On January 7, 2025, under the Biden administration, the Consumer Financial Protection Bureau (“CFPB”) published a final rule prohibiting consumer reporting agencies from including individuals’ medical debt on consumer credit reports. While the medical debt rule provides financial relief for patients, it also introduces challenges for hospitals by eliminating a traditional collection tool.
With the Trump administration now in office, the future of this rule is uncertain. Hospitals and healthcare providers must prepare for policy changes by focusing on proactive revenue cycle management. The growing need for technology to ensure accurate insurance billing has never been more critical. Shifting processes upfront in the revenue cycle, before accounts are written off as bad debt, is key to maintaining financial stability.
Challenges for Medical Provider Cash Collection
The CFPB medical debt rule majorly changes the revenue cycle landscape for healthcare providers. This rule aims to alleviate financial stress for patients by removing an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. Without this traditional collection lever, providers face increased risks of unpaid bills and an avalanche of uncompensated care, potentially tipping the scales for organizations already operating on thin margins.
According to a 2023 report by the Kaiser Family Foundation, hospital margins, while rebounding in some areas, remain razor-thin—particularly for rural hospitals and those with a high share of Medicaid patients. These organizations often operate with margins as low as 1-3%, leaving them highly vulnerable to any increase in bad debt. Losing revenue due to uncollected bills could push these institutions into financial distress.
To address these challenges, hospitals must enact proactive revenue collection, tackling payment issues before they arise.
Role of Insurance Discovery
Insurance discovery is a crucial tool for providers to uncover unknown primary, secondary or tertiary insurance coverage. This solution ensures claims are routed to the appropriate payer, reducing the risk of billing errors and coordination of benefits (“COB”) denials. For pre-scheduled appointments, upfront discovery processes verify patient eligibility and identify coverage gaps before services are rendered. In emergency department registrations, real-time insurance discovery provides immediate insights into active policies, enabling accurate billing even in high-pressure scenarios. By identifying additional coverage, hospitals can recover revenue that might otherwise be lost and improve overall operational efficiency.
Effective insurance discovery leverages advanced algorithms to scan for undisclosed coverage, providing hospitals with a comprehensive view of patient eligibility. This process can result in a 20% increase in secondary insurance identifications, significantly improving revenue recovery and minimizing bad debt.
Importance of Real-Time Eligibility
Real-time eligibility (“RTE”) plays a vital role in verifying coverage before services are rendered. Eligibility-related errors, such as inactive policies, are responsible for over 25% of claim denials. By confirming a patient’s insurance benefits upfront, providers can prevent these errors, ensure services are covered, and reduce the likelihood of claim denials. Additionally, RTE enhances the patient experience by clarifying out-of-pocket costs and enabling financial discussions at the point of service.
It is also critical to regularly re-verify Medicaid eligibility. This population frequently changes coverage, so it is important to update the primary payer and scan for any retro-approved Medicaid as soon as possible.
Automation with Prior Authorizations
Securing prior authorizations is another essential component of proactive revenue cycle management. Manual authorization processes often cause delays and increase the risk of errors, leading to claim denials and slower revenue collection. By automating the prior authorization process, providers can reduce authorization times by up to 60%, significantly improving cash flow and patient satisfaction. Centralized tools can help track authorization statuses and prevent denials caused by lack of authorization or notifications of admission. Furthermore, integrating prior authorization technology with electronic health records simplifies training and tracking, enhancing both speed and accuracy.
Balancing Patient Care with Financial Health
Financial transparency and patient engagement at the point of service are essential for maintaining both care quality and revenue integrity. Solutions like maxRTE’s tools contribute to a smoother patient experience by enabling accurate billing, reducing administrative burdens, and minimizing denials. By adopting these tools, hospitals can protect their financial health while prioritizing patient trust and satisfaction.
What You Can Do
As the healthcare landscape continues to shift, hospitals and providers must be proactive in addressing financial challenges. Automated insurance discovery, real-time eligibility, and prior authorizations empower providers to adapt to regulatory changes and safeguard their revenue cycles.
Explore how maxRTE’s solutions can help your hospital navigate these challenges. By embracing proactive financial tools, you can ensure both patient satisfaction and financial sustainability in an uncertain policy environment.
On Demand Webinar: 4 Tips to Boost Cash on Hand
Uncertainty in healthcare policy is a constant. However, hospitals that embrace advanced technology and proactive revenue cycle management will be better positioned to succeed. By staying adaptable, transparent, and patient-focused, providers can ensure both financial stability and quality care, no matter what regulatory changes lie ahead.