Today's American healthcare consumer is responsible for paying almost 35% of his or her own medical expenses - triple the amount paid out of pocket in 1980. This has led to a major shift in medical practices today focusing more on patient pay strategies. Now that we are in a new year and patients will be back at zero when it comes to meeting their deductibles, practices need to take collecting from patients very seriously or prepare to lose revenue.
Because of increased out-of-pocket costs (often due to high deductible health insurance plans), healthcare is becoming more consumer-driven. Practices that reach out to consumers with relevant information and who have the conversations with them about costs and outcomes are the practices that will succeed in this new economic reality.
The Impact of High Deductible Plans on Your Practice Revenue
After a patient's bill exceeds 5% of his or her household income, the likelihood for payment drops precipitously. From patients with high deductible plans, providers are collecting around $0.18 to $0.34 on the dollar.
However, having a large percentage of patients with high-deductible plans may or may not have a major impact on your practice's collections. In some cases, employers that offer high-deductible plans to employees also help employees fund HSAs, so the effect on providers' collections may not be significant.
The average deductible for all employer-sponsored coverage is $1,200, and it's higher for plans from the Health Insurance Exchange. At one hospital in Kansas City, Missouri, fewer than half of patients pay their portion of the bill before it gets sent to collections. An appreciable portion of the population simply doesn't have the money or they choose to pay medical bills last. To cope, providers must develop a financial policy.
Why You Need A Written Financial Policy
A practice's financial policy should spell out patient responsibilities and the role of the practice in collecting payment. The policy should be in writing and should be applied consistently to avoid any confusion.
Having a financial policy doesn't make you look like you are only practicing medicine to make money. You need a financial policy to set the expectations for your patients and help them understand their payment options for your services. Every store has a return policy and every practice needs a financial policy.
What Should a Financial Policy Include?
A sound policy can encourage patients to pay and prevent conflicts. The best place to start with your financial policy is to identify the issues in your practice that bring the most patient questions and that result in the most conflict with patients.
Issues covered may include:
- Charges for missed appointments
- Who qualifies for discounted care
- When an account is sent to collections
- The termination of non-paying patients
Talk About Money Before Treatment
Offering Prompt Pay Discounts
High-deductible plans are making healthcare more of a "retail" marketplace. This is especially true for services like lab tests and medical imaging that are increasingly viewed as commodities. Furthermore, healthcare providers are facing more competition from non-traditional providers like pharmacy-based clinics and concierge medical clinics.
Practices that offer discounts or charity care for low-income patients must create a system for verifying the patients' ability to pay. They may be required to provide the previous year's tax form, bank statements, or pay stubs. Having consistent rules, applied consistently, about hardship care can keep practices from facing difficulties like discrimination cases, and they make the conversations with patients more straightforward.
Offering an Online Payment Option to Patients