Prepared by HFMA and the American Hospital Association
To change the patient-billing system will require the cooperation and agreement of providers, payers, government, and employers. The patient friendly Billing Project is working to form these links.
Freeing the consumer from the confusion of the current billing and payment process is a
key long-term goal of the Patient Friendly Billing Project. This project is a joint effort of HFMA and the American Hospital Association, and with support from HCA; Mayo Clinic, Rochester, Minnesota; Northwestern Memorial Hospital, Chicago, Illinois; Quorum Health Resources, Nashville, Tennessee; SSM HealthCare, St. Louis, Missouri; Cap Gemini Ernst & Young; Deloitte & Touche/Deloitte Consulting/ Ernst & Young; PricewaterhouseCoopers; Stevens & Lee, Reading, Pennsylvania; Greenwich Hospital, Greenwich, Connecticut; Medical Group Management Association; Centers for Medicare & Medicaid Services; and HFMA's PFS Forum Advisory Council. If the goal of this project is achieved, the healthcare industry can gain from both improved consumer relations and cost-efficient outcomes that benefit all involved.
Patients and their families have identified the patient bill as a "…symbol of the confusion, mystery and the perception of high costs and overcharging."a Healthcare financial professionals confirm that the billing process is a source of significant confusion and frustration.
The healthcare-billing process is a multiparty, interdependent relationship that is not within the control of any one entity. It is made up of a hodge-podge of processes that are both standardized and nonstandardized, manual and automated. A single bill can be a simple one-item charge or voluminous, when a variety of providers and payers are involved. And it is often the patient who is left alone to understand, coordinate, and navigate through a maze of bills, claims, referrals, authorizations, regulations, and explanation of benefits.
The current pAudio Webcasthwork of benefit plans, payment systems, and billing formats creates a system that is expensive to operate and results in financial communication that is confusing, complex, and, too often, incorrect. Because providers, government, payers, employers, and, to some extent, patients are partly responsible for the complexity of the billing system, fixing this system involves everyone.
Consumer Focus
The Patient Friendly Billing Project is focused on the needs of the patient and consumer first. The consumer's perspective relates four key messages to healthcare leaders:
- Consumer satisfaction increasingly is driving the long-term success of healthcare organizations.
- The healthcare organization's nonclinical interactions with patients and consumers have as much impact on their satisfaction as clinical interactions.
- The patient-billing process (including insurance interactions) is a major cause of dissatisfaction for both patients and consumers.
- A patient friendly billing process will increase satisfaction and thereby increase the long-term success of healthcare organizations.
What is desired is a bill, or more precisely, a flow of financial and other information to patients and their families that is clear, correct, concise, and patient friendly:
Clear. The bill is easy to understand and is written in clear language. The general type of services provided to the patient is documented. Patient and payer responsibilities are clearly stated, necessary actions are described, and a source of additional help and information is provided.
Correct. Bill items reflect the episode of care. Information on how patients can get more information or ask questions about their bill are referenced and available from the hospital's patient representative or from various written and Internet sources.
Concise. The bill contains the appropriate amount of detail necessary for the message communicated. Information on how to request a more detailed bill is included.
Patient friendly. In addition to being easy to read and understand, the bill should be easily mAudio Webcasthed with the payer's explanation of benefits (EOB); the patient's, the hospital's, and the payer/employer/government's understanding of the insurance benefits; and the episode of care.
Beginnings of the Project
HFMA and the American Hospital Association (AHA) have set out to examine what hospitals and health systems can do now to address consumers' concerns related to the billing process, and provide a forum and framework from which the rest of the industry could work. To examine the issues, HFMA and AHA assembled a task force of hospital and health system experts in the areas of provider registration, billing, contracting, follow-up, and collections to identify steps that can be taken immediately to respond to issues raised by patients and their families. The task force also identified future actions that can be taken to remove barriers to, or that facilitate, the clear, correct, and concise flow of financial and other information to consumers.
