Data Mine: The new normal — How shifts in payer mix change the revenue cycle

Medical groups are experiencing substantive changes in every facet of practice, from patient care to business operations. Five years ago, the COVID-19 pandemic brought an onslaught of respiratory patients to primary care, while specialty practices experienced a severe decline in patients as much of the population self-quarantined to avoid risking exposure to the disease. At the same time, many hospital systems closed operating suites and ambulatory surgery centers and redirected staff and resources to focus on COVID patients. The entire U.S. healthcare system was severely disrupted as the pandemic caused a significant shift in patient volume and case mix.

Although the Department of Health & Human Services (HHS) declared an end to the federal public health emergency in May 2023 — after more than three years of upheaval and more than 1.1 million lives lost — the pandemic’s impact continues to reverberate. Physicians and practice leaders still face operational hurdles in managing pent-up demand for care and navigating workflows that were rapidly adopted.

Practices have expanded telemedicine services, integrated new digital tools and artificial Intelligence (AI) for clinical decision making and more efficient EHR documentation. Additionally, pharmaceutical advancements — including the use of GLP-1 receptor agonists for diabetes and weight management — and new cancer therapies, such as kinase inhibitors, CAR T-cell therapy, checkpoint inhibitors, and Antibody-Drug Conjugates (ADCs), are revolutionizing care delivery.

Additionally, substantial federal policy changes in Medicare and Medicaid have reshaped the economics of medical practices. Under the 2021 American Rescue Plan Act, hospitals and healthcare providers received direct financial assistance to offset the steep drop in patient volume and surge in operational expenses. The Act also broadened access to insurance by increasing premium tax credits for those purchasing insurance through the ACA marketplaces. Meanwhile, Congress mandated continuous eligibility for virtually all Medicaid beneficiaries, and the 2023 Consolidated Appropriations Act extended that provision for children enrolled in Medicaid and CHIP. However, it also allowed states to begin “unwinding” Medicaid eligibility for adults, causing a marked decrease in adult Medicaid enrollment. Compounding these shifts is the continued rise in Medicare beneficiaries as more Baby Boomers turn 65, further shifting practices’ payer mixes and reimbursement structures.