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Industry Insights

Paduda: Why Your Facility Costs Are Increasing

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Revenue cycle management.

Joe Paduda

Joe Paduda

RCM is the acronym for a focused, ever-evolving, highly sophisticated approach hospitals, ambulatory care facilities and health care systems use to suck as many dollars as possible from employers, taxpayers and insurers.

There are scores of RCM companies out there, some with programs specific to workers' comp:

  • Cognizant.
  • Resolv.
  • Convergent.
  • FIRM.
  • And lots more.

And this is a growth industry.

The reality is that in many states, workers’ comp is — by far — the most lucrative payer. Florida is the worst example of gaming by facilities to Hoover dollars out of employers' and taxpayers' pockets. Wisconsin is also hugely problematic, as is Alabama and a bunch of other states.

And it is going to get worse.

With Medicaid enrollment scheduled to drop dramatically, the Centers for Medicare and Medicaid reducing COVID payments to hospitals, and many hospitals and health systems facing record deficits, hospitals’ scramble to find revenue is going to accelerate.

Meanwhile, bill review companies are woefully behind the Cognizants and Convergents, despite BR companies’ protestations otherwise.

Rather than seek expertise, capabilities and better performance by subcontracting to much more sophisticated and capable third parties, BR companies try to do it in-house, mostly so they can keep all those fees for themselves.

Meanwhile, facility costs increase, and the ones getting screwed don’t seem to care. Expect Florida and Texas to be most problematic, as those states did not expand Medicaid. Some 1.6 million Texans and 1.4 million Floridians will lose their Medicaid coverage, further hammering hospitals’ financials. Some 400,000 Wisconsinites could lose coverage.

Why I continue to berate the industry for failing to protect its own best interests is a puzzle even to me. Employers aren’t exercised enough to demand better. Neither are insurers, and third-party administrators are no better.

And don’t get me started on brokers and “consultants.”

What does this mean for you?

Do your job.

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.

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