To gain the patient's and family member's perspective, the task force commissioned six focus groups comprising certain demographic and other characteristics of hospital and health system patients, including recent patients, patient guardians, and individuals with varying types of insurance coverage. Two additional focus groups were made up of hospital and physician office employees. The focus groups were conducted in four locations throughout the United States. The task force also collected examples of "better practices" being used by leaders in hospitals today for creating a more patient friendly billing process. Based on the feedback from the focus groups and these accepted better practices, the task force identified major concerns with the billing process.
Consumer Views of the Hospital Bill
Several major points and recurring themes came up during the focus groups. Public frustration with "the system" begins before care is delivered. The system is perceived as fragmented, with minimal communication among entities in the healthcare delivery system. Most participants report that regardless of previous admissions to the hospital, personal and financial information had to be provided with each new encounter. For some, it was the physician's office that provided the information to the hospital; others received calls from the hospital prior to admission. As stated by one woman whose child has had multiple hospitalizations, "You still have to go through all the hoops."
Consumers did not want to discuss coverage and billing issues during their medical episode, nor did they view this as an appropriate time to discuss such issues. Coverage is not top of mind for them; their health is.
Consumers found it extremely difficult to clearly distinguish what information was received from what sources, and in what order. Some said they received "something" from the insurance company within a few weeks after hospitalization; others said their first communication was from the hospital. While some said they could tell what a particular document was ("not a bill," but an "explanation of benefits"), few thought the documents clearly stated either what occurred in the hospital or what, if any, action the patient needed to take.
For many consumers, multiple bills and statements are a source of frustration and confusion. They described documents that were filled with codes and abbreviations that were impossible for them to understand and check for accuracy in terms of the services actually rendered. These consumers' frustration was compounded by the fact that they or their family were not fully informed about all of the tests, physician consults, and other services performed on their behalf.
Few focus-group participants felt they were informed about or prepared to receive the numerous bills and documents they got from multiple sources, and few knew where to go for assistance with these bills and documents. Most began with the physician's office or hospital billing department, but the quality and availability of the assistance varied widely.
Focus-group participants viewed the payment process as a struggle that puts providers and insurance companies into conflict. They see insurance companies constantly "gaming the system" by delaying or denying payments to providers for any number of "excuses," such as coding errors. Consumers often feel caught in the middle.
When asked what they would suggest to improve the system, focus-group participants mentioned the following remedies:
- A statement should be issued that simply explains what was done, by whom, when, what the "real cost" (to the consumer) is, and what is (and is not) covered by insurance.
- The bill should be easy to read and understand, and should omit codes and acronyms.
- Every procedure, activity, and provider involved in an episode of care should be represented on the hospital bill to prevent the patient from receiving multiple bills.
- Statements or bills should be sent to the patient only after claims have been submitted to the insurance company.
- There should be more uniform billing cycles among providers.
- Explanation of benefits and other forms should be standardized across all providers and payers.
Creating a Patient Friendly Billing Philosophy
The comments of consumers are not surprising. Addressing these frustrations, however, is an extremely complex problem. Nonetheless, in a very simplified form, the task force has outlined a universal philosophy that the entire industry can adopt. It also proposes two strategies for implementation-one, a series of steps and changes that an individual provider can implement, and the other, a change that the industry can adopt.
The following patient friendly billing statements can help guide implementation of changes to make the communications process more effective and friendly. These statements should be a starting point for organizations to developing their own patient friendly billing philosophy and implementation plans:
- The needs of patients and family members should be paramount when designing administrative processes and communications.
- Information gathering should be coordinated with other providers and payers, and it should be done efficiently, privately, and with as little duplication as possible.
- Whenever possible, communication of financial information should not occur during the medical encounter.
- Financial communications should contain language, and be in a format, that can be understood by the average consumer.
- Continuous improvement of the billing process should be instituted through implementation of better practices and addressing feedback from patients and consumers.
Steps to Creating a Better Bill
Consumer concerns should guide hospitals and health systems in changing their billing practices in the areas of preregistration, data collection, and data retrieval; the physical bill itself; and multiple bills and follow-up.
Preregistration, data collection, and data retrieval. Activities that may respond to preencounter consumer concerns include:
- Informing patients in advance what they should expect from the episode of care, both medically and financially.
