Succeeding in the era of patient payments

From a pure business perspective, few changes in healthcare have been as disruptive as the rapid growth of high-deductible health plans (HDHPs) over the last few years.

HDHPs have taken what was primarily a business-to-business (B2B) transaction between healthcare providers and payers and made it a business-to-consumer (B2C), retail-style transaction between healthcare providers and patients.

While HDHPs are great for helping patients keep premium costs lower, they also create a dilemma for providers: it is much easier to collect from payers than it is from patients, especially when the patient portion is thousands of dollars – or more. Most Americans simply don’t have that kind of money sitting around in the form of ready cash.

What that means is healthcare providers need to re-think their entire revenue cycle management (RCM) process to accommodate this new reality. They need to modernize their organization’s infrastructure to handle billing hundreds or thousands of patients rather than a handful of payers.

They need to expand the payment methods they accept, and develop payment plans that enable patients to break payments into smaller portions the way they do with other big-ticket items such as housing and vehicles. They may need to develop financing arrangements with local lenders to make these plans work.

They also need to develop communication mechanisms and materials to educate patients about their new financial responsibilities, helping them understand what they owe (which may come as a shock) and making it easier for them to pay in full. This task isn’t just about providing information; it’s about building a trusted relationship with patients that not only drives payment today but also builds consumer loyalty. After all, the more healthcare becomes an expensive retail transaction for patients, the more likely they will be to comparison shop in the future – unless they feel the provider is looking out for their best financial as well as healthcare interests.

Finally, healthcare providers must increase security across channels and payment methods to protect revenue and instill confidence in the transactions.

That’s a tall order for organizations used to taking a B2B approach. Yet the need is there, and growing. According to a 2015 survey from the Henry J. Kaiser Family Foundation, in the individual market “almost 90 percent of enrollees in the Affordable Care Act (ACA) marketplaces are in a plan with a deductible above the amount that qualifies a plan as HDHP.” Additionally, its 2016 survey found that 29 percent of patients participating in their employer’s insurance plan were covered under an HDHP.

To ensure they are successful in getting patients to pay their portion of the bill, healthcare organizations must avoid three key pitfalls:

Lack of clarity on what is owed – The days of complex, arcane invoices that require a Ph.D. in mathematics to understand are over. Instead, healthcare providers must offer patients timely, accurate, and easy-to-read statements so patients understand exactly what they owe. Preferably, they can generate these statements prior to services being rendered to give patients the opportunity to understand what their financial obligation is before the receive care. Most people wouldn’t purchase a vehicle, or a furnace, or any other large-ticket item without first knowing the cost up-front. Why should healthcare be any different? Healthcare organizations may also want to have consumer financing experts available at that time to answer any questions and ensure patients understand what their responsibility will be.
Lack of convenient payment options – Consumers these days expect to be able to pay bills online in all parts of their lives. In 2014, more than 60 percent of consumers had already started making online bill payments in areas other than healthcare. So why wouldn’t they expect to have that capability within healthcare? Nine out of 10 say they do. Add to that the fact that more than 10 percent of consumers will go online exclusively through a mobile device this year and it’s clear that healthcare providers must include mobile payments within their strategies going forward.
Lack of financing to make payments affordable – Unlike the past when the patient portion in the form of deductibles were in the $20-$50 range, today’s HDHPs mean patient payments can run into the hundreds or thousands of dollars, even for routine encounters such as simple surgery or childbirth. Many consumers are unprepared for these large expenses, and thus will need to finance them over time. Making financing available will help ensure they meet their obligations and could create an additional revenue stream for the provider. Add in the fact that research shows compliance with auto-pay plans for medical bills is nearly 100 percent and it’s a win for everyone involved.

HDHPs have created new concerns for healthcare providers at a time when traditional revenue streams are already being squeezed. By understanding the risks around patient payments, and addressing them with innovative technology and strategies that reflect these new realities, providers can turn potential risk into a sustainable market advantage.

By Crystal Ewing, Manager of Data Integrity, ZirMed

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