November 21, 2011
By Maura Keller
For The Record
Vol. 23 No. 21 P. 5
While question marks still exist regarding the state of the economy, one thing’s for sure: Hospitals and other healthcare facilities are wondering what this doubt means for their collection initiatives.
When it comes to payment collections within the medical arena, efficiency is the name of the game. “There are growing financial pressures for healthcare organizations to collect cash for services rendered,” says Phil Solomon, chief marketing officer at UCB Intelligent Solutions. “For patients who can afford health insurance coverage, they have been forced to take on a greater portion of the responsibility to pay out of pocket for their healthcare services. Increasing deductibles and increased copays now burden patients with additional expense unlike any time in our country’s history. Due to the high cost of healthcare insurance, many consumers are not able to afford coverage at all. That said, hospitals are now experiencing a meteoric rise in their self-pay financial class.”
UCB provides intelligent revenue cycle solutions to hospitals, health systems, large multispecialty clinics, and physician groups. As Solomon explains, the company leverages a multitude of outsourcing disciplines, including analytic modeling and analysis, workflow benchmarking, cutting-edge technology, and revenue cycle optimization.
The financial pressures facing healthcare organizations are on the rise. Consider this: The U.S. Census Bureau reports that 36.6 million people were uninsured in 2000. That number rose to 49.9 million in 2010. “There is a direct correlation between unemployment and our uninsured population,” Solomon says. “During that same period, the portion of the population with job-based health insurance dropped from 65.1% to 55.3%, while the overall population grew from 279.5 million in 2000 to 306.1 million in 2010. When we experience a down economy, more patients become uninsured or underinsured. Collecting self-pay payments from patients is going to get more difficult in the future. Hospitals must adjust their collection strategy accordingly.”
Kevin Weinstein, vice president of marketing at ZirMed, agrees that changes in insurance coverage, such as high-deductible plans, healthcare savings accounts, and increasing copay and coinsurance rates, have resulted in patients being directly responsible for more of their healthcare expenses than ever before—often as high as 20% in some cases.
“At the same time, the shift toward consumer-driven healthcare has set patient expectations that paying for healthcare should be just like paying other service providers and retail merchants,” Weinstein says. “These trends have combined to create an industrywide need to seamlessly provide patients highly efficient, highly secure, easy-to-use payment options.”
ZirMed delivers revenue cycle management solutions that include eligibility verification, claims management, coding compliancy and reimbursement management, electronic remittance advice, patient statements, and patient e-commerce solutions.
Weinstein says the challenge for hospitals is that making these options available has typically required one of the following three paths:
• purchasing an outside solution that is expensive and/or needs to be integrated with their existing solutions;
• building an internal solution that costs money to develop and even more to maintain, especially from a compliance standpoint; or
• trying to “link” to a third-party technology or process that often results in a confusing and suboptimal user experience.
“This [last point] is important because research has shown a direct connection between how easy it is to read, understand, and pay patient bills and patient satisfaction,” Weinstein says. “In turn, patient satisfaction is linked to many important items for most hospitals, including local market share, bond ratings, and employee compensation.”
With patient collections playing such an important role in hospitals’ revenue streams, John Zammit, director of special accounts at Gateway EDI, a healthcare electronic data interchange provider that helps hospitals maximize revenue by catching and correcting claims issues before they reach payers, stresses the importance of reaching out to patients early and often with payment information.
“Research has shown 56% of patients don’t pay their medical bills because of a lack of financing options or delays in receiving their statements,” Zammit says. “Your patients need to be informed about what portion of healthcare expenses are their responsibility, educated on options available to them for payment, and consulted with to ensure follow through.”
Defining Payment Strategy
A good payment collection strategy begins with the first interaction between a patient and a provider. “For self-pay accounts, healthcare providers must develop a systematic collection workflow and stick to it,” Solomon says. “When patients have outstanding bills, they should be contacted early and often in the revenue cycle. The message sent out to the community must mirror the hospital’s policy to pursue collections for those who do not pay. A poorly executed collection strategy actually trains patients not to pay their bills. Today, consumers are very savvy. If they do not have the financial resources to pay their bill, they will seek out the provider who is less likely to pursue collections.”
