The consumerization of healthcare has created financial challenges for both providers and patients
Over the past decade, the relationship between patients and providers has moved from the sacrosanct to the transactional. Today’s patients often choose – or are provided with – less costly insurance that incurs high deductibles, high co-pays, or both. For example, 81 percent of covered employees in the U.S. have insurance plans with deductibles and 68 percent of covered workers have a copay. In smaller businesses, 63 percent of employees have a deductible of $1,000 or more, and 36 percent have a $2,000 or higher deductible. For an individual with an entry-level “Bronze” ACA plan, the average deductible allowance is $5,731 and the average out-of-pocket allowance is $6,639; for families, it is $11,601 and $13,292, respectively. Despite these foreseeable expenses, few patients adequately anticipate their out-of-pocket costs – or budget accordingly.
This shift towards patients-as-payers has fueled the “consumerization” of healthcare. This is evidenced by patients’ proactivity in managing their health – and healthcare providers – through fitness apps and devices, patient engagement tools, diagnosis-by-Google, and online reviews of physicians and practices.
In turn, consumerization has caused healthcare organizations to undergo a fiscal sea change. A decade ago, patient payments generated about a tenth of medical group revenue. By mid-2016, that number approached 35 percent. Patients are quickly becoming the #1 payer for practices. Between 2009 and 2015, providers witnessed a 68 percent leap in out-of-pocket payments from insured patients, creating a host of challenges associated with capturing payments and maintaining a sustainable cash flow. A 2015 survey conducted by the Ambulatory Surgery Center Association found that 12 percent of healthcare executives identified estimating patient financial responsibility as a top challenge. At the other end of the revenue cycle, debt collection trade organization ACA International finds that only 21 percent of non-hospital medical debt assigned to third-party collectors is recovered.
The increased patient cost burden – and its financial impact on providers – is here to stay. In order to thrive, high-growth medical groups must adopt policies, procedures, and technologies designed to prioritize patient-generated revenue streams.
Protect patient-generated revenue streams by avoiding payment delays
Protecting patient-generated revenue streams requires two strategies. One is to implement front-end operational processes to collect expected patient responsibility at the time of service. The second is to execute solid claim processes to move claims out the door as promptly and cleanly as possible so that they will be paid quickly and effectively. The goal? Fast adjudication, zero denials, and a first-pass resolution rate (FPRR) of 96 percent or higher.
With a high FPRR, patient responsibility amounts not collected at the time of service become the patient balance, and statements can be generated within 30 days. When it comes to patient billings, time is money and speed is of the essence. Only 21 percent of patient balances that remain on the books for 120 days is ever collected. In other words, 79 percent of 120-day balances go down the drain. Billing the patient within 30 days of the time of service is crucial to stay ahead of the 120-day ticking clock.
Impeccable claims and billing processes help drive other key performance indicators, including the overall net collection rate. Implement the following roadmap to produce a net collection rate of 95 percent or more.
Before the patient arrives
Accurately estimating the extent of a patient’s financial responsibility and then communicating your payment expectations are key to increasing your net collection rate.
- Ensure accurate patient data:
- Verify insurance eligibility:
- Confirm authorizations:
- Communicate with the patient:
- Let appointment reminders do double duty:
Outdated or incorrect information in a patient’s record can result in otherwise avoidable insurance denials. To prevent this, ask for the patient’s contact and insurance information when the appointment is made and again at check-in. Ideally through an automated or self-serve digital tool (online or via their phone).
With the support of insurance verification tools, confirming a patient’s eligibility under an existing insurance plan should be straightforward. Next, review deductibles, benefits, co-pays, and other related information. Based on the patient’s benefits and how much of their deductible has been met, estimate the extent of the patient’s financial responsibility.
Obtain necessary referrals or authorizations as quickly as possible.
Proactively communicating the patient’s expected payment at the time of service and the medical group’s acceptable payment methods empower patients by preventing an unforeseen financial burden.
Remind patients of their responsibility to pay at the time of service in your auto-dialed, emailed, and mailed appointment reminders.
At appointment time
Securing 100% of patient co-pays and payments toward deductibles during visits ensures a robust revenue stream. Creating forward-facing policies and utilizing digital tools minimize confusion and mitigate the risk of uncollectible invoices.
- Ask “how,” not “if”:
- Accept multiple payment methods:
- Clean up outstanding balances:
- Create a payment plan:
When the patient arrives or prior to the patient’s departure, staff should ask, “How would you like to pay today?” Setting the expectation of payment makes it more difficult for patients to demur.
The greater the number of payment methods accepted, the greater the patient’s willingness and ability to pay. Options to consider include debit cards (including HSA and FSA), credit cards, cash (with proper controls in place), mobile payments, EMV “smart cards,” PayPal, traveler’s check, and money order.
After implementing same-day payment policies, outstanding balances should not be an issue. If there was an unexpected insurance rollover and it hasn’t been paid, staff should ask how the patient would like to pay for it.
If the amount due is beyond the patient’s ability to pay, create an easy-to-implement payment plan. For example, your practice management system should be able to automatically charge the patient’s debit or credit card according to an agreed-upon timeline.
Behind the scenes
Creating systems and procedures behind the scenes creates an environment that fosters patient payments and prevents collections from approaching the 120-day tipping point.
- Invest in staff training:
- Review common denial issues:
- 100% buy-in from staff:
- Firmness and compassion:
- Implement technological tools:
- Invest in analytics:
Training staff members in all aspects of revenue management will empower them to master skills ranging from the ability to pinpoint errors in claims to the soft skills necessary to talk with patients about financial issues.
By identifying common causes of confusion or errors around claims, your team can minimize potential mistakes, ensure that claims are adjudicated quickly, and proactively collect from patients at the time of service or within 30 days.
All staff members should be committed to excellence at all points of the revenue management cycle. Patient-facing staff members must understand the medical group’s commitment to time-of-service payments and be prepared to field patient questions should they arise.
An increased emphasis on financial responsibility may create stress for some patients. Staff members who work with patient payments should be able to have difficult conversations with patients while remaining both firm and compassionate.
Practice management and revenue cycle management technology can promote insurance verification, prevent denials, estimate patient financial responsibility, and track payments. An online payment portal provides patients who have insurance rollovers to effortlessly fulfill their obligations. Greater automation lessens the chance that revenue will fall through the cracks.
If you don’t know what percentage of your medical group’s accounts receivable are insurance-based and which are the patient’s responsibility, you don’t have your finger on the pulse of your practice. Analytics deliver key performance indicators (KPIs) that enable you to – at a glance – ascertain if you’re hitting your benchmarks. If not, you can take immediate action.
Pairing proactive policies with digital solutions is the best way for your practice to leverage patient payments for a consistently high revenue stream
The consumerization of healthcare has led to a paradigm shift that emphasizes patient financial responsibility through higher deductibles and copays. Medical groups that understand the impact of this trend are positioned to evolve their policies, procedures, and technology in order to maximize patient revenue. Successfully estimating and communicating patient financial responsibility, quickly submitting error-free insurance claims, and securing payment at the time of service makes a 95 percent patient collection target eminently attainable.
CareCloud is helping thousands of physicians increase profitability, streamline workflow, and improve patient care. CareCloud currently manages more than $4 billion in annualized accounts receivables on behalf of its revenue cycle management clients nationwide.