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ACOs and Their Effect on 3rd Party Medical Billing Companies

Friday, August 24th 2012 12:02 pm
Mr. Bradley J. Lund

In order to fully appreciate the impact ACOs will have on 3rd party medical billing companies, it’s important to understand what the ACO is and what it’s meant to accomplish.  The ACO, or Accountable Care Organization, is destined to play an increasing role in Medicare healthcare delivery in 2012 and beyond.  As part of the healthcare reform movement, the idea behind the ACO sounds simple:

  • Providers will form groups that span practices and specialties, and will serve a specified group of Medicare patients.
  • Technology will allow the sharing of information between these providers, allowing for greater efficiencies and results tracking.
  • The providers will collaborate among themselves to make sure they are delivering the most affordable and effective care.
  • The government will provide financial incentives if costs are controlled or reduced. 

However, when increased government scrutiny (some would say micromanagement), regulations (HIPAA) and revenue cycle management are figured into the equation, the task of forming and managing ACOs becomes considerably more complex:

  • The CMS (Centers for Medicare and Medicaid Management) first issued its rules for ACOs in March of 2011.  The original document spanned 400 plus pages, and solicited questions and comments from concerned parties.  In October, the final rules were released and expanded to nearly 700 pages.  Will ACOs be able to keep up with ongoing changes, or will compliance ultimately end up being a major cost increase factor?
  • With the cross pollination of services will come the need for cross pollinization of confidential medical information.  With HIPAA the law of the land, will the exchange of information, mostly through technology, also increase the vulnerability of confidential patient information?
  • Like the HMOs in the 1990s, will the financial incentives lead to compromises in the level of care provided in order to control costs?

ACOs and Third Party Billing Companies

Since physicians and other healthcare providers rely largely on third party medical billing companies.  This opens the door to a whole host of problems:

  1. If physicians’ team up to form an ACO and different billing services were utilized by different providers within the organization, how does the ACO decide which service to use?
  2. Since all services must now be coordinated between providers, all billing must also be coordinated.  While it would seem that this would be an easily accomplished through technology, there are risks.
  3. If technology is to be utilized to streamline these processes, how is security going to be managed?   Does the proper technology exist?
  4. Just like the physicians themselves, the billing companies are going to have to keep up with the latest regulatory changes.
  5. Even without regulatory changes, the financial incentives for meeting cost goals are going to be complex to track.  This will be another challenge for third party billers.

While all this sounds daunting, the risk for 3rd party billing companies is dwarfed by the opportunity.  At no time in medical history has there been a greater need for expertise, technology, compliance assistance etc.  There is simply no entity in existence positioned to meet these needs better than the third party medical billing companies.  Most already have state of the art technology in place and have had to be on the cutting edge when it comes to compliance and expertise in order to survive.  In addition, physicians and healthcare providers will need help in order to make sure they themselves are conforming to all the requirements inherent in the formation of their ACOs.  This represents another great opportunity for third party billers; that is, consulting services to make sure that their clients’ ACOs are meeting the ever-changing requirements and compliance standards.

Like anything new and innovative, the ACO is not without its foes.  And, like anything that deals with the health and welfare of the population, change is a constant.  By leveraging their essential functionality with the potential value-adds referred to above, the 3rd party medical billing industry can not only be an essential cog in the ACO mechanism, but can also ensure that the Medicare healthcare providers have the time and resources to concentrate on their real priority: providing healthcare to our aging population. 

Brad Lund is the Executive Director of HBMA.

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