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Collecting Patient Financial Responsibility – Challenges and Solutions

by | Sep 15, 2017 | Blog, Medical Billing

Patient Financial ResponsibilityWith rising costs and the challenges involved in implementing electronic data capture, healthcare revenue cycle management (RCM) can be tricky to execute. Many hospitals and practices opt to outsource RCM to an experienced medical billing service provider as they focus on providing quality care. However, recent reports from Revenue Cycle Intelligence have made startling revelations about the trends in patient financial responsibility which has increased substantially due to high deductible health plans.

According to a recent study from TransUnion Health, about 68 percent of patients with medical bills of $500 or less did not fully pay their patient financial responsibility to hospitals in 2016. A survey by West showed that 36 percent of providers do not discuss a patient’s ability before services are provided.

The key findings of the TransUnion Health study which covered the period from 2014 t0 2016 are as follows:

  • 63 percent of hospital medical bills were $500 or less and patients failed to pay 68 percent of these bills in full by 2016
  • 14 percent of hospital medical bills were $3,000 or more and hospitals did not receive full patient financial responsibility for 99 percent of the bills in 2016
  • While 10 percent of hospital medical bills were between $500 and $1,000, patients did not pay the full balance on 86 percent of them in 2016

This survey confirmed that hospital patient financial responsibility collection rates fall as patient out-of-pocket costs rise.

The study from West revealed that high-deductible health plans are the main reason why healthcare organizations are experiencing increase in uncollected self-pay revenue. This analysis showed that:

  • Affordability is the greatest healthcare challenge for about 80 percent of individuals, causing 56 percent to delay paying their medical bills at least some of the time.
  • 12 percent of adults who admitted to delaying payment reported that their payments are always delayed while another 16 percent said they often delay paying their medical bills.
  • 70 percent of millennials were more likely to delay medical bill payments, while the corresponding proportion was 50 percent for non-millennials.
  • About 42 percent of patients reported that unexpectedly high deductibles were the reason they avoid medical bill payments.

So how can healthcare providers collect the maximum amount of patient balances? This can be achieved by restructuring their RCM process with the help of a medical billing company and by embracing the idea of patients as consumers.

  • Educating patients about their financial responsibilities: This would require a modern medical billing approach. The first step in this direction is to hire an insurance verification specialist to work with patients to verify their insurance coverage and patient financial responsibility prior to their office visit. The comprehensive benefits verification procedure would involve everything from verifying demographic information and contacting insurance companies to verify coverage and eligibility to communicating with patients about their financial responsibility and making arrangements to collect the amount. Efficient insurance eligibility verification can also prevent costly and time-consuming claim denials and improve patient satisfaction.
  • Patient Financial ResponsibilitySimplify medical bills: Many consumers find medical bills difficult to understand. Complicated medical jargon often leaves them confused about when and what balance is due and how to pay. Standardized medical bills are easier for patients to understand and pay.
  • Ensure price transparency: Patients should be provided with estimates of cost at every encounter. Price transparency will reduce the risk of patients being shocked by a medical bill and questioning the amount owed.
  • Implement a credit card on file program: An article published by RevCycleIntelligence.com recommends that providers implement a credit card on file program to collect patient payments. People pay for most goods using credit cards and this option can be used to pay for healthcare services too. According to the report, an Illinois-based four-physician specialty practice partnered with a partnered with a medical billing vendor to implement the credit card merchant program. The result: their accounts receivable reduced by 28 percent in six months and account aging for 91 to 120 days for patient balances declined by 72 percent. In fact, surveys show that today’s healthcare customers would prefer to pay via multiple platforms such as online payments, interactive voice response, and point-of-sale terminals.
  • Offer payment plans: Many people may not be able to afford to pay out-of-pocket costs at the doctor’s office. Payment plans can make it easier to pay and also reduce the stress involved in dealing with a traumatic medical situation. Providers can work with their medical billing service provider and financial advisors to create a payment plan based on the amount the patient owes. By spreading out their financial responsibility over a certain period of time, patients will be relieved from the burden of having to make one large payment. This would also prevent patients from skipping medical appointments. Providers would save the time and resources that would otherwise go into tracking down missing payments.

With the increase in patient financial responsibility, success with RCM is more dependent on the patient than ever before. In addition to retraining their staff to effectively communicate with patients, providers can benefit from partnering with an experienced medical billing company to submit accurate claims as well as collect patient revenue.

To know more about Patient Financial Responsibility we have written a new blog on November 6, 2017 “Patient Financial Responsibility, a Growing Physician Concern

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