The rise of high-deductible health plans (HDHPs) has been something of a shock to the healthcare payment system. Patients struggle to meet their responsibility for paying premiums and co-pays. While patient balances below $1,200 exhibit a payment rate of 40 percent, the average self-pay payment rate is 10.9 percent across all inpatient accounts receivable.1 True self-pay patients pay about 6 percent on the dollar, while those who owed out-of-pocket costs under their insurance plan paid 15.51 percent. As the JPMorgan Chase Institute has documented, roughly one in six families makes an extraordinary medical payment in any given year.2
With self-pay on the rise, hospitals and health systems are focused on redesigning their workflows to collecting payment from individual patients. As they have discovered, it’s a very different ballgame from negotiating with large insurance companies well versed in the intricacies of hospital finance.
A second, but no less significant burden on hospitals is evidence of a reduction in patient volume. As stated in a recent HFM online article, “Seeking to avoid out-of-pocket costs they simply can’t pay, patients are putting off necessary physician visits and even care. This behavior puts the patient’s own health at risk…but also constitutes a financial threat to hospitals,” in part due to the increasingly rigorous “quality” metrics tied to pay-for-performance models.3
To confront this new reality, many hospitals and health systems are looking at other sectors of the economy that work well to help consumers finance their purchases. Hospitals are adopting responsive payment program models to make health care bills simple and manageable for patients.
But before diving into this new approach to patient collections and improving their financial experience, hospitals should do their homework. Here are the four components of an effective responsive payment program incorporating the same self-activation strategy that consumers have come to expect:
Hospitals must always strike a balance between the need to protect patient health while ensuring their own financial stability. The rise of patient self-pay has initiated a new relationship with patients. Hospitals should empower patients with more transparent billing and better tools and payment options to effectively manage healthcare expenses. Responsive payment options are an important tool to chart a course through this altered healthcare financial landscape.
1 Crowe Horwath, “Revenue Recognition and High-Deductible Plans,” Crowe Revenue-Recognition-and-High-Deductible-Plans-HC-17512-005A.pdf.
2 Paying out of Pocket: The Healthcare Spending of 2 Million Families, from the JP Morgan Chase & Co Institute.
3 “Responsive Payment Support: Finding the Right Balance for High Deductible Patients,” https://www.hfma.org/Content.aspx?id=57413
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