A new approach to self-pay collections

When patients are in the driver’s seat, everyone wins

Rising healthcare costs and growing patient financial liability are changing the way hospitals get paid as payers punt the financial burden to patients in the form of high-deductible health plans. With those higher deductibles comes higher medical debt. Today, more than half of all debt collections reported to credit agencies is medical debt. It’s also the highest cause of bankruptcy according to an article in The Commonwealth Fund.

To protect ongoing revenue streams—nearly 30% of which come directly from patients— providers need to reevaluate how they’re engaging with consumers throughout the payment experience according to an article in Healthcare IT News.

What’s working. What’s not.

Most hospitals have a variety of patient payment processes in place. Six of the most popular are below. Each of these have benefits but they still fall short of where we could be.

  1. Pre-service and point-of-service collections. Collecting payment up front is without a doubt one of the best ways to lower the cost of collections, reduce write-offs, and improve cash flow. Yet some hospitals take this to an extreme, refusing to schedule any services outside of emergency care until existing balances are paid. But this policy may do hospitals more harm than good in regard to value-based care reimbursements. When patients delay or skip needed care, it can negatively impact care plans, compliance, outcomes and revenue.
  2. Propensity to pay. Hospitals with propensity analytics can be more proactive in finding alternative methods to help patients pay. Unfortunately, many hospitals just don’t have this type of data, leading them to turn accounts over to charity or collections too soon, which, in essence, leaves money on the table.
  3. Patient responsibility estimation. Addressing payment responsibility up front increases pricing transparency and serves as a natural onramp to discussions about prompt-pay discounts or payment plan options. Without this technology, it’s difficult to align estimates to actual payments. This can delay both patient payments and payer reimbursements.
  4. Prompt-pay discounts. Hospitals with analytics such as propensity to pay find it easier to incentivize patients with discounts. However, these incentives may violate managed care agreements. Discounts can also devalue services, especially if used too often, and can leave patients wondering if prices were falsely inflated in the first place.
  5. Internal payment plans and lines of credit. In most cases, payment plans and lines of credit are only offered after a patient requests them. This approach relies on processes that are only as affective as the capabilities of a hospital’s patient accounting system. Adjusting the plan can be difficult and inexperienced financial advocates may not complete a full evaluation of alternative sources of financing, such as Medicaid, presumptive charity, or other insurance options.
  6. Early out on day one. When turning over self-pay collections to a third party too soon, hospitals miss out on low-hanging fruit. They also lose control of the patient financial experience. It’s impossible to know how an agency is representing the hospital when engaging its patients, many of whom don’t realize the agency isn’t a part of the hospital. Now that patient satisfaction scores are tied to reimbursement, it’s important to ensure each patient interaction is as positive as possible.

The ideal patient pay experience

While at the recent HFMA annual conference, we asked 60 of our session attendees what they thought a perfect self-pay environment would look like. Not surprising, having 100% of accounts paid in full was at the top of the list.

  • Accurate, real-time pricing transparency and estimates for all patients across all services, along with automated adjustments.
  • Patients have a clear understanding of all their financial options, which can be customized to their unique financial situation.
  • Patients have self-service options, such as setting up their own payment plans and accessing online payment portals.
  • All self-pay payments are completed at the time of service using autopay, with real-time insurance adjudication available for the rest.
  • Customized, interactive patient-provider communications—including billing statements—based on the patient’s preferences, such as text, email, phone, and/or paper.
  • Technology to identify the best options for each patient, including charity care, payment plans, and full payments. Acting as a one-stop shop, patients could take care of all financing details at one time through the hospital.
  • Move to a flat-rate fee system with vendors, rather than fluctuating contingency fees.

Putting the patient in the driver’s seat

Hospitals and patients alike are challenged with the growing financial pressure of rising costs and increasing patient responsibility. Creating a proactive, responsive payment model based on a patient’s unique financial situation can increase revenue and reduce the cost to collect. Providing patients with 24/7 access to self-service tools improves patient satisfaction and the payment experience, and ensures patients are able to get the care they need when they need it.

It really isn’t that far from where we are to where we need to be. With the right technology and a patient-centered approach, there’s nothing standing in our way.