How CAH Hospitals can use CostFlex Products for Cost Reimbursement Computation

Many critical access hospitals (CAH) face challenges determining the actual reimbursements they will receive from Medicare and other cost-reimbursed accounts to gain an accurate picture of their actual profit/loss ratio. In some cases, cost-reimbursed accounts make up half or more of hospital’s’s total revenue, so it is vitally important to accurately track the cost reimbursement computation for CAH hospitals to understand net profit after total reimbursement fully.

A leader in cost-accounting software for CAH hospitals and other healthcare providers, CostFlex offers Payer Contract Analyzer Software to help quickly and accurately project payer reimbursement. Our turn-key software works seamlessly with our suite of cost accounting products for hospitals. The client can pull and analyze pertinent data efficiently to manage the hospital’s budget, identify areas for improvement, and calculate projected reimbursement to maintain a healthy bottom line.

The Old Process

For one of CostFlex’s clients, the old process of determining a CAH hospital’s true financial picture was tedious, complex, and involved the following:

  • Pulling cost-accounting reports based on financial class to determine the profit/loss margin for private, government, and commercial payer accounts
  • Running a second report using revenue codes and financial classes to compute the final payments expected from Medicaid/Medicare and other payers
  • Inputting the revenue codes and cost-based payer charges into a spreadsheet template that would then look up the revenue codes and apply the corresponding charges
  • Computing a final payment expected from the payers (e.g., Medicaid/Medicare)
  • Generating a spreadsheet report that contained the charges, costs, and expected reimbursements for all payers

Although the old process was sufficient for certain applications, such as for a small, limited number of services or physicians, the challenge came when wanting to review the profit/loss of individual practitioners or service lines. In some cases, this meant running reports for more than 50 physicians, which included inputting revenue codes, financial classes, and other information from various sources.

Additionally, the old process was not ideal for dealing with contingencies affecting reimbursement accounts, such as changing reimbursement rates. Moreover, the approach was not scalable for use in large-scale applications, and it was very labor-intensive and far too expensive to be cost-effective even for moderate applications.

The New Process

After implementation, the client uses CostFlex’s Payer Contract Analyzer Software to compute the actual cost reimbursement and pull reports directly from the system, eliminating the need to perform additional computations and run more reports. The client can also easily enter effective dates to stay on top of changing reimbursement rates to compute the proper amounts accurately.

WitCostFlex’s’s system, the client can calculate reimbursements for given populations by inputting patient selection parameters and selecting th” “Update Patient Reco”d” at the time of calculation. This feature will compute the projected reimbursement for each patient record chosen and include that in the computations. The client can then use the Excel Reporting option to generate a report containing the desired volume request, charges, payments, cost information, and the actual “projected” reimbursements.

The client customizes the system to include cost-based reimbursement data for different kinds of accounts, e.g., insurance, government, self-pay, and commercial, and pivot tables can be used to obtain even more pinpointed metrics.

CostFlex’s system also allows the client to pull reports for individual surgeons/physicians and surgeries/procedures to obtain breakdowns of net profit/loss ratios pertaining to those areas.

The Bottom Line

CostFlex’s Payer Contract Analyzer Software and Hospital Activity Based Cost Accounting Software are powerful, turn-key, and fully supported solutions for tracking and analyzing CAH hospitals’ cost reimbursement computation. Regardless of the organization’s size, hospitals will benefit from the CostFlex software by making the best-informed decisions for the hospital’s interests and the needs of the patients.

To read more about how CostFlex’s software products helped a CAH client reduce time and improve accuracy, click here for the client’s’s story.