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Patients provide one-third of hospital revenues so delayed or unpaid bills can destabilize finances.
Healthcare payment has changed to better meet the needs of patients. Therefore, many providers who have relied on proven methods of getting paid—see patients, code visits, submit claims, and receive payments from health plans for services provided—are reconsidering their approaches.
Traditional payment models are being replaced as patients become more integral parts of payment pictures due to the advent of high-deductible health plans (HDHPs), increasing copayments, and an overall shift to greater patient responsibility. Today, patients provide one-third of hospital revenues; therefore, delayed or unpaid bills can destabilize organizations’ finances (Jones Sanborn, B., “ Patients are the new payers in healthcare,” Healthcare IT News, Feb. 6, 2018).
The days when health plan payments covered the majority of patient bills are fading, replaced by a blended payment model in which the patient is responsible for paying a larger portion of charges. While some providers have begun laying the groundwork for blended models, others have not started to address the growing importance of patient payments.
Best Practices for Boosting Patient Payment
Collecting patient payments is difficult, time consuming, and expensive. Recent studies show that 50 percent of patient obligations to hospitals and doctors go unpaid ( Revisiting Healthcare Payments , McKinsey & Company, March 2010). The inevitable transition to blended models is smoother with the right technology, people, and processes to drive patient payments. The following best practices help providers sharpen their focus on patient responsibility and, ultimately, improve financial performance.
Verify eligibility and benefits.To maximize payer portions of payments, providers should consistently verify eligibility for all patients during scheduling and prior to their visits. This establishes a revenue safety net, ensuring providers capitalize on payer payments as part of the overall payment equation. While eligibility verification can be done manually, automated verification tools can not only improve efficiency but also accuracy, making certain that patients are properly cleared before going to hospitals or physician practices.
Estimate patient responsibility. Shifting patient payment conversations to earlier points in patient encounters can increase the likelihood of payment and improve patient satisfaction. Key components of these conversations are patient estimates. By using real-time technology to establish patients’ copayments and coinsurance amounts, as well as any unmet deductibles, healthcare organizations can create clear estimates about patients’ expected payments based on what payers have paid historically. This creates transparency with patients and offers better financial experiences, increasing the likelihood that patients will pay their bills.
Communicate financial policies. Define the financial information that should be presented to patients during visits, how that information should be communicated, and the types of payment plans available. Train those who work directly with patients to be sure they understand the increasing burden patients face and are comfortable counseling patients on their financial options by using “compassionate collections” approaches, which helps to better engage patients and build trust. This policy also identifies internal processes that may need to be reworked to support estimates and payment plans.
Collect payments at the point of service. Have the tools in place to collect from patients when they are ready and able to pay, ideally at the point of service. Providers should offer more consumer-friendly methods such as online billing and payment tools, telephone payment options, and effective print statements for those that prefer them.
Use personalized patient statements. Streamlined delivery of accurate and easy-to-understand paper and electronic patient statements can result in quicker patient payments. Patient statements should use concise, simple language and a call-to-action that clearly displays patients’ financial responsibilities—including amount owed, date due, and options for payment—to encourage faster payment. The use of design-thinking principles and focus-group feedback can enhance statement design to help expedite payments.
Consider statement designs that encourage patients to opt-in to digital statements and pay online or with mobile devices. Americans pay more than half of their bills online; therefore, it’s crucial to include online payments as convenient options in patient statements ( How Americans Pay Their Bills , ACI Worldwide, Jan. 24, 2017).
In addition, digital statements give providers the opportunity to provide links to details, including a clean display of charges, payments, and remaining amounts due.
Include safeguards in your print and communications plans. When consumers provide incorrect or old addresses, patient statements often end up at the wrong addresses, which creates delays that negatively impact hospitals’ cash flow. In fact, the U.S. Postal Service reported that 4.6 percent of all mail was classified as Undeliverable-as-Addressed (UAA) in 2017, mainly because of address changes (Seitz, G.A., “Where is Your Returned Mail Hidden?” Mailing Systems Technology, May/June 2018). Hospitals spend hundreds of hours handling returned mail, tracking down patient addresses, and posting new statements.
To offset these types of payment delays, hospitals should be proactive and ensure that they have return mail services for patient statements that eliminate return mail handling. Return mail solutions can help speed collections by automating return mail processing and facilitating skip trace to locate new address information, which shortens the time it takes for bills to reach patients.
Have a plan for delinquent payments. This may involve reaching out to patients and offering payment plans or helping patients transition into charity care. Personalized dunning or collection letters may also be a helpful last attempts to collect payments. They also can educate patients about payment arrangements or other sources of assistance—such as long-term payment plans, hardship programs, and charitable organizations—that might help them meet their financial obligations. Dunning letters can potentially fulfill state medical debt collection requirements. Providers should also develop protocols for improving collections on delinquent patient accounts and consider employing automated tools that can create, manage, and monitor work queues.
A Multi-Faceted, Consumer-Focused Approach Can Help Drive Cash Flow
As patients have more financial stake in their care, they are seeking health organizations that offer more consumer-focused experiences. For revenue cycle operations, this translates into the need for greater transparency in the form of up-front estimates, multiple payment options and plans, and direct communications with staff about payment responsibilities. The opportunities lie in preparing now for moves to greater patient responsibilities, coupled with increasing demand for more transparent processes. Targeted efforts focused on increasing patient communication can better support revenue cycles that lead to more productive fiscal health.