With rising healthcare costs, patients are taking on more financial responsibility for their medical expenses. This, in addition to changes in insurance plan structures and evolving regulatory influences, means that more money is coming from the pockets of the patients when it comes to medical expenses. Healthcare providers are now forced to adapt to these shifting dynamics. As a result, new trends are emerging in this sector. In this article, we take a look at the profound ways in which this impacts the sector and healthcare accounting in general.
How current medical trends impact healthcare accounting
Understanding current payment trends is vital for healthcare entities to maintain financial health and provide quality patient care. These are the trends to be aware of:
1. Rising deductibles and co-payments have impacted client liability
One of the most prominent trends in patient financial responsibility is the substantial increase in deductibles and co-payments. High-deductible health plans have become increasingly popular among employers, transferring a more significant portion of healthcare costs to employees. As a result, patients are now responsible for a more substantial share of their medical bills upfront. This trend has a direct impact on healthcare accounting as providers must accurately estimate and collect patient payments. It also opens room to greater tax-deductible claims for individuals.
2. There’s an increase in industry negotiations and demand for consumer price transparency
Healthcare providers are now engaging in more extensive negotiations with insurance companies to secure favorable reimbursement rates. These negotiations impact revenue recognition and require careful accounting to ensure that expected revenues are accurately reflected. But, negotiations don’t simply impact revenue recognition in this instance. Patients are also demanding more transparency in healthcare pricing. They want to know the cost of services before receiving treatment. Healthcare accounting must adapt to these changes by providing clear and comprehensive pricing information to patients and reflect such details in financial records.
3. There’s an increase in payment plans and financing
To accommodate patients facing financial strain due to higher out-of-pocket costs, healthcare organizations are offering more flexible payment plans and financing options. Accounting for these arrangements requires precise tracking of terms of payment, installments and interest accruals. Your accounting system must take these terms into account and implement them according to the principles of the accounting method your practice follows. This is essential to ensuring compliance with accounting standards.
4. There’s an increased demand for scrutiny of bad debts
The rise in patient financial responsibility has also led to an increase in bad debt and uncollectible accounts for healthcare providers. Proper accounting procedures must be in place to account for these losses accurately. This includes recognizing bad debt expenses, assessing recoverability, and managing financial reserves.
5. There is a greater need for tighter controls when it comes to regulatory compliance
With a change in the trends and evolving healthcare regulations related to patient financial responsibility, come additional compliance burdens on healthcare organizations. Healthcare practices need to ensure that accounting practices align with these regulations to avoid penalties.
Partner with a CPA
The trends in patient financial responsibility are reshaping the healthcare industry’s financial landscape. Staying ahead of the trends is imperative to ensure the health practice maintains financial stability while delivering high-quality care to patients. Partnering with a CPA can help these practices stay abreast of the changes and employ financial management strategies and software to aid in accurately tracking finances for compliance.
At Fusion, our CPAs have years of experience helping businesses optimize their finances and remain compliant. We service multiple industries and stay abreast of regulatory changes. Contact us if you need assistance with healthcare financial recordkeeping and general tax filing. Our CPAs can help you.
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This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. We base articles on current or proposed tax rules at the time of writing and do not update older posts for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.
