The COVID-19 pandemic has impacted nearly every facet of our lives in recent months. We've all had to adapt to a new normal of social distancing measures and lockdown orders. Health insurance companies have not been immune to these changes and they too have had no choice but to evolve in this rapidly changing world. As restrictions are relaxed and practices return to business (though perhaps not business as usual), it is important for healthcare providers to be aware of how health insurance companies have been affected by this unprecedented event.
Impact to Health Insurance Plans
Among the first things to be impacted by the COVID-19 pandemic were health insurance plans themselves. In response to the outbreak, health insurance companies across the country began expanding coverage for policyholders to accommodate the situation. Then came the FFCRA, which eliminated patient cost-sharing for COVID-19 diagnostic testing services provided under employer-sponsored group health plans. Beyond this, many insurance companies voluntarily waived copayments for hospitalizations and other costs related to treating COVID-19.
FYI – A great resource for figuring out what providers have responded to COVID-19 with specific changes to their healthcare plans is the AHIP Health Insurance Provider COVID-19 Response list.
Impact of COVID-19 on Claims
At the beginning of the COVID-19 pandemic, some believed the health insurance industry would be hit hard by the sudden influx of insurance claims due to the high number of Coronavirus infections. However, the reality of the situation has turned out to be quite different. In fact, the number of claims has hardly affected them at all. Why? Because of social distancing and lockdown measures.
Social distancing, you see, reduces the likelihood of many day-to-day accidents and injuries. For example, there were suddenly far fewer cars on the road. Less traffic resulted in fewer injuries from traffic accidents. During lockdown, elective medical procedures were also suspended. People were only going to hospitals if they thought they might have COVID-19 or simply had no choice, with some people actively avoiding emergency rooms out of fear they could be exposed to the virus.
As a result of all these occurrences, insurance companies experienced a significantly lower rate of claims expenses from patients seeking care that was unrelated to COVID-19. Therefore, even though hospitals and practices have seen heavy financial losses because of drops in patient volume and elective surgeries, health insurance companies have not been inflicted with the same monetary hardship. To put it simply, things have balanced out for them… so far.
The Impact of Rising Unemployment
The biggest impact on health insurance companies (so far) has been from the sudden rise in unemployment. In April 2020, the Economic Policy Institute reported that 3.5 million workers had already lost their employer-provided health insurance. By March 2020, the unemployment rate in the U.S. reached 4.4 percent. Some currently predict that the COVID-19 pandemic will ultimately result in an unemployment rate of over 15 percent, the highest in the U.S. since the Great Depression.
As a result of this sudden surge in unemployment, health insurance companies are likely to experience heavy losses due the resulting drop in employer premium payments. However, most large health insurance companies are required to maintain reserves of “risk-based capital.” And if nothing else, this pandemic has demonstrated why this requirement is a good thing, because these reserve funds are now absorbing much of the impact from revenue shortfalls caused by unemployment in the COVID-19 pandemic.
The Impact to Reopening Practices
As practices begin to reopen across the United States, allowing patients to return for non-emergent care and elective procedures, it is likely that insurance companies will be a bit overwhelmed at first by the increased call volume. For practices, this means longer wait times when calling insurance companies to verify insurance coverage for new patients. This may also mean claims reimbursements will be a bit slower than usual for a while.
Practices that are able to leverage Revenue Cycle Management (RCM) services will be far less likely to experience the same headaches as those who are still dealing with insurance companies. An RCM service simplifies the entire process by communicating with the insurance companies for you. After an insured patient receives treatment for a given condition and pays the copayment, your practice only needs to categorize the nature of the treatment according to ICD-10 codes. The RCM will then capture all charges and submit claims automatically to the insurance company. This means your office manager or receptionist won’t be tied up for hours trying to contact insurance companies during the initial surge as everyone returns to work.
For information on how Nextech’s Revenue Cycle Management can simplify billing and streamline reimbursements for your practice, contact our team today at (813) 425-9200.