Abandoning business as usual

With high-deductible health plans (HDHPs) emerging as an industry standard¹ patients bear more financial accountability for their healthcare costs today than ever before. In stark contrast to a $20 copayment, an HDHP may require patients to pay thousands of dollars out of pocket before their insurance companies will pay. For most medical practices, this means abandoning business as usual in order to survive.

The tight financial margins common to most medical practices do not permit them to delay thousands of dollars in patient payments while the claims process unfolds. Rather than bill the patient’s commercial insurance first and then attempt to collect from a patient after insurance has paid or denied the claim (often months after a service was performed), patient collections must be migrated to an earlier point in the process to collect out-of-pocket payment obligations before performing an elective service.

To optimize patient payments for your medical practice, take the steps outlined below to educate patients about their deductibles.

Avoid deductible shock

Many patients chose HDHPs without recognizing the extent of financial accountability these plans impose. Some patients who have subscribed to plans with high deductibles, such as $5,000, face “deductible shock.” Either they did not understand that their health plan would require such a substantial payment or they need more healthcare services than they can afford.

To improve patients’ understanding of their deductibles and minimize unpleasant financial surprises, adopt the role of financial advocate. In other words, help your patients to understand their health plan. Here’s how:

• Focus on transparency.
  • Schedule patients to meet with billers or schedulers trained in billing before elective surgeries or procedures to develop a formal financial agreement with patients that spells out what their insurance will pay, what the insurance indicates patients are expected to pay and when those payments will be due.
  • If the patient has a balance due, mention the amount at the time of scheduling and what it is for, such as an unmet deductible. Attempt to collect the amount during the scheduling telephone call or offer online payment options before the next visit.
• Redesign your practice’s financial policy.
  • Clearly define payment terms. State what payment is expected at the time of service and the consequences for nonpayment. Ensure that patients have the information they need to make informed financial decisions about their healthcare.

Make it easy for patients to pay

To help expedite payment, make it easy for patients to ask questions and pay bills. Consider the following actions:

• Install online bill payment options so patients can pay at their convenience, 24 hours a day, seven days a week.
• Post information on your portal or website about your billing terms, how to read your billing statements and other information that will help educate patients about their potential financial responsibilities to your practice.
• Implement secure electronic messaging so that patients can send questions about their bills and get answers from your billing office.

Enhance payment systems

Leverage technology and adopt new tools to improve patient collections, including:

• Price estimator tools so employees can respond to inquiries as patients shop for care
• Online calculators that permit staff to check payer allowables and determine the minimum deposit that will be collected from a patient at or before the time of service
• Seamless credit and debit card processing to streamline collections
• Credit-card-on-file systems that automatically charge copayments, deductibles, noncovered services and other amounts to a patient’s credit card
• Adequate cash drawer levels

Redesign work processes

To help streamline collections, move billing up in the process or accelerate back-end billing with these suggestions:

• Advance patient collections closer to the beginning of the revenue cycle. Create a staffing model and design work processes so that your employees can collect all payments from patients at the point of care or before an elective service, including copayment, coinsurance and unmet deductibles.
• Compress the patient collections cycle. Instead of sending three monthly statements, making two telephone calls and issuing a collection letter, consider a streamlined approach that reduces length of the entire cycle to 30 or 45 days.
• Adopt a credit-card-on-file system to collect patient responsibility within 48 hours after the insurance company pays or denies a claim. These systems, which store confidential patient financial information securely offsite, also can be used to create payment plans. If a patient qualifies for a payment plan, ask for a credit card to be placed on file and debited as appropriate. This step improves the timeliness of payments and reduces the costs associated with patient collections.

Improve accountability

Educate employees about the new reimbursement environment so they understand why they need to adopt new work processes and perform new roles to optimize patient collections. Then hold them accountable for their important role in the revenue cycle. For example, create an “if not, why not?” report that requires employees to document the reasons they fail to collect a patient’s out-of-pocket responsibility payment.

To improve patients’ understanding of their deductibles and minimize unpleasant fi nancial surprises, adopt the role of financial advocate.

It is vital to recognize that the market has shifted to patient financial accountability and the commoditization of healthcare. The responsibility for the practice’s aged trial balance has shifted from payer to patient, placing a significant strain on the patient collections cycle of the medical practice. Failure to shrink the patient collections cycle and reduce the time to patient payment inevitably produces a corresponding increase in patient bad debt and account write-offs — all of which are direct hits to the bottom line. Faced with these challenges, medical practices must change the way they do business to survive and thrive in the era of HDHPs.

Notes:

1. Cohen RA, Martinez M. Health insurance coverage: Early release of estimates from the National Health Interview Survey, January-March 2015. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics. 2015.
2. Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January-March 2015 by Robin A. Cohen, Ph.D., and Michael E. Martinez, MPH, MHSA, U.S. Department of Health & Human Services, Centers for Disease Control & Prevention, National Center for Health Statistics.  

More from MGMA:

• Larson J. “Game-changer: How do HDHPs affect medical groups?” MGMA Connection magazine. January/February 2015.
• Larson J. “Are you losing the high-deductible game?” MGMA Connection magazine. November/December 2014.