January 28, 2013
Nursing facilities across the U.S. have somehow endured a series of Medicare/Medicaid cuts thus far, but the latest move by CMS to reduce reimbursement for so-called Medicare “bad debt” – Medicare co-payments not made by beneficiaries or state Medicaid programs – may bring them on the threshold of a major operational crisis. The new legislation has effectively brought down reimbursement rate for bad debts to 65 percent from what used to be 100 percent of unpaid co-payments under dual-eligible beneficiaries, and 70 percent for other Medicare bad debts. With most of the nursing facilities encountering dual-eligibles (Medicare & Medicaid beneficiaries), and federal law allowing Medicaid programs to opt out of making co-payments in most cases, it may be difficult to sustain quality and operationally viable nursing services amidst shrinking Medicare and Medicaid reimbursement rates.
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Therefore, it is not unusual for nursing facilities adopting contingency plans to safeguard their operational viability. Amongst several options available to nursing facilities, the following seem to have been deemed strategically more sensible:
Laying off direct service staff
Many nursing facilities operators believe that they would be able to off-set the effect of irrevocable bad debts with a reduction in their direct service staff. While they may be able to save considerable overheads, they may also be limiting their ability to sustain service quality.
Putting new hiring on hold
With limited scope for generating or increasing practice revenues, it may be difficult for nursing facilities operators expand their staff beyond their capacity. That is why most of them are inclined to putting new hiring on hold, and optimize operational efficiency with existing capacity. Here again, they may either be limiting their scope of operation or quality against a likely increase in Medicare or Medicaid patients.
Another plan that may increasingly be adopted is ‘pruning employment-related benefits’ – bonus, increments, promotion, and other amenities. While it may help substantially reduce cost, you could be harming staff’s morale and motivation.
Deferring or cancelling expansion plans
Reduction in reimbursements may curtail nursing facilities ability to expand with new ventures, and be forced to continue with current capacities despite demand generated by growing Medicare or Medicaid population.
While these plans may be effective to a certain extent, they will certainly be limiting nursing facilities’ ability to sustain quality, motive staff, and look beyond myopic operational strategies. That is why, rather than protective plans, operators would do well to explore alternatives that can keep their facilities responsive to quality and growth demands. Medical Billing is the area which has answers to most of the operational issues. Therefore, operators should look at making their nursing facility medical billing as effective and efficient as possible. Significantly, operators will need to align their billing practices to Medicare/Medicaid’s policy on reimbursing bad debts from disowned co-payments or deductibles.
Medicalbillingandcoders.com remains the most comprehensive source for medical billing solutions, more so for Medicare and Medicaid billing. With a resource base of medical billing experts spread across the 50 states in the U.S., nursing facilities can look forward to instant, effective, and efficient nursing facilities medical billing that can help them sustain quality and grow with evolving demand for nursing facilities.