Three Major Factors That Affect The Stability Of Revenue Flow In The Healthcare Industry
Providers in the healthcare sector have three major factors that impact their revenue flow for business (Cleverley, Cleverley, & Song, 2012). The stability of revenue flow is affected by price setting, payer contract negotiations, and management of billing and coding practices. Price setting is the process that providers undergo to determine the prices they will charge for the services that they provide. Many payers will reimburse the provider for services based on negotiated contracts with the providers, individual payer fee-schedules, and some pay on a cost-payment basis. Contracted rates and cost-payment based reimbursement both are normally based around a percentage of cost or total charges of a claim. A fee-schedule basis is the
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Even in regards to payers that reimburse on a fee-schedule basis unrelated to charged amounts of services, pricing is still paramount to the revenue flow for providers. Medicare and Medicaid payers are well known for reimbursing on a fee-schedule basis. However, recent research has shown that 56 percent of the American population has some line of commercial healthcare insurance and those plans tend to pay on average, 61 percent higher reimbursement on some Diagnosis Related Groups-DRGs than Medicare(Perez, 2017). Even though Medicare may reimburse on a lower scale in many cases, many commercial plans follow Medicare guidelines as to which services they will pay for. Therefore, a provider could still benefit from charging higher pricing for services if they have a large enough pool of patients that have commercial plans. A way to lure a substantial amount of those patients is to be more competitive by providing high quality services or just by having a community perception of being a high quality provider (Cleverley, Cleverley, & Song, 2012). So regardless to provider having a higher volume of Medicare patients, if the pricing is more than comparable to the actual cost of the care, the provider could receive larger amounts in payments on claims from the commercial
Even in regards to payers that reimburse on a fee-schedule basis unrelated to charged amounts of services, pricing is still paramount to the revenue flow for providers. Medicare and Medicaid payers are well known for reimbursing on a fee-schedule basis. However, recent research has shown that 56 percent of the American population has some line of commercial healthcare insurance and those plans tend to pay on average, 61 percent higher reimbursement on some Diagnosis Related Groups-DRGs than Medicare(Perez, 2017). Even though Medicare may reimburse on a lower scale in many cases, many commercial plans follow Medicare guidelines as to which services they will pay for. Therefore, a provider could still benefit from charging higher pricing for services if they have a large enough pool of patients that have commercial plans. A way to lure a substantial amount of those patients is to be more competitive by providing high quality services or just by having a community perception of being a high quality provider (Cleverley, Cleverley, & Song, 2012). So regardless to provider having a higher volume of Medicare patients, if the pricing is more than comparable to the actual cost of the care, the provider could receive larger amounts in payments on claims from the commercial