Payment clarity ahead: Why it matters, and how it can help your patients and your bottom line

Healthcare providers today are principally concerned with two things: first and foremost, providing quality care to patients; second, getting paid for that care.

Unfortunately, while advances in medical science and technology are making it easier to help patients get well, a tidal wave of reform is making it harder to get paid.

Higher deductible plans and cost sharing mean that insured patients owe more. And as patient out-of-pocket expenses rise, so will the amount of bad debt carried by hospitals.

The increasing prevalence of high-deductible health plans, evolving payment models and regulatory changes are leaving a growing number of patients liable for larger portions of their bills, and providers unsure about reimbursement.

In this environment, healthcare providers need payment clarity – visibility into when and how much they will be paid, by whom, and the ability to better navigate the many obstacles to payment.

Today's patients are savvy healthcare consumers, and demand transparency into what they will owe – up front. Studies show that when patients receive timely, accurate information in advance, they are more likely to pay. Confusion over insurance jargon (only 14 percent of insured adults correctly understand terms like deductibles, coinsurance, co-pays and out-of-pocket maximums) and fears about overpriced care contribute to patient unwillingness to pay.

To remain financially viable, providers must be able to furnish accurate cost estimates to patients prior to service, and be ready to collect more from them at the point of service. And they must be sensitive in their collection efforts, as patient satisfaction scores are not only used to inform federal payments for healthcare services, but patient collections are increasingly linked to overall satisfaction.

Medical Debt Spurs Cost Transparency

Medical debt is a growing problem in the U.S., and is no longer limited to the uninsured. In the past, such debt was often due to a lack of insurance. Today, 70 percent of people reporting difficulty with medical debt are insured, and cost-sharing is cited as the leading contributor to the debt.

Millions of Americans are newly insured due to the ACA, and millions more have moved (or been moved by their employer) to high-deductible plans. As they navigate the system for the first time or try to make informed healthcare choices, they are often disillusioned by confusing, unclear and hidden costs. They want to know what they will owe.

Accurate estimations of patient financial liability and the ability to collect on that obligation at the point of service can help reduce bad debt – and increase patient engagement and satisfaction. But determining what a patient will be responsible for (within reason) and providing visibility into that cost remain a serious challenge for hospitals.

In addition to providing cost transparency for patients, providers require visibility into what they should (and will) be reimbursed by payers. To succeed on both fronts, they need a reliable way to validate a patient's identity, financial capability and propensity to pay (beyond a credit score), benefit eligibility, and available coverage. This includes not only whether they are eligible, but what their deductibles are, whether authorizations are in place, and the estimated liability on how much they will owe. With this information at the beginning, providers are better able to address the patient payment clarity portion of the equation, which impacts the rest of the revenue cycle.

Opportunities Throughout the Revenue Cycle

To achieve true payment clarity, healthcare providers must implement technology solutions and processes that help automate and streamline everything from pre-service patient access functions, including preauthorization, to claims management and processing, denial management and (ultimately) the identification and management of payer payment variances.

Patient Access/Pre-Service
Successful solutions and processes here at the critical front-line can help mitigate obstacles to payment further downstream in the revenue cycle.

Today's pre-service solutions help simplify and accelerate front-office duties such as validating patient ID, verifying benefits and eligibility, identifying whether authorization is required and determining medical necessity. They enable patient access staff to accurately determine the patient's financial responsibility, assess the patient's propensity to pay and also check for charity options for patients who cannot pay. Most important to patients with high deductibles, they calculate pre-service bill estimates and create a recommended point-of-service deposit.

By identifying and correcting registration errors at the beginning of the revenue cycle, patient access automation solutions help ensure accurate data to enable providers to mitigate denials, decrease claim rejections and statement returns, and improve patient satisfaction when claims are processed accurately and quickly. Ultimately, they help improve cash flow, reduce accounts receivable (A/R) days, and decrease bad debt.

Claims Management
Smart claims management is the key to timely cash flow, yet the process for many providers remains painfully antiquated and time consuming. Traditional claims management too often relies on schedule-based worklists to coordinate follow-up activities with payers. With a more targeted focus, users can positively influence their productivity and help speed payment.

