CFO Zone: A 360° View of Patient Payments
By Crystal Ewing
For The Record
Vol. 29 No. 3 P. 28
The growth of patient payments as a share of health care provider revenue has thrown a wrench into traditional revenue cycle management (RCM) processes. The patient responsibility portion of the bill may climb to 50% of hospital and physician revenue by the end of the decade. This is a sea change for provider organizations, especially those accustomed to extracting reimbursements from government and commercial payers, but have comparatively little knowledge of the consumer-payments landscape.
The biggest challenge? It's simply more difficult to get patients to pay their bills than payers. By some estimates, it costs twice as much to collect from patients—and it's easy to understand why. Patients may need to be rebilled or talk with staff about billing questions and payment options, including those that require more hands-on work or manual reconciliation. And with patient balances being what they are, patients may need to set up a payment plan—just as they do with any other major financial obligation. All of these items require time and additional resources on the part of providers.
Health care organizations need a mindful approach to patient-as-consumer payments, one that makes it easier to educate patients on their new responsibilities and elevates the level of customer service to meet the emerging needs of health care consumers. Importantly, this new approach must modernize health care organizations' payment infrastructure to improve billing, increase communication channels, expand payment methods, and boost security across channels and payment methods.
How Did We Get Here?
Enrollment in high-deductible health plans (HDHPs) continues to climb. A 2016 survey by the Henry J. Kaiser Family Foundation found that 29% of patients participating in their employers' insurance plans are covered under an HDHP. The 2015 version of the same survey found that, in the individual market, "almost 90% of enrollees in Affordable Care Act (ACA) Marketplaces are in a plan with a deductible above the amount that qualifies a plan as an HDHP."
The average family deductible has grown 40% since 2010. Meanwhile, the ACA has created millions of first-time health plan members. The combination of new consumers in the mix—and new plans that require more skin in the game—puts provider organizations on precarious footing when it comes to RCM.
But there is a potential upside for the health care organizations that learn to successfully navigate this new consumerism. That's because as patients are being forced to understand the costs of health care services, they are also making important judgments about the quality and value of the care they are receiving. Health care organizations that demonstrate their value—both clinically and in terms of customer service—stand to benefit as consumers increasingly shop for nonemergency care.
Beyond Simple Transactions
Provider and payer organizations typically have a predictable give-and-take relationship. The provider codes and bills the payer, then the payer offers a rate of reimbursement, possibly disputing some of the charges based on eligibility rules, demonstration of medical necessity, or inadequate/inaccurate coding.
But emerging payment relationships with health care consumers are fundamentally different. Health care organizations must first make sure patients understand what they owe, then encourage them to pay in a timely fashion while making it easy to do so. Finally, hospitals and physicians must provide customer service and demonstrate value to secure repeat business.
In short, provider organizations must educate patients on the legitimacy of the bills and compete with other organizations for future business. These new demands require relationship building along the patient journey.
Provider organizations must leverage all potential touchpoints with patients to demonstrate the value of care and improve transparency around costs. It also can be helpful to sync patient engagement strategies to phases of RCM, including the following:
• Front-end RCM: scheduling, patient access, insurance verification, financial counseling, and eligibility
Patient touchpoints: previsit, patient intake
• Midcycle RCM: case management, charge capture, and clinical documentation
Patient touchpoints: patient in/out
• Back-end RCM: claim submission, cashiering, refunds and adjustment postings, third-party and guarantor processing, payment posting, payer follow-up, customer service, and collections and outsourcing
Patient touchpoints: patient payments
By recognizing and seizing opportunities along the patient journey to engage and educate patients on their financial responsibility, provider organizations can minimize the risk of nonpayment. Providers can optimize opportunities to improve cash flow and potentially even engage patients in preventive care that can mitigate their out-of-pocket costs.
The following are key obstacles to patients paying their bills:
Lack of Clarity on What Is Owed
Health care providers must provide timely, accurate, and easy-to-read statements that explain exactly what is owed. But many times bills are so complex that patients throw up their hands in dismay—and don't pay. Providers must simplify bills and offer support to help consumers better understand what they are responsible for and why.
Lack of Convenient Payment Options
As of 2014, more than 60% of consumers had already started making online bill payments outside of health care. Nine of 10 consumers, when asked, wanted to have this option for medical bills. Consumer research has found that more than 10% of consumers will go online exclusively through a mobile device this year, making it clear that mobile payments are a key tenet of an effective patient-payment strategy going forward.
Lack of Financing to Make Payments Affordable
Gone are the days when most patient bills were $20, $30, or $50 copays. Insured patients being discharged from hospitals may still face thousands of dollars of expenses after a routine surgery or childbirth. For outpatient care, patients still may be responsible for the lion's share of those expenses before meeting their deductibles. Many consumers are unprepared for these sudden bills and will need payment plans to pay off the balances.
Payment plans work well for health care organizations too; research shows that compliance with autopay payment plans for medical bills is nearly 100%.
New Technology Must Adapt to Patient Needs
Provider organizations need comprehensive payment solutions to capture patient responsibility—technology that improves transparency, patient education, and convenience. The approach needs to offer multiple payment and communication methods to help meet patients' growing expectation of a personalized consumer experience. This approach should include the following:
• Patient-initiated payment plans. Enable patients to set up payment plans that increase the likelihood of payment and remove friction from the collection team.
• Intelligent statements. Don't just provide a record of what is owed—proactively drive patients to the most crucial information while offering easy-to-read print and electronic statements.
• Secure payment processing. Arm your organization against fraud with chip-card technology and end-to-end encryption while offering multiple payment options to ensure convenience to your patients.
• Mobile capabilities. Ensure patient satisfaction by allowing patients to pay via a mobile device while also viewing statements and current balances.
• Check processing. Securely accept checks over the phone, online, or through the mail.
• Dynamic reporting. Comprehensive reporting, customized based on your unique key performance indicators.
A Proactive Stance
Studies have shown that only 13% of bills that end up in collections ever get paid. Providers must get out in front of the growing mountain of patient bills to educate patients on their new responsibilities and make patients feel good about the value they are getting from their health care dollars.
Deploying technology to improve patient education, accepting payments across channels and via different payment methods, and security across processes and devices will all deliver dividends in terms of reduced days in accounts receivable and increased patient loyalty.
The right online payment options mean patients can manage, pay, and understand bills in one place, reducing the burden on staff who previously had to accomplish that work over the phone. As plan information is increasingly viewed through payer portals, there are emerging opportunities to educate patients on deductibles and plan specifics, and minimize unpleasant surprise bills.
And ultimately, engagement across multiple channels and along the patient journey can help providers engage with their patients on preventive medicine and healthy lifestyles education.
In multiple ways and for multiple stakeholders, the right approach pays off.
— Crystal Ewing, ZirMed's manager of data integrity, has more than 19 years of experience in the health care industry and brings a blend of business and technical expertise to her current role, where she focuses on revenue cycle as well as population health data integrity solution development and compliance.