Everyone wants to know the future, especially when it comes to forecasting revenue for your behavioral health agency. You can try complicated revenue projection models or business analytics tools, but there is a far simpler way to help you maintain a firm grasp on your agency’s future.
Know your payer mix!
I know it sounds too easy to be true, but I will show you the main ways that knowing your insurance payer mix will help you predict the future of your agency.
- Revenue Forecasting
Knowing how much revenue you generate by your top insurance payers is a great way to forecast your future revenue. You can easily watch trends among your payers to see if they are increasing, decreasing, or staying the same. You can use these numbers to extrapolate a revenue forecast into the future.
Forecasting revenue with payers instead of top line revenue, will give you better insight into what sources are contributing to your agency. You will want to know if a payer is steadily contributing more revenue to your agency when it comes time to negotiate your contracts. That way you can focus on higher payments from your larger payers first.
- Be alerted to possible claim rejections
Keeping track of your payer mix weekly helps you know how much revenue you can expect to deposit from each payer each week. If you know what percentage of your revenue is expected from each payer on a weekly basis, you can easily notice on any given week if one of your key payment sources is showing up short.
If you’re measuring in percentages and you notice a dramatic shift, you will want to investigate the reasons that one of your payers is short. It may lead you to discover a whole batch rejection, or other systemic issue preventing you from receiving payment for all your claims.
- Target reimbursement changes
If you notice declines from a payer in your mix, it may be the result of a reimbursement change. If you keep track of your payer mix you will notice this change right away, and you can act before any explanation of benefits arrive.
The sooner you can adjust for reimbursement changes the sooner you will correct your fiscal ship from drifting off course.
- Identify New Payers
Keeping an eye on your payer mix will tell you when a new insurance starts to become a larger contributor to your business. You will want to approach any new payers as soon as you can to negotiate payment contracts that will be advantageous to your agency.
You may find that Medicaid is becoming a smaller payer in your mix as the industry shifts toward managed care. This makes contracting with your managed care payers a new necessity.
- Tracking Patient Demographics
If you continue to deposit the same amount of money regularly, but your payer mix is changing, you may be experiencing a shift in your patient base. There are other measures that will tell you the make-up of your clientele, but spotting a change in your payer mix can tip you off to look at them.
Shifts from Medicaid toward private insurance for example may have an impact on your marketing strategy, and watching your payer mix will help you spot these trends early.
Your payer mix says a lot about your agency and the clients you serve. You can tell a lot about the future of your agency by watching for changes that will lead you to other discoveries. A lot of times changes in your payer mix are indicative of other changes happening to your business, so it’s important that you investigate substantial shifts in payment sources.
Your conclusions may or may not lead to actions, but you should investigate your business with Discovery Data Mining techniques whenever you notice changes in payments from your payers. Do your agency a favor, and monitor your payer mix with an eye toward the future.