According to the American Medical Association, patients are now responsible for nearly 24 percent of their medical bills.1 And a recent study by the Federal Reserve found that only 48 percent of Americans could cover a $400 emergency expense without selling something or borrowing money.2 Taken together, these two facts explain a great deal about the rapid increase in patient bad debt among physician practices.
Despite the shift of responsibility for care costs, many practices continue to approach patient financial engagement as they did when patients were responsible for only 6 to 10 percent of their bills. The old model that put nearly all financial emphasis on payer claim submissions – and writing off the patient’s small remainder if it went unpaid – is no longer sustainable.
Fortunately, from the consumer perspective, remedying the situation is really a matter of aligning with expectations. As patients go about their daily lives, they expect to be engaged financially by every provider of goods and services with which they interact, and to pay not only immediately but conveniently.
Yet in healthcare, even as patient responsibility escalates to one-quarter of care cost, many providers engage the patient financially only well after care is delivered – in the form of a paper bill for an unexpected (and often astonishing) amount weeks or even months later. It’s a situation tailor made for poor cash flow, high accounts receivable (AR) days, collections issues and unhappy customers.
Practices owe it to themselves to catch up to consumer expectations in patient financial engagement. A good starting point is to ask three essential questions regarding patient financial engagement:
1. Are you optimized for patient collections?
To meet patient expectations for financial engagement, a practice must be optimized for patient collections. That’s a matter of making it easy for patients to understand what they’re paying for and why they’re paying for it. Being able to arrange for payment terms when they can’t afford the entire amount at once and having a satisfying experience when settling any remaining amounts post-care is also ideal.
Optimization for patient collections begins before check-in, with eligibility and verification. While most physician practices check current insurance coverage and eligibility, few do so before each appointment. Eligibility should never be assumed; patients change coverage often, either through individual choice or that of their employers. Checking eligibility with every appointment ensures that the practice has the latest information prior to dispensing care. A revenue cycle management solution, including an e-eligibility clearinghouse service, can manage this process to keep it from becoming an administrative burden.
Eligibility and verification aren’t just essential to knowing what a health plan will cover; the processes enable the practice to identify and communicate precisely what the patient’s responsibility will be before a particular service is even administered. In addition to setting expectations and eliminating “sticker shock” through advance information on anticipated cost of care, assembling this information at the time an appointment is made enables maximized collections at check-in.
Remember that patients, as consumers, really do expect to pay for professional services at the time they receive them. Taking care of the patient’s portion of the bill at check-in is typically a convenience, not a burden. Collecting these fees before administering care has the added convenience for the provider of eliminating the time-consuming and costly mailing of statements, and it’s inherently far easier to collect patient payments at check-in rather than later. Be sure to empower the front-desk staff to collect all copayments, deductibles and coinsurance upfront, and train them to be able to explain details of coverage when presenting the amount to the patient.
For those patients who simply cannot afford to pay upfront for the amount presented, consider offering financing. An installment plan may make it easier for many patients to fulfill their financial obligations, and it can also promote patient retention; those who can’t pay and leave you with bad debt typically leave the practice as well, and are likely to relate what they perceive as a bad customer experience to other current or potential patients.
Even the most prepared approach to upfront collections will have some amount of patient post-care billing, only with bills that are of less concern (and less surprising) to the recipients than they otherwise would be. Even with smaller amounts, the patient should be presented with a bill that explains clearly what is being collected and why it wasn’t covered by the upfront payment. This should also be presented as soon as possible. Consumers tend to be suspect of – and feel less responsible for – bills that arrive months after service completion.
2. Are you engaging patients as modern consumers?
Separately from the timing of collection, many physician practices continue to rely on payment mechanisms that consumers find inconvenient. Thanks in large part to expectations shaped over years by retailers and banking, consumers now take for granted the ability to pay bills online, quickly and at the time of their choosing. They’re also increasingly accustomed to the convenience of paying via their mobile devices through services such as Apple Pay. One-touch payment from a smartphone – with not so much as a card swipe involved and no Internet connection required – is taking off rapidly.
By comparison, a patient medical bill that arrives by mail and instructs the recipient to pay with a check seems absolutely antiquated – and less secure from an identity-theft perspective. It’s also comparatively inconvenient; a bill set aside to be dealt with later may become lost or otherwise not be dealt with at all. Practices can see their patient AR cycles and collection rates improve dramatically by making it easier for patients to settle their accounts. A number of healthcare-specific services can assist with the management of online and mobile payment processing.
Consumers expect to interact beyond payment with their service providers online, which is why patient portals hold so much potential for patient engagement. Many consumers simply won’t perform actions by phone or other media that they can perform 24/7 with a Web browser. To maximize use of the patient portal, think of it as an online destination like any other, with conveniences that make it worth visiting – and visiting again, as the provider-consumer relationship deepens. More than simply making payments, a portal must include such features as the ability to set appointments, request prescription refills, and receive meaningful and relevant health information, among others.
3. Are you building patient perceptions of value?
Succeeding financially in the transition to value-based payment models will require providers to reach out and proactively engage customers. Most patients appreciate being contacted with reminders at appropriate times for routine check-ups and other scheduled care, and those reminders are essential to preventive care. With the growing emphasis on improving population health, new tools can help staff efficiency tremendously. They enable a higher level of engagement in chronic care management by increasing adherence, keeping up with the people in their care between appointments and identifying persons who are overdue for best-practice services.
Even for physician practices not currently participating in the shared-risk initiatives that have contributed to the rise of these tools, population health solutions are worth investigating. They can be an excellent means of both improving the health of individual patients and fostering patient perceptions of value for the care that is increasingly their financial responsibility.
Conclusions
Increased financial responsibility brings with it an inherent opportunity for increased patient engagement. It also makes providers responsible for engaging patients financially – a task that can be best addressed by making sure the practice is optimized for patient collections, is engaging patients as modern consumers and is building perceptions of value.
Providers have long wished that patients were better at following the advice they give them. One reason for that may have been because following the advice wasn’t financially costing patients much, and thus didn’t have great perceived value. The more that patients assume responsibility for the cost of their health services, the more they’re making a personal financial investment in their own health – thus, the more likely they’ll become and remain engaged. And their overall health and satisfaction should be the better for it.
References
- AMA press release: “New AMA Study: Patients Responsible for Nearly One-quarter of the Medical Bill,” June 17, 2014. www.ama-assn.org/ama/pub/news/news/2013/2013-06-17-national-health-insurer-report-card.page
- “Report on the Economic Well-Being of U.S. Households in 2013,” Board of Governors of the Federal Reserve System, July 2014. www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf
