Here’s a dirty little secret about healthcare: money is a really big deal. Practices need to be reimbursed, the lights need to be kept on and doctors need to get paid. Managing the flow of cash in any business can be a head-scratching affair, but with a myriad of patients, providers, and payers, the revenue cycle in healthcare is fraught with black holes that gobble up dollars.
According to Kevin Arner, CEO of PaySpan, one of the biggest hurdles to jump is transitioning to electronic payments across the board. Using electronic payments strategically “expedites the exchange of funds and ultimately provides a more detailed reconciliation in the payment stage,” Arner said.
He pointed out that electronic payments are standard in other businesses, but they “have been overlooked” in the healthcare world for many years. Read on for his five suggested ways to use payments strategically.
1. Use and promote electronic payments
Most people wouldn’t believe how many practices still don’t handle plastic. Arner said providers who use non-automated forms of payment will see “problems manifest in long A/R cycles, cash flow constraints” and other means of tracking and generating revenue.
By beginning the financial dialogue with a patient early and doing so electronically, Arner said a healthcare provider will end up getting the full reimbursement. He noted that the older model of payment, where a payer transfers funds and leaves it at that, can hurt providers, who may find that they can claim more reimbursements after the treatment has ended.
By adopting and promoting an electronic system, and by engaging payers and patients alike, the resulting dialogue and good records ensure a more open revenue flow.
Getting all the players on board isn’t as much of a hurdle as one might think. Arner said it can be “as simple as requesting electronic payments from the payers and from the patients.” Almost all payers are able to submit payments through a third-party electronic payment system, and a vast majority of patients would be happy to whip out the plastic. “It’s surprising how few providers petition and reach out to payers for electronic payment,” said Arner.
2. Incorporate fraud and abuse prevention technology
As the process of paying a provider electronically becomes more widespread, so will the complacency surrounding it. When transferring money to a doctor is as easy as buying an app, “the easier it is for people to become less attentive to errors like fraud and abuse,” said Arner.
Best, then, to hit hard and fast and establish a strong security regimen sooner rather than later. The good news is because so many other industries have been using electronic payments for a long time, there’s a wide range of industry standards that have been established. The trick, said Arner, is being sure to adhere to them and holding your partners accountable to the same standards.
“It’s important to utilize partners that are compliant with security standards, and [who have] all of their technology up to date.”
3. Use multiple payment modes to shape provider behavior
Getting paid is good, right? Arner said that practices need to realize that “you have to have a tremendous amount of flexibility in accepting forms of payment now. In today’s market, providers need to utilize credit cards.” He recommends accepting other forms of electronic fund transfers (EFT) and paper-based transactions as well.
He noted that each of these methods of payment has its upsides and drawbacks and that doctors need to understand the nature of what they’re getting paid for is in as much transition as the ways to pay are. “The old method is you go in and see the doctor [who] provides services, bills for those services, and gets paid,” he explained.
The process of treating a patient is no longer necessarily based around a single visit that gets billed and then paid for. Treatment is a more fluid and ongoing process, with different charges occurring at different stages. As healthcare starts “shifting from fee-for-service to episodic, based on the outcome…that changes the timing and sequence of payments,” said Arner.
Keeping track of the way payments are due and what they are for makes electronic payments look a lot more palatable.
4. Align payment strategy to support “risk redistribution”
“Probably one of the fundamental characteristics of the healthcare reform is that we need to move away from the pay-for-service to the outcomes model,” said Arner, referring to the ACA’s requirement to reimburse caregivers based on the quality of the outcomes of treatment, not for each time they simply see a patient.
This change in the reimbursement cycle can create new risks for providers, who have to deal with “extended collection cycles and increased accounts receivables,” according to Arner.
The best strategy to deal with this is “aligning provider practices with reimbursement methods such as EFT (electronic funds transfer), payer virtual card reimbursement and automated patient credit card reimbursement,” Arner said, which can help “avoid the risk and expenses related with uncollected amounts due.”
5. Utilize payment technology that enables reimbursement disbursement
As the healthcare landscape moves toward outcome-based reimbursement, the timeline of care grows longer, as does the spectrum of who pays for what – and when.
Keeping on top of it means healthcare providers are going to have to be skilled at hitting a moving target, and Arner said choosing and investing wisely in a good technology platform is a key move. “This is about choosing a tech platform that allows you to not only use different models [of payment] and manage interactions but here is a call to make sure the technology allows you to do all of these things in a secure way,” he said.
“Reimbursement requires that you look at who owes you, when you’ll get paid, and all those other moving parts.”
What does the ideal system have? “Integration issues are critical,” said Arner. “Having an open platform (standards-based) for the exchange of data is critical.” Additionally, a system needs to be capable of things beyond facilitating transactions. Arner warned that it’s more complicated than just moving money from point A to B. It’s about making sure all the money is in the right place.
He also noted that a payment system needs to keep track of where money is in its journey, how much of payment has been made and how much is due, and if it’s ending up in the right place. “It needs to be very comprehensive,” he said.
Benjamin Harris is a new media producer at MedTech Media. His articles appear regularly on several MedTech properties, including PhysBizTech, an online publication covering business and technology issues for small physician practices.