Pandemic-related impacts to healthcare providers are expected to continue well into 2021. Many short- and long-term challenges remain and serve as additional factors influencing revenue recovery, operations and the overall market. These include:
Decreased hospital volumes: Overall volumes dropped approximately 60% at the height of the pandemic according to recent TransUnion Healthcare analyses. While outpatient volumes have since returned to normal levels, inpatient visits continue to lag by 8%–10%. Emergency department volumes follow a similar trend — down 25% compared to pre-COVID-19 numbers.
These reduced volumes have made profitability a challenge this year — especially as operating margins, per a Kaufman Hall Flash Report, have fallen 96% since the start of 2020, and hospital losses are projected to reach more than $323 billion by year end.
Repayment of CMS loans: In early stages of the COVID-19 pandemic, CMS loaned roughly $100 billion to Part A and Part B healthcare providers as part of the Medicare Accelerated and Advance Payment Program. Hospitals were required to begin repaying the funds 120 days after receiving the loan; however, they recently pushed the start of recoupment to 1 year.
Providers now have 29 months from their first payment to repay loans. CMS will charge a 4% interest rate for any unpaid amount after the final due date. The penalty has yet to be fully enforced; however, providers may still owe payment by way of audit.
Changes in patient behavior and economic instability: As the industry shifts to a “new normal” — amid the threat of virus resurgence and elective and ED visit reductions — patient preferences have also changed. There’s been increased utilization of telehealth, virtual care and lower acuity settings. These less intensive services affect overall revenue, and a clear path as to where these funds can be made up may not be apparent yet. The overall payer mix will continue to be impacted due to high levels of unemployment and economic instability.
Price transparency mandate: Healthcare consumers expect price transparency, accessible information of cost responsibility and accurate patient payment estimates. The federal government, by way of CMS, has mandated by Jan. 1, 2021, hospitals must display their negotiated rates for 300 shoppable services and charge master description in a machine-readable format. Hospitals failing to comply will be subject to monetary penalties — up to $300 per day, per hospital — as well potential compliance issues and reputational risk.
In the wake of COVID-19, providers stand to lose millions of dollars of earned revenue. It’s imperative to avoid complacency and not leave dollars on the table. Insurance discovery, Medicare and commercial payer reimbursement, and patient revenue recoveries are all at risk if hospitals pause their recovery efforts. For additional resources on how your organization can recover revenue amid COVID-19, visit our Hub page.