- Informing patients about the timing of the billing cycle, their insurance coverage and potential benefits, payment expectations, payment options, and names and phone numbers of individuals they can contact with questions.
- Maintaining insurance coverage and benefit information from local health plans that is current.
- Implementing internal and external data-retrieval capabilities to reduce redundant questions asked of patients, and validating data in the system to ensure completeness and accuracy.
- Simplifying contractual relationships with managed care and other health insurers to reduce confusion about coverage and payment amounts.
- Improving communications between the hospital's business office and payer organizations, and working collaboratively to simplify the administration of the contractual relationship.
- Employing well-trained and motivated staff who are able to communicate effectively with patients and be their advocates.
The physical bill itself. Activities that may respond to consumer concerns about the bill itself include:
- Providing a clear bill, in plain language, with a summary of the services provided.
- Offering resources upon request to assist and educate patients with detailed bills.
- Reflecting the way the provider is reimbursed for the episode of care. For example, if a provider is paid a fixed price based on a DRG, then the detail of the bill needs to support the established DRG, not every single item in a provider's cost-accounting system associated with that episode of care.
- Immediately after the episode of care, sending an informational letter that explains what the patient should expect (eg, billing of a certain insurance company, identification of what payments if any are due from the patient, and if payment is due, when it is due).
- Using a format that is similar to other bills the patient receives, such as a credit-card billing format.
- Identifying the location of services provided in addition to the name of the hospital or clinic.
- Using terms that are easily understood and avoiding abbreviations, medical jargon, disease and procedure codes, and other specialized terminology.
- Using a standard billing cycle that is consistent regardless of how often the patient visits inpatient or outpatient hospital units.
- Studying the unique needs of the marketplace and enlisting suggestions from patients, family members, and the caregiver community to develop a simple patient bill.
- Communicating only information that is useful to the patient. Consumers wish to see the "real cost" (to the insurance company and to them), and therefore a display of full charges and contractual allowances generally is not meaningful to consumers and typically result in an increase in confusion and suspicion.
- Displaying what was due from (paid by) the payer and what remains due from the consumer.
- Where possible, reducing the number of chargeable items by combining items and developing package prices to reduce complexity, provide the patient more useful information, and reduce questions about individual services that are impossible for the patient to track.
Multiple bills and follow-up. Activities that may respond to consumer concerns regarding multiple bills and follow-up include:
- Providing the patient with the names of any provider-based physicians who also may bill the patient either on the bill or separately. Helpful information would include the group or practice name as it appears on billing forms, the names of the physicians providing services, the types of services the group provides, and phone numbers to use to contact the appropriate person(s) if questions or problems arise with these bills.
- Maintain office hours that mAudio Webcasth the needs of consumers (evenings and weekends may be necessary);
- Hire and train a well-motivated, customer-service-oriented staff who can communicate effectively with various consumer groups and who have access to information necessary to answer questions and solve problems quickly without sending consumers to multiple contacts.
In addition, a time restriction for the resubmission of a claim causes problems for the consumer, provider, and payer. In many instances, this timeframe does not provide adequate time to follow-up on the causes of a rejected claim and gather the information necessary to resubmit it. Additionally, consumers and providers of care are frustrated with the long time it takes to pay claims, which fuels negative perceptions of insurers and health plans. Solutions to these problems could include the following:
- Working with representatives of major health insurers to determine if standards can be developed to address this claim resubmission issue.
- Creating a national standardized "clean claim" definition that could simplify billing communications with patients by avoiding duplication and overlap of claims statements and bills.
Regulatory Changes Needed
Regulatory issues have an impact upon healthcare organizations' ability to provide a clear, correct, concise, and patient friendly bill. Solutions to these issues require working together with government to evaluate or change current policies and regulations. Hospitals and health systems need to collaborate with others in the community or state to create a uniform set of educational resources available via printed, Internet, and other pathways. These materials need to cover the end-to-end process from the patient's view and include a standard glossary of terms.