Claims management systems help take the guesswork out of claims processing and monitoring and reduce manual touch points that hinder productivity. Advanced automation solutions should include exception-based workflows that flag claims that need attention – allowing billers to focus on only the 'problem' claims.

Such systems also help lower denial rates by identifying coding errors and claim issues prior to submission – and by helping users ensure that claim edit information is up to date. Visibility into the claims system means staff can instantly check a claim's status, be alerted if/when an issue develops, readily determine whether the issue stems from the payer or the provider, and be timely and targeted with claim follow-up.

Analytics
Patient access and claims management solutions generate a lot of data. But most healthcare organizations lack the ability to unlock the true value of all that information. When that data originates from disparate sources or is outdated, it's nearly impossible to extract the insights needed to support strategic decisions.

Advanced analytics solutions can extract key data – about patient access, billing efficiencies, denials, reimbursement, payer relations, the impact of regulatory changes, charge processes and clinical services – to further illuminate payment. That data can also be compared to results from peer organizations to establish benchmarks and gauge performance. The ability to analyze financial performance and operational results across the entire revenue cycle without stretching IT department resources will help hospital leaders make informed, strategic business decisions more quickly.

Patient Portals & Online Account Management
Increasingly, providers are realizing the need to collect from patients at every point in the care continuum. Doing this, while maintaining (ideally, increasing) patient satisfaction can be a delicate balancing act. Online account access and convenient payment options not only help reduce A/R days, increase cash flow and eliminate bad debt – but also help further patient engagement and boost satisfaction by increasing transparency.

Working in tandem with patient access solutions, online account management systems help providers gain clarity into what insurance expects the patient to pay, which not only helps provide cost transparency to patients, but enables collection at every encounter.

The benefits can be substantial and immediate. One U.S. hospital system used an online patient portal along with a patient financial advocacy program to boost online patient payments by 40 percent, realize a $1 million year-over-year increase in insurance self-payments, and dramatically reduce call center volume.

What's Ahead

The pace of change across the industry doesn't appear to be waning. With the pending transition to ICD-10, increased focus on pay-for-performance, more complex reimbursement models and evolving plans, providers will benefit from enhanced visibility into claims, denial workflow, and how these relate to appeals and payment variances.

These influences will also drive the evolution of revenue cycle solutions that promote payment clarity. For example, as revenue cycle solutions mature, they will include more embedded estimation capabilities. And as clinical information is used to confirm authorizations, healthcare providers will have everything needed to furnish timely and accurate estimates.

The capability to determine patient liability on the front-end, coupled with a clearer understanding of the payer payment can be used on the back-end of the revenue cycle to verify payment accuracy. As with current contract management systems, when a remittance is received the provider will match it not only with the submitted claim, but with the estimation of what should be paid based on the payer contract. This emerging capability, payment variance management, goes beyond simply indicating whether a claim or service line is denied, but whether the payment received is line with the contracted amount.

Taking claims status and claim follow-up visibility a step further, emerging claims management solutions will automate the management of appeals when a denial is received or payment variance is detected.

Nice to Have, But Needed Now

Payment clarity is rapidly moving from a "nice to have" to a necessity. Those provider organizations that master it will dramatically reduce their exposure and bad debt – while significantly enhancing patient satisfaction and loyalty. Those that don't could face an uncertain future.

While there is little we can do about skyrocketing deductibles and consumer debt, we can implement the tools and processes that help provide payment clarity and accelerate revenue.

Comprehensive payment clarity begins with ready access to accurate, up-to-date information on every patient and every claim in the billing system. Once that data is consistently being used to lower denial rates, improve cash flow and give patients the cost information they need, hospital executives can (and should) turn their attention to more advanced payment clarity measures, which include streamlining the appeals process and better management of payment variances.

Health systems must be ready to financially clear, educate and manage the considerable influx of newly insured patients. Leveraging the process changes and tools to help improve the revenue cycle at pre-service, point-of-service and post-service, and creating a payment system that is optimal for both hospital staff and patients is essential to financial viability.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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