Medical billing is shaped by healthcare reform, which is one of the most dynamic forces at play. Legislation, regulatory changes, and shifts in healthcare delivery models have led to a significant change in how providers bill. In response to the continued push for value-based care, increased patient responsibility, and technological advancements, medical billing is evolving.
In this newsletter, we explore the impact of healthcare reform on medical billing, including the Affordable Care Act (ACA), the shift to value-based care, recent regulatory changes, and how billing practices are adapting to a more complex healthcare environment.
The Affordable Care Act (ACA) and Its Long-Standing Impact
Medical billing practices have continued to be affected by the Affordable Care Act (ACA), passed in 2010. By expanding Medicaid coverage and establishing health insurance exchanges, the ACA aimed to expand access to healthcare by increasing insurance coverage. As a result, medical billing departments had more claim submissions due to an increase in insured patients.
Increased Claim Volumes
Billing departments saw an increase in claims as millions of Americans gained insurance under the ACA. This created a number of challenges, but it was also a positive development for healthcare providers. As more patients moved from being uninsured or self-paying to receiving Medicaid, Medicare, or private insurance, medical billing teams had to deal with a more complex claim process. There are different billing rules, procedures, and timelines for each of these payors.
In addition to shifting the focus toward quality of care, the ACA affected billing departments previously relying on volume-based fee-for-service models. The integration of performance metrics into billing processes was a challenge for value-based models, which we will explore in greater depth.
Medicaid Expansion
A significant increase in Medicaid patients seeking care was the result of Medicaid expansion. This has implications for medical billing in terms of payor mix, because Medicaid reimburses at lower rates than private insurance. It was necessary to adjust billing teams to the nuances of Medicaid billing, including stricter reimbursement criteria and specific coding rules. Denials also increased as a result of the expansion, often resulting from confusion over eligibility and coverage limitations.
Value-Based Care and Its Billing Implications
Healthcare reform has led to a major shift from volume-based to value-based care models, one of its major effects. As a result of these models, patients’ outcomes are improved while healthcare costs are reduced, emphasizing quality over quantity. In spite of the clear benefits to patients and the healthcare system, medical billing processes are made more complex by this shift.
From Fee-for-Service to Value-Based Billing
The medical billing process has traditionally been based on fee-for-service (FFS) billing, which reimburses providers based on the volume of services provided. Value-based care models increasingly tie billing to patient outcomes, quality metrics, and coordination of care.
In medical billing, this means switching from coding services rendered to tracking and reporting care quality. In addition to the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs) under the Quality Payment Program (QPP), billing teams must be familiar with new codes related to value-based care programs.
The tracking of key performance indicators (KPIs) like patient readmission rates, adherence to treatment plans, and preventive care is also being emphasized.
Bundled Payments and Accountable Care Organizations (ACOs)
As part of the move toward value-based care, bundled payment models and Accountable Care Organizations (ACOs) have become more prevalent. Instead of receiving individual payments for each service, providers receive a single, predetermined payment for an episode of care. In order to ensure that the services provided within the bundle are properly documented and billed, medical billing professionals must coordinate with multiple departments and providers.
Alternatively, ACOs are groups of healthcare providers that work together to deliver coordinated services. The complexity of coordinating care across different entities can make managing shared savings and performance incentives challenging for medical billing departments working with ACOs.
To ensure that providers receive fair compensation for their involvement in an ACO, it is crucial to ensure that their coding and submission are accurate and timely.
Regulatory Changes and Their Impact on Billing
Additionally, healthcare reform has introduced several regulatory changes that have impacted billing. For billing departments, transparency, data sharing, and coding have become top priorities.
The No Surprises Act
The No Surprises Act, which took effect in January 2022, is one of the most recent changes to medical billing regulations. Often, patients receive out-of-network care without realizing it, which results in surprise medical bills. In accordance with the No Surprises Act, patients pay only in-network cost sharing amounts for certain out-of-network services, such as emergency care.
These new protections now require medical billing teams to ensure that patients aren’t billed more than their in-network costs. As a result, billing practices are under increased scrutiny, particularly when dealing with out-of-network providers. This legislation makes it more likely for billing teams to engage in arbitration between providers and insurers over out-of-network rates.
ICD-11 Transition
A further regulatory change that affects medical billing is the transition from ICD-10 to ICD-11. While ICD-11 implementation is still in progress in the U.S., it represents the largest update to diagnostic coding in decades. As a result of the more detailed codes in ICD-11, patient outcomes can be tracked more accurately and value-based care initiatives can be aligned.
The medical billing industry must prepare for ICD-11 by updating its coding systems, training staff on the new codes, and making sure billing software can handle the expanded code set. As a result of coding errors, billing workflows will be disrupted, and claim denials will be reduced.
Technological Advancements: Streamlining Billing Amidst Reform
Healthcare reform has not only influenced how medical billing is done but has also driven the adoption of new technologies to manage these complexities. As a result of the increasing need for accuracy, compliance, and efficiency in medical billing, automated billing systems, electronic health records (EHRs), and artificial intelligence (AI) have emerged.
Automation and Artificial Intelligence
The adoption of automation and AI-powered tools has been one of the most significant advancements in medical billing. Billing teams can use these technologies to process claims faster, reduce errors, and improve reimbursement rates. Automated billing systems can flag potential coding errors before claims are submitted, reducing the risk of denied claims. In addition, AI can be used to analyze claim data and identify patterns that cause denials, allowing billing teams to address these issues proactively.
The transition to ICD-11 will be made easier by AI-driven tools like natural language processing (NLP). The billing team can focus more on resolving claim disputes, managing denials, and optimizing revenue cycles by streamlining these processes.
The Rise of Telehealth Billing
In the wake of the COVID-19 pandemic, telehealth has seen explosive growth, and healthcare reform has played a key role in making it a permanent fixture in care delivery. In spite of this, telehealth billing presents a number of challenges. A provider’s reimbursement policy may vary depending on the state, the payor, and the type of telehealth service they provide.
The medical billing team must be up-to-date with telehealth billing guidelines, including the correct use of modifiers like Modifier 95, which indicates a telehealth service, and ensure that state and federal regulations are met.
Preparing for Future Reforms
As the healthcare system continues to evolve, billing departments will need to conform to new payment models, regulatory requirements, and patient expectations in order to remain competitive.
As a result of the shift toward value-based care, social determinants of health (SDOH) and patient-centered care will likely continue to increase. In order to secure appropriate reimbursement, medical billing teams will need to capture data related to these factors and report it to payors.
Additionally, cybersecurity and patient data privacy will become increasingly important as the healthcare system becomes more digitized. In order to protect patient information and comply with privacy laws such as HIPAA, medical billing departments need to invest in robust cybersecurity measures.