to keep reminding our clients that there is always a lag. That is just the nature of medical accounts receivable.

Cutting into Collections

The unfortunate reality is that the coronavirus actually impacted more than surgical volumes. Every step in the process of preparing and resolving claims for our anesthesia clients was also impacted. In other words, the life of a typical claim to an insurance company since March 15 follows the same basic path as an historical claim, but each step has been modified or adjusted given new work rules for staff who may now be working from home or by patients who may have been laid off.

To the extent that a claim can be adjudicated electronically without manual intervention, it has probably been processed and paid as always; but, if it required manual review or resulted in a denial, getting the claim paid now requires considerably more time and perseverance. It has always been true that it is easier to get the payment from a patient's insurance than the deductible and co-pay from the patient. Patients' willingness and ability to pay their portion of the charge is now at an all-time low.

Delving a Bit Deeper

When we analyze expected collections by payer for any of our clients, three things become clear. First, there is a slightly higher percentage of claims that get denied on first submission from March on than we experienced previously. For some payers this appears to be the result of new policies for endoscopic claims. A growing number of insurance plans are reluctant to pay for anesthesia for endoscopic procedures if there is not some clearly documented medical necessity for the anesthesia service. The second thing we notice is that patient deductibles have risen since last year, which, of course, means that a higher percentage of the allowable is now the patient's responsibility. Lastly, it comes as no surprise, therefore, that given the growing level of national unemployment and an overall uncertainty about patients' financial future that an increasing number of patients are refusing to pay their open balances.

The table below is a representative sample of the increase in patient deductibles for five clients from across the country. For each of the plans listed, we divided the total deductible due by the number of cases billed to each plan. We only looked at the top five plans to simplify the example, but a comprehensive analysis might be useful for some practices. Obviously, many patients had satisfied their deductible by March but even so this had a material impact on collections, especially given all the other factors from March on.

Putting It All Together

Thus, we can start to explain why collections are not ramping up quite as fast as expected even though surgical case volumes are increasing. The degradation may be barely perceptible for some practices but quite obvious for others. As always, payer mix can be the critical factor. Usually it is the preferred PPO plans with significant patient deductibles and co-payments that are impacted the most. With regard to payments from insurance plans, the delays should eventually get resolved as life returns to normal, although none of us can quite predict what that will look like. Now, the real concern will be the patient balances. Outstanding medical bills have always been the number one cause of bankruptcy in the United States. Short of collecting these balances up front there will be little we can do to collect them down the road.

The good news is that, for most practices, getting paid is simply a when issue. We urge our clients to be patient as all the pieces of the revenue cycle slowly get put back in place. If you are concerned how the return to normal will look for your practice, feel free to email us at info@anesthesiallc.com or consult your account executive who will be happy to provide you an analysis and projections.