The definition of what constitutes a detailed or itemized bill needs to be clarified so providers can respond effectively and legally to requests for detailed bills, and in a manner that satisfies Medicare requirements.
Healthcare organizations need to work toward a regulatory environment that allows "package pricing" and billing for hospital services that recognize the different needs of various consumers and potential responses by hospitals and health systems.
Healthcare organizations need to urge regulators to reevaluate the value of the Medicare cost report as a data-collection device. The cost report once formed the basis of the payments to providers, and many hospitals use detailed charges to accumulate the necessary volumes and revenue calculations for this report. Thus, charge master development and maintenance is much more complicated than is necessary and produces an overly complex and error-prone patient bill. Since the cost report is no longer used as the basis for payment, and since it creates a barrier to clear, correct, and concise patient billing, its value needs to be examined.
Healthcare organizations need to work with regulators to ensure that write-offs of small balances that are too costly to collect are not construed as an illegal inducement to generate business covered by Medicare or Medicaid. Doing so would save money and simplify billing. Issues related to credit balances due to patients or others also may require state approvals.
It is extremely difficult to provide clear, correct, concise, and patient friendly bills if the amount due from the patient cannot be calculated accurately as a result of numerous regulatory changes. Healthcare organizations should work with regulators to help simplify payment changes that affect patient billing.
As providers gear up to implement provisions of the Health Insurance Portability and Accountability Act (HIPAA), all interested parties should examine HIPAA-related regulations to ensure that they do not present new barriers to patient friendly billing. Along these same lines, healthcare organizations should work with government to create a process that will review new regulations to ensure that they help streamline the billing process.
Another issue that creates confusion and an inability to effectively communicate what the patient owes from an episode of care relates to deductibles, copayments, and coinsurance, which are difficult to verify and often difficult to calculate. As part of a broader-based reform effort for Medicare, Congress should be urged to review ways by which beneficiaries contribute their share of program costs, with an eye toward implification and cost reduction.
Long-Term Improvement
If the preceding recommendations are implemented, consumers should see an immediate improvement in the patient-billing process. To effect long-term changes in the system, however, will require the interaction, cooperation, and agreement of providers, payers, government, and employers.
From the consumer's perspective, what is needed is a process that would capture and summarize bills from all providers (hospitals, physicians, pharmacies, etc.), and automatically mAudio Webcasth those with all payments from health or other insurance. This process would result in a consolidated communication that clearly identifies all the services that were provided for an episode or episodes of care, the coverage of that care by health or other insurance companies, the expected insurance payment, and the amount that is owed by the consumer.
The consumer would have a single point of contact to go to for answers to questions about complaints, benefits, payments, and other issues. An appeals process would be established to handle disputes that consumers may have about eligibility, coverage, charges, and payments. Eligibility, coverage, and payment issues between providers and payers also would be resolved through this system and handled in a way that is transparent to the consumer.
Payments by consumers would be made to a single source and automatically distributed to those providers and suppliers involved in the episode of care. And, of course, all of this would be handled in a way that ensures the appropriate privacy and confidentiality of individually identifiable patient health information.
A pipe dream? Given the administrative simplification provisions of HIPAA, the explosive growth and effective use of the Internet, actions by various health plans and companies to automate and Web-enable certain eligibility and benefits information, the dream may be closer to being realized than it may seem. The savings to all the parties involved in simplifying the billing process would more than pay for its development.
Case studies of providers who have adopted patient friendly billing in their settings show that participants felt that they came to understand their patients' needs and frustration with the hospital's billing practices. Implementation of patient friendly billing initiatives decreased calls to billing departments, increased patient satisfaction surveys, increased collections and decreased days outstanding in accounts receivable. One CFO said the project completely changed his approach to patients and his understanding of how health care works.
The patient friendly Billing Project is an important first step in finding a workable approach to achieve clear, correct, concise, patient friendly financial communications.
For more information on how your organization can support this effort, or for more information regarding patient friendly billing, go to http://www.patientfriendlybilling.org (live November 26) or send e-mail to info@patientfriendlybilling.org.
footnotes
a. Reality Check II, Chicago, Illinois: American Hospital Association. |