Remember those big old barometers that your father or grandfather had on his desk or hanging on the wall? It probably had the company logo of the business where he worked and was one of those milestone gifts one picks out of a catalog of “rewards” to recognize years of service or important achievements.
Tell me it didn’t fascinate you? But, what did it do?
The barometer measures the atmospheric pressure. If the pressure dipped a storm event was imminent. If the needle climbed then most likely fair weather would be coming soon. If you had a weather fascination, then you probably checked it out every day to see what tomorrow or the next day’s weather would bring.
Payer Mix- The EMS Barometer
EMS business isn’t so cut and dried as the weather. It would be great if there was a business pressure reading that predicted ups and downs in run volume, cash flow and payer trends. Each day you could check out what to expect next week, next month, next year and prepare accordingly.
While it’s not quite that easy, there is a barometer of sorts and it’s called the Payer Mix.
For those who may have never heard the term, Payer Mix, we’ll add a few words here to define what a payer mix is.
The Payer Mix is the percentage of runs that you bill out to each type of payer source. Simply broken down, it is the percentage of billable runs (represented either in dollars or in run totals) that is billed to Medicare, Medicaid, Commercial Insurance (Auto and Liability Insurances typically included) and Patients (ie. Patient Pay or Self-Pay.) You can obviously break things down further and add Facility Contract activity, if providing those services is part of your EMS business model and I’ve seen some Payer Mix reports that also break out subcategories within what we call the four major payer “buckets.
Comparison over time is crucial…
One of the most effective ways to use the Payer Mix for forecasting and analysis, is to compare reports over time.
We believe you’ll find it very interesting to look back five or maybe even as much as ten years and compare the payer mix then to the payer mix for your EMS agency today. We no doubt believe you’ll find an interesting shift.
We say this out of experience, especially given the health care changes of the last several years.
It’s telling when you look at how the flow of your agency’s billable numbers has moved and shifted. This is important to view as a look at the forest rather than the trees, simply because it explains why you are working in markets and business lines now more or less than you have in the past. Graphing out your payer mix to compare side-by-side year-to-year or in a compilation of past years, allows you to notice how the various shifts have taken place and also can show you trending of what will come, so you can predict and prepare for even more movement of your incoming dollars.
Most notable we find across many of our billing clients in this billing office that there has been a decided shift from commercial health insurance percentages over to Medicaid in a majority of geographical service areas. Additionally, there has been a shift from Patient Pay over to the Medicaid products which is a result of the lasting effects of Obamacare.
Notably the most impactful scenario is that shift from Commercial to Medicaid.
This can be a demographic issue.
For example, XYZ Industry in your community just closed its doors and left town. XYZ’s employees, having lost their employer-based health insurance coverage, moved to a Medicaid plan because they couldn’t afford the monthly COBRA premium to keep their current coverage. You now have x-number of patients who use your EMS service that previously paid at a very healthy rate, but now pays equal to your State’s Medicaid fee schedule amount which we all know pays less than our costs to provide EMS service, in most cases.
This kind of revenue drain is hard to replace, but one that we must be prepared for and can only predict if we watch the trending over time.
Your Payer Mix report is key to help you gauge where your dollars have come from in the past and are set to come from in the future.
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