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Improving up-front collections and patient experience.


Providers are currently navigating a growing revenue cycle trend—the rise of high deductible health plans (HDHPs) and increased patient financial responsibility. As a result, providers are adjusting their revenue cycle management approach to be more consumer- or patient-centric. In fact, according to a census conducted by America’s Health Insurance Plans (AHIP), 17.4 million people were enrolled in HDHP plans at the beginning of 2014 — up from just 11.4 million three years earlier.

Patient payments continue to expand as a portion of the total revenue that physicians’ offices and hospitals receive for their services. Much of this upsurge can be attributed to the popularity of HDHPs that trade lower premiums for significantly higher deductibles, copayments and total annual out-of-pocket patient spend.

Deductibles and total out-of-pocket expenses have climbed steadily in the past decade, even among more traditional employer-sponsored plans. According to the Kaiser Family Foundation, for example, the average deductible for a family PPO plan has nearly doubled from $1,034 in 2006 to $1,954 in 2014. Likewise, J.P. Morgan statistics show that out-of-pocket payments from patients are expected to total $420 billion this year, up from $250 billion in 2011—a 68 percent increase in just five years.

The report from J.P. Morgan also noted that bad debt from insured patients is mounting at some hospitals at more than 30 percent per year. Patient payments, which typically accounted for less than 10 percent of revenue early last decade, today constitute roughly a quarter or more of all healthcare revenue.

Revenue Cycle: A Shifting Paradigm

Against this backdrop, healthcare organizations of all sizes must transform their revenue cycle strategies to include patients. The traditional focus on payers will no longer suffice: Providers must more fully address patient collections. In short, they need to find effective ways to collect more of the money owed by patients, or risk their own financial health. Leading organizations and industry groups, like HFMA and HIMSS, are spearheading initiatives to help the industry chart a course towards a more patient-centric or patient-friendly revenue cycle.

There are several aspects for physician practices and health systems to consider in regards to the jump in patient payment obligation. First, provider systems and workflows are currently designed to primarily address collections from government and commercial payers, rather than the consumer. As a result, providers are finding that there are significant differences in the time, resources and cost required to collect patient balances versus collecting from insurance carriers.

Current revenue cycle processes are not traditionally set up to address consumer payment needs, which can have a significant effect on the patient experience and satisfaction levels. Emphasis on the patient experience touches all areas of healthcare, and the revenue cycle is no exception. As one recent report revealed, a negative patient financial experience can often keep patients from paying their bills and may even prevent them from returning for another visit with the provider. In the end, patient dissatisfaction with financial processes can negatively impact satisfaction scores and the bottom line.

As the patient responsibility trend continues to grow, healthcare organizations must attempt to balance effective revenue cycle management workflows with efforts to improve the patient experience. Fortunately, there is a better approach. When industry stakeholders work together to establish a framework of payment clarity, everyone wins. Payment clarity is characterized by two factors.

  • Foundational knowledge that allows providers to estimate and communicate patient charges before or at the time of their visit
  • Effective communication strategies and clear post-visit billing that minimize confusion and empower patients to take responsibility for the costs associated with their care

Moving Toward Payment Clarity

The big picture of payment clarity will ultimately provide the opportunity for organizations to update their business models, technological infrastructures, and workflows. Revenue cycle management must be reinvented to foster collaboration between stakeholders who may have not been accustomed to working together in the past.

As best-practice business models continue to evolve in response to current trends, healthcare organizations can take first steps now to move toward greater clarity. The key is to improve information sharing and communication between payers, providers and patients. By deploying processes and tools to facilitate better payment estimations and communication with patients, for example, revenue cycle management professionals can start to more proactively secure payments.

Historically, healthcare organizations have not consistently followed up with patients early in the claims process to collect revenue after the initial patient encounter. Failure to do so is where providers of all sizes lose the most cash in the revenue cycle process. Therefore, to bolster collections, physician practices and hospitals need to develop sound financial communication plans that take effect both before and at the point of care.

Software-driven solutions that can mine data from the organization’s practice management system—and other sources—is one way to provide patients with an up-front estimate of what they will owe for their services. These tools provide a baseline of what a procedure will cost; what patients’ insurers typically pay for procedures; and estimated balances patients will owe based on their copayments, coinsurance, and deductibles.

Using this information, billing personnel can open up conversations with patients based on accurate information regarding estimated out-of-pocket costs. Then they can either arrange for payment on the spot, or make alternate payment arrangements for more complex circumstances. At a minimum, sharing this estimate at the time of care with the patient helps set a clear expectation from the beginning, helping to avoid future unpleasant billing surprises for the patient.

This information can also help address the knowledge and culture gap that exists for many providers and patients when it comes to understanding the nuances of patient balances. For example, it is not uncommon for front-office staff to have limited knowledge of HDHPs or other alternative payment models such as health savings accounts. Thus, when patients plan to receive care within these parameters, financial conversations can often become misconstrued and uncomfortable.

However, once providers are equipped with the right information, communication strategies can be employed to break down barriers between providers and patients. This concept of proactive patient outreach is currently an under-represented skillset for most administrative staff. As a result, staff should be trained as to when, where, and how to set expectations for payment, as well as to manage the in-person collection process. New skillsets will have to be acquired, including how to decipher out-of-pocket costs, how to accurately describe payment plans, and how to receive and account for up-front payments.

For resource-strapped healthcare providers, addressing this critical issue amid so many competing priorities can be challenging. Thus, many are seeking out the assistance of financial counselors to work alongside revenue cycle staff and mentor them on how to successfully shift processes to communicate financial responsibilities with patients. In this way, all parties can learn to navigate the new financial realities of the healthcare system together.

Reinventing the Patient Payment Process

With patients now responsible for approximately 25-30 percent of all healthcare revenue, it is paramount that providers develop a solid plan for reinventing their patient collections processes to include up-front estimation and collections, clarity in setting patient expectations, and convenient payment options in post-care billing.

Collecting payments early yields a significant bottom-line revenue performance opportunity—and as hospitals and physician practices continue to contend with tremendous cost pressures, every additional dollar to hit accounts receivable makes a difference. By deploying a technology solution to estimate costs and spur early payments, providers can head off collection problems down the road and build a solid foundation for effective patient revenue cycle management.


Stuart Hanson is senior vice president and general manager, consumer payment, Change Healthcare.

Publication Date: Wednesday, January 13, 2016