The reduction in healthcare providers margins has become particularly challenging. In large part, these are due to health insurers’ problematic behavior, which is centered around maximizing insurer profits by routinely rationalizing below-market reimbursements or failing to pay providers for their critical services altogether.
For example, emergency medicine physician groups are experiencing a 39% reduction in out-of-network reimbursements since the No Surprises Act’’s (NSA) implementation. Meanwhile, insurers are enjoying record profits. Payors wield vast power to make unilateral reimbursement decisions, particularly in out-of-network situations. Providers must implement new creative approaches to their payor reimbursement strategy in order to level the playing field.
Legal finance is one of those strategies. Innovative solutions like Allia Group’s litigation model developed specifically for the healthcare sector are starting to revolutionize the healthcare reimbursement industry by providing both essential financial support and its successful litigation platform to providers. Thus, providers are empowered to battle insurance companies for the rightful reimbursement they are entitled. A wide variety of providers can benefit from adding litigation finance to their healthcare revenue recovery and revenue optimization strategy. Here are 6 ways legal finance is transforming provider reimbursement strategy:
1. Financing Variable Costs of Litigation
Litigation is extremely costly and involves wide-ranging expenses, including legal fees, court fees, and expert witnesses, as well as all costs associated with data extraction, synthesis, and analysis. This financial burden can deter providers from seeking justice for the fair compensation to which they are entitled.
Allia Group’s unique model of financing litigation and managing pursuit of the claims provides a vital solution for healthcare providers. By financing the uncertain expenses of litigation and arbitration against insurers, Allia enables providers to pursue legal action without having to allocate their own capital, alleviating financial pressure. Consequently, providers can focus their resources on the core mission of delivering quality healthcare while Allia Group’s litigation finance ensures that the providers are fairly compensated for those services.
2. Cash Flow Improvement
Increasing payer denials and delays are “wreaking havoc on the revenue cycle” of hospitals and healthcare providers, leading to volatile accounts receivable balances and reduced cash reserves. Reports from various sources including the AHA highlight how rising denial rates and billing delays exacerbate financial challenges and impede patient care, with small healthcare providers being hit the hardest.
An upfront payment for the disputed claims can be structured into the Allia transaction model. This immediately eases financial pressures. Ongoing payments as claims resolve can continue to fuel provider cash flow. Healthcare legal finance extends the conventional revenue cycle timeline to recapture insurance balances by six years or greater, depending on the state. Therefore, a litigation strategy complements traditional revenue cycle management (RCM) solutions and services and offers a new healthcare revenue optimization strategy.
3. Bundling Claims Levels the Playing Field
Health insurance behemoths’ size and resources provide challenges to one-off litigation by a single provider. In fact, UnitedHealthcare has been called “too big to fail” due to its power and rising control over all arms of the healthcare delivery system.
Payors also create systemic inequity with bad behavior and underhanded strategies to maximize their own profit. For example, the unraveling MultiPlan scandal illustrates the lengths insurers will go to pay less than their fair share, using illegitimate repricing models to suppress provider payments. This is just one of many examples of payors acting in bad faith at the expense of healthcare providers and patients.
Allia Group’s unique litigation finance platform serves as a strategic solution for this inequity. Allia orchestrates an alliance between multiple providers, allowing their claims to be bundled together in a single lawsuit against an insurer. These cases improve litigation economics and demonstrate to a court that the carriers’ behavior is consistent across providers. By implementing this novel approach, healthcare litigation finance specialists can help providers level the playing field.
4. Negotiation Leverage
The strain on provider and payer relationships is at an all-time high. The AHA’s 2022 survey found that 78% of hospitals believe their relationships with insurers are getting worse. Negotiations are growing more tense and appear in headlines more often. Payors will stop at nothing to improve their profits, even canceling contracts with providers and then systematically underpaying the now out-of-network claims.
Further, with contract negotiation disputes increasing almost 70% between 2022 and 2023, it is challenging for providers to get insurers to comply with contracts that will keep their practices alive. The pressure of ongoing litigation compels payers to reimburse providers fairly for their services. Allia Group’s healthcare litigation finance platform also offers an opportunity for enhanced negotiation leverage, as providers can use pressure from an outside organization to negotiate favorable terms to potentially return in-network or enter for the first time.
5. Resource Allocation
Cost is just one resource impacting providers when litigating against health insurance companies. Litigation also requires dedicated workforce resources, often diverting not just operating budget dollars but manpower and labor resources. Successful litigation also requires specialized expertise. While larger providers may have the budget to hire law firms and cover various additional expenses, smaller providers often do not have the resources available to properly leverage this revenue recovery opportunity.
By assigning the claims to an organization like Allia Group, who can then bundle and incorporate them into one or more larger lawsuits, providers can continue to focus on delivering quality healthcare rather than the heavy lifting on the legal end.
6. Revenue Opportunity Identification
Using proprietary data analysis and multidisciplinary expertise, Allia Group can find unrealized potential in many insurer claim underpayments and denials going back through years of data. Our healthcare litigation and recovery experts provide a comprehensive analysis of insurer receivables to find otherwise missed revenue recovery opportunities. Allia fuses together deep legal, RCM and finance experience in offering a turnkey solution.
For example, Allia Group helped NES Health, a multi-state hospital-based emergency physician group, build a data extraction process to identify pursuable underpayments. The process ultimately identified over $100 million in recoverable claims and will continue to do so as new claims appear, extending the revenue cycle and providing new opportunities for improved cash flow.
Support Revenue Recovery with a Legal Finance Strategy – Contact Allia Group
Legal finance offers vital support to healthcare providers, providing upfront financing and compelling insurers to pay for services rendered. Litigation finance also provides an opportunity to revitalize written-off receivables and offers a new extension to revenue cycle management. Explore how these strategies can benefit your physician group, hospital, or EMS company by contacting Allia Group for an introductory consultation.
