Rising out-of-pocket medical costs and high deductibles are challenging issues for many individuals in the United States. The following numbers show just how much of a problem high healthcare costs are for consumers:
- The average individual health plan deductible is approximately $4,300.
- The average family health plan deductible is about $8,300.
- An estimated 40 percent of working-age Americans are either experiencing medical bill issues or paying medical debt.
About 30 percent of adults in the United States have trouble paying their medical bills.
These factors aren’t only a problem for healthcare consumers. They also make an impact on providers of all sizes by negatively affecting patient collections, even as they’re relying more on revenue from these individuals. Approximately 81 percent of providers aren’t able to collect $1,000 or more in 30 days, and 77 percent report that it takes more than a month to collect any payment.
Fortunately for providers, there are ways to improve patient collections without only using the services of a debt collector. These options not only can optimize a provider’s revenue cycle but also maintain and even improve patient satisfaction, as an estimated 60 percent of patients would consider switching providers for a better payment experience.
1. Offer Payment Plans
By promoting payment plans, healthcare providers enable patients to pay off medical debt a little at a time instead of all at once. If a patient is asked to pay a $1,000 bill up-front, he or she might feel overwhelmed by the amount and fail to pay on it at all.
Providers can consider a discounted amount if a patient agrees to enroll in their payment program, a favorable option especially for patients who are uninsured or underinsured. It’s also important for providers to keep track of these plans.
As noted in a 2020 HealthLeaders article, providers have several options for payment plans, including outsourced, in-house or a combination of the two. Programs also may vary in whether or not they’re interest-free and if they’re funded by internally-funded loan programs, medical credit cards or another option.
2. Promote Point-of-care Collection
As noted by the American Medical Association, collecting amounts due from patients at the point of care (POC) offers multiple advantages for providers, including reducing accounts receivable, increasing cash flow, reducing medical billing and back-end collection costs, decreasing the administrative burdens of tracking and writing off bad patient debt and managing the growing portion of practice revenue generated from patient payments. Consequently, more than half of providers report attempting to collect 100 percent of their patients’ financial responsibility upfront or in advance.
An essential part of POC best practices is collecting accurate patient contact and insurance information upfront. Ensure the patient registration process is streamlined, and implement technology if necessary to achieve this. Another key is utilizing price transparency strategies to educate patients on their payment responsibility.
3. Be Transparent About the Cost of Care
Price transparency continues to be a hot topic in the healthcare industry. An initiative established under the Trump administration means healthcare consumers will have increased access to providers’ prices for multiple services and procedures. The administration in October 2020 issued the final rule on price transparency, which will take effect on January 1, 2022, by requiring health plans to make publicly available standardized and regularly updated data files.
An astounding 75 percent of patients don’t know the cost of services until they receive a bill. More than 70 percent report that an upfront estimate would positively impact their view of a healthcare provider, and about 60 percent disclose being comfortable with a ballpark estimate (within 10 percent accuracy).
Patients unsure of how much they owe their healthcare provider or how to pay their bill are more likely to be slower in paying. Estimating the cost of services can be a complex process for providers but often increases patient satisfaction, minimizes the days of receivables and improves the overall payment process for patients.
More Available Options
Other ways providers can improve their patient collections are by educating their staff onthe importance of upfront collections and training around specific procedures, such as how to read eligibility screens. Staff also should be trained on how to create cost estimates and overcome any discomfort with asking for money.
The availability of multiple payment options promotes patient engagement as does the capability for patients to pay their bill online. More than 50 of patients prefer some type of electronic billing, and about 60 percent of patient payments are made online. Technologies such as secure and HIPAA-compliant patient portals drive online payment and offer patients increased flexibility in paying their provider bills.
According to the Healthcare Financial Management Association (HFMA), two key performance indicators providers can track to improve patient collections are:
· Point-of-service (POS) Cash Collections: A trending indicator of POS collection efforts that accelerates cash collections and may reduce collection costs.
Patient POS payments = Accounts Receivable
Total self-pay cash collected Accounts Receivable
· Cash Collection as a Percentage of Net Patient Service Revenue: A trending indicator of revenue cycle ability to convert net patient services revenue to cash that indicates fiscal integrity/financial health of the provider.
Total patient service cash collected = General Ledger
Average monthly net patient service revenue Income Statement
Picking a Medical Billing Partner
Employing the services of an outsourced medical billing company enables providers to achieve an optimized revenue cycle. Such a resource can assist in streamlining the patient collections process, track payment details and identify patients who are behind on their bill. With a reliable billing partner in place to coordinate financial functions, providers also can focus on their most important goal: high-quality patient care.
View our tips for choosing a good medical billing company for outsourcing, and find out more about the services we provide.