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Industry Insights

3 Cost Changes Facing Labs and Providers in the New Year

By: Dyana Williams, Client Manager, Lighthouse RCM Solutions

Don’t you love the way we use the phrase “perfect storm” to describe adverse situations? It does bring to mind the way that a combination of events can coalesce into something much greater than the sum of their separate parts.

Another storm seems to be on the horizon in the healthcare industry as US providers and facilities continue to face increased costs and a reduction in insurance reimbursement heading into 2023.


The commercial price of COVID vaccines is set to increase

In August 2022, the Department of Health and Human Services (HHS) announced the government’s plan to shift the purchase and distribution of COVID vaccines away from the federally managed system that was put in place at the beginning of the Public Health Emergency (PHE) and move it over to the commercial marketplace. Federal funds, which have been used in part to purchase and distribute vaccines, are expected to run out as early as this month (January 2023). The Administration further anticipates that the federal supply of therapeutics such as Paxlovid and other anti-virals will be entirely gone by mid-2023.

Pfizer has faced sharp criticism since October 2022 when they announced their intention to raise their price for the COVID vaccine by 400%.  Unfortunately, that didn’t stop Moderna from following suit, announcing just this week that they will also be raising their rate to $110 – $130 per dose.

As COVID vaccines and therapies are shifted to the commercial market, healthcare providers and facilities will have an additional cost burden to procure vaccines and treatments directly from companies like Pfizer and Moderna rather than the government.


National Medicaid population is expected to decline

Lawmakers agreed just last month to begin allowing states to remove people from their Medicaid rosters in April 2023. Even though the PHE has been extended through April 11, there will be no change given to the approval for states to begin reducing their Medicaid rolls.

Patients who lose access to Medicaid will be forced into the public marketplace to seek private insurance at a cost that is oftentimes prohibitive to those existing near or below the poverty line.

While patients’ access to healthcare becomes more limited, providers will notice a decrease in Medicaid reimbursement, an increase in self-pay, and an increase in patient bad debt.


No Surprises Act: increased costs for Independent Dispute Resolution

Adding insult to injury, CMS released an important update about the Independent Dispute Resolution (IDR) process under the No Surprises Act on Dec 23, 2022. Due to the timing, their announcement largely flew under the radar until after the New Year — the administrative fee for IDR has been increased by 600% from $50 to $350 per party effective Jan. 1, 2023.

Agencies have been inundated with IDR requests, and the entire process has been bogged down by delays and backlogs since it was announced. This increase in the administrative fee seems intended to slow the pace of new cases so the backlog of existing claims can be addressed.

Providers who were already being squeezed from unreasonably low out-of-network insurance reimbursement following the passage of the No Surprises Act are being further discouraged from seeking resolution through the very mechanism that was promised to them. How much benefit will providers see if their total fee for service is below, or only slightly higher than, the administrative fee?


Provider Preparation

How do you find the way through a hurricane? By preparing ahead of time:

  • Ensure you have a robust insurance discovery process. Collaborate with ordering providers/facilities to obtain updated demographic information. Leverage technology and AI solutions that find and verify insurance information.
  • Write effective charity policies and discount directives which allow your customer service representatives and other team members the ability to resolve outstanding patient-pay balances quickly.
  • Personalize and target pre-collection follow-up attempts to reduce the amount of bad debt that is sent to a third-party collection agency.
  • Partner with lab RCM specialists. Contact us today for a free consultation.


For Additional Reading:

CMS Summary of Major Updates: Centers for Medicare & Medicaid Services | Amendment (cms.gov)


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