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
You may consider creating a patient brochure outlining important parts of the financial policy. These can be presented to each new patient upon his or her first visit. It's best if you have new patients sign a statement indicating that they have read and understand the information. Talk About Money Before Treatment
Some facilities implement pre-payment policies for self-pay patients and for those whose services will cost more than a designated amount. Self-pay patients may, for instance have to pay 25% up front or keep a credit card on file for any charges that they incur.
Many third-party vendors are offering online payment platforms for medical practices that include tools that allow patients to get cost estimates and look at their payment and financing options before they come in for care.
Your written financial policy can make a good jumping-off point for conversations with patients about paying for care. Patients should be encouraged to ask questions before they receive care. Self-pay patients can be informed of what a standard office visit costs so they can decide whether to proceed or try to work out a payment plan.
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.
In addition to making financial policies and payment options clear, practices may implement other incentives, such as "prompt pay discounts" which can increase collections even after the discount is taken.
Financial Policy and Patient Discounts
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
Having a financial policy and discussing costs with patients before care is given can prevent problems and increase collections but it doesn't stop there. Giving your patients an online payment option is critical to your self pay strategy.
With the technological advances that have been made over the past couple of years patients today expect practices to have an online payment portal. In fact, a survey conducted by Billtrust found more than 60 percent of Americans prefer to pay their bills online. People who get bills online pay them quicker; literally when they see them in their e-mail inbox.
GroupOne recently completed an internal analysis of our patient services call center to identify why patients were calling into the call center. Our patient services representatives handle patient phone calls for our revenue cycle management customers to help with some of the common questions a patient might have after receiving a statement.
We found that a large percent of the incoming calls were patients wanting to make a payment over the phone. Of the 60,670 direct calls taken by a patient services representative in a 13 month timeframe, 26% (15,897) were patients wanting to make a payment by phone. This tells us that patients aren't mailing in checks and are looking for a quicker and easier way to pay their medical bills.
Staffing a patient services center isn't really an "ideal" solution for many practices because the overhead costs would be far too high. However, an online payment portal can give your patients the ease of use they have come to expect in regards to bill payment.
An online billing and payment system helps your patients make payments quicker and improve your practice's cash flow and it doesn't have to be expensive. Most practice's assume the management of another technology is not worth the time or hassle but I can tell you it is not complicated (or should't be at least) and you will see a return on your investment.
Making the Case for Online Patient Payment Technology
An online billing service can cut the time and cost to produce and issue a bill for a $100 charge by 50 percent, according to PatientPay, Inc. Online bill pay also reduces, if not eliminates, the need to send costly follow-up statements seeking payment. That adds up to real cost savings when you consider the cost of paper, postage, and printing.
Mailing just one patient statement can cost the average medical practice between $5-$8 when considering the employee’s time spent on preparing the statement, the cost of the envelope, paper, postage, and printing costs. Think about that: If you send 400 statements each month at $5 each, that is $2,000 each month or around $24,000 per year in avoidable costs.