Are You Turning Half Dollars into Nickels?

Posted by Lyle Beasley on Sep 28, 2015 11:03:00 AM
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Unless you're a big fan of Thomas Jefferson (whose face appears on the nickel coin), you'd never trade a half-dollar for a nickel. But that's exactly what many hospital Business Office Directors (BODs) are doing by prematurely sending motor vehicle accident claims to either health insurers or a self-pay vendor.

Most BODs live by the motto, “Days Outstanding means everything.” In many cases, their bonuses are based on how aggressively they whittle down the hospital’s Average Days Outstanding. Some BODs get nervous at the 120-day mark and downright panicky when it reaches the 180-day thresholdBut auto accident reimbursement is a niche unto itself – and there are two great reasons to go beyond 180 days: significantly greater reimbursement and higher patient satisfaction.

You can understand why hospitals shy away from aggressively working accident claims. Without an experience partner, it can be a workflow nightmare: tracking down police reports, dealing with multiple property/casualty insurers, etc. If the injured patient has health insurance, some hospitals simply direct the bill in that direction. If the patient is uninsured, they often send it straight to a collection agency. But in their haste to get the claim off their Days Outstanding list, they’re leaving a lot of money on the table.

For claims involving medically uninsured patients, the average reimbursement rate from a collection agency is typically 5% to 10%. But if BODs show a little patience, they can usually get 50 cents on the dollar. Here’s where the extra money come from:

  • Roughly two-thirds of the additional revenue comes from no-fault insurance (Med-Pay or PIP), which has the dual advantage of lowering the patient’s co-pays and deductibles while dramatically increasing the hospital’s reimbursement rate. 
  • About one-third of the extra revenue is from lien protection in cases where a motor vehicle accident victim has financial settlement pending. By placing a lien on that settlement, the hospital is guaranteed to get paid before the patient receives the settlement check – and the patient’s credit score doesn’t take a hit.

It typically takes about 250 days to receive revenue from a settlement lien – and reluctance to wait that long hurts the hospital’s revenue stream. Some BODs get so nervous at the 180-day mark that they take the lien off and send the claim to a collection agency. They’re missing out on a big chunk of guaranteed income by not waiting those additional 70 days. It’s much smarter to find an accident claim partner with the expertise and patience to help achieve maximum reimbursement.

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