Using Cross-Subsidizing in Medical Billing Could Lead to Denials

Using Cross-Subsidizing in Medical Billing Could Lead to Denials

Using your medical billing to cross subsidize lesser expensive services with more profitable services could lead to denials. Some hospitals are already feeling the pain. A revamp in hospitals’ medical billing chargemaster may be in order to correct this reimbursement problem.

In the coming months the Centers for Medicare and Medicaid services will be doing a more detailed look at your hospital claims. If you happen to be cross subsidizing the more profitable services for the less profitable services, this may lead to non payments. This will change the medical billing scene forever.

Unfortunately if insurance companies quit paying your medical billing claims, you will be forced to close certain departments in your hospital. These departments would probably include those that service uninsured patients such as emergency rooms and burn units. These departments are important elements of any hospital, and they should not be closed.

However, since hospital payments from insurance companies become fewer and fewer, they must do something to compensate. As a matter of fact, the medical billing reimbursement ratio of insurer payments to hospital charges was once 1:1 but is now 2:6. In order to be profitable and stay in business, these hospitals must do something to improve their medical billing reimbursements. This almost certainly means a revamp of the chargemaster.

If something doesn’t happen soon, hospitals may be forced to turn down uninsured patients. Another option would be to charge the uninsured patients more in medical billing expenses. This would do no good, however, because most uninsured patients cannot pay their medical bills. Turning down a human being for medical care is just not an option in this country. The best option is to change the way hospitals report their medical billing to insurance companies and Medicare.

View all Articles by: Melissa C. - OMG, LLC. CEO