Weinstein says hospitals have increasingly acquired or become more deeply affiliated with physician hospitals, to the point that 50% or more of physicians are in some sort of economic agreement with a hospital. ”As hospitals look to integrate the billing cycle of these physician offices, often they try to apply hospital-based guidelines and processes to them,” Weinstein says. “Physician office billing, whether insurer based or patient based, is a different game. Hospitals should look to use physician office-appropriate tools and processes. For example, chasing $10 copays may seem like a wasted effort for a hospital, but it is imperative for a physician office.”
Another common mistake hospitals make is relying on manual billing processes that are cumbersome and time consuming. “For example, calling insurance companies directly to verify each patient’s eligibility is cumbersome,” Zammit says. “The hassle of this process often leads to staff holding off on checking patient eligibility to verify coverage and payment responsibility until after services are performed. No other industry waits until after performing a service to tell the customer how much they will owe, but it’s commonplace in healthcare.”
Experts point to other common collection mistakes, including the following:
• delivering a confusing, non–patient-friendly bill;
• not collecting payment at the time of service;
• an inability to “risk score” self-pay patients;
• not leveraging available technology to identify charity-qualified patients and wasting valuable collection resources attempting to collect from them;
• forgetting that medical bills are scary, daunting, and confusing for most patients (While patient statements should be comprehensive, they should also be easy to read and understand. Statements that meet these criteria tend to be paid more quickly and more fully.);
• having insufficient contact with self-pay patients who have outstanding bills;
• not using all available tools to estimate and collect patient payments ahead of planned admissions and procedures, including eligibility verification and actual patient estimation tools;
• holding unpaid accounts too long before placing them with a third-party collection agency; and
• not offering enough payment options to maximize collections. (This could be in terms of payment plans or payment method.)
Weinstein suggests hospitals always use eligibility verification for office visits and in the acute care setting. “Revisit patient payment guidelines to ensure that they offer the greatest opportunity for full collection of money owed,” he says. “This may mean adjusting write-off levels, billing frequency, or collection policies.”
Also establish a clear patient payment policy, commit to it, and communicate it in writing throughout all care episodes, he adds.
“Find a partner who can provide you with patient payment tools that are easy to use for patients, seamlessly and easily integrate with your existing systems and Web presence, and provide the most secure and compliant payment platforms,” Weinstein says. “Make sure that you have the capability to establish patient payment plans. Economic conditions are likely to continue to squeeze patients’ ability to pay, so hospitals need to be flexible and prepared to give patients options.”
Many claims-processing systems offer reporting features that allow facilities to monitor how quickly they send claims, the number of errors they submit, and the amount of time claims spend in accounts receivable. “Running regular reports can help you evaluate your workflow for ways to improve efficiency,” Zammit says.
Solomon suggests hospitals use the following techniques to make their payment collections more efficient:
• Use the latest technology to validate patient information such as financial responsibility service estimates, the likelihood of payment, charity qualification, demographic verification, and insurance eligibility.
• Develop a segmented propensity of payment collection workflow internally or leverage scoring tools with a qualified vendor.
• Inform patients of all payment options well before service is provided.
• Retrain staff to ask for cash payments at every opportunity.
• Proactively offer payment plans to patients who have high-deductible insurance coverage.
• Install ATMs in strategic locations such as the emergency department.
“One way that hospitals can get ahead of the patient payment challenge is to use tools that automate patient eligibility checks, so they can easily run them at the time a patient appointment is made,” Zammit says. “This way staff can set expectations with patients as to how much they will owe. Then, when patients check in, you can have another conversation with them about their payment responsibility. After services are completed, you can work with them to collect their portion of the bill before they even leave the hospital.”
It’s also imperative that staff recognize the important role they play in the collections process and how it affects the entire organization’s bottom line. “All staff play a role in the facility’s revenue cycle, from the front staff who inform patients of the payment policies to the providers and clinical staff who document charges to the billing office that completes the billing cycle,” Zammit says. “Educate staff members on how they personally affect the practice’s revenue cycle in their daily jobs.”
— Maura Keller is a freelance writer based in Minneapolis.