Redefining Healthcare Payments: Accelerate Revenue and Increase Price Transparency with An Up-Front Collections Process

In recent years, the healthcare industry has seen a significant rise in the number of high-deductible health plans permeating the financial healthcare coverage market. As a result, patients have become responsible for the majority of, if not all, the cost of their care. With this shift, patients are gradually becoming the sole payers of healthcare costs, resulting in an increase in unpaid and outstanding patient invoices and a consequential loss in revenue for hospitals, practices, and clinics across the continuum of care.

Notoriously, the healthcare payments process is a convoluted and fragmented system between patients, payers, and providers. The system relies on outdated and inefficient processes and technology to bill and collect on money owed. Oftentimes, the complexity surrounding patient billing leaves patients in the dark about what they owe, who they owe, and what to do with an unexpected medical bill. 

With the recent growth of high deductible health plans, coupled with recent legislation pushing for increased patient financial transparency, healthcare organizations need to adopt an up-front patient payment model. By implementing the right technology, practices can accelerate cash flow earlier in the revenue cycle, increase communication and transparency with patients, and reduce friction within the collections process.

Cost Estimate Creation

Collecting from patients is an expensive, complex, and time-consuming process. In fact, getting claims paid remains the largest revenue cycle challenge for healthcare providers. On average, healthcare providers send 3.3 billing statements before receiving payment, and it takes an average of 3.5 months to collect on a bill.¹ The longer the claim remains in accounts receivable, the less likely it is to be paid. If the bill remains unpaid, it will be sent to collections, and from there, it's nearly impossible for providers to know how much they’ll ever actually see of that payment.

To prevent the number of claims in accounts receivable going to collections, healthcare organizations need to secure patient payments as soon as possible. To do so, they need to provide accurate patient cost estimates that are easy for patients to read and understand. To create an accurate patient cost estimate, providers should consult either their actual contracted rates or analytics from remittance data. The patient’s scheduled services should then be paired with benefits and eligibility to give them a liability benchmark (i.e. what their copay is, expected residual balances due, etc.) This information should be delivered in a way that helps the patient clearly understand their financial obligation. Creating an accurate cost estimate is key to building trust and transparency with patients and is an essential step in accelerating the collections process.

Communication and Cost Introduction

There is a significant disconnect between what patients are told and what they understand about their medical bills. When implementing an up-front collections process where the patient is the sole payer, it is essential to create opportunities that communicate balances earlier and more effectively. 

In addition to providing patients with an accurate cost estimate before receiving service, patients should also be made aware of any payment policies associated with the service being received. When asking for up-front payments, healthcare organizations should have a standardized process that is clear and well-documented. Standard elements of the policy should include a list of payment methods accepted, where the payment should be sent / how it can be completed, and noting whether the bill can be paid in full or in installments.

Working to improve communication surrounding service costs with patients is an essential element to collecting on owed revenue — in fact, 65% of patients are willing to make a partial payment when given a patient cost estimate at the time of service.²

Simplified Payment Methods

The healthcare payments system is complex enough as it is, and relying on outdated processes for patients to submit payments only exacerbates the situation. To remedy the complexity surrounding patient billing, healthcare organizations should incorporate modern payment methods to streamline and simplify the collections process.

By accepting a range of payment methods, including mobile pay, web pay, flexible cards (HSA/FSA, debit, credit, etc.), and auto-payments, in addition to providing patients with the option of paying over the phone, online, or at the point of service, patients can easily view and pay their bill at their convenience. Offering patients modern payment options already familiar to them from other industries, such as retail and banking, helps to alleviate added confusion and complexity surrounding healthcare bills.

Modern Technology

To truly increase revenue and improve patient transparency with an up-front collections process, healthcare organizations must invest in a modern technology platform designed to seamlessly integrate with their current EHR. Intended to overcome even the most complex revenue cycle challenges, today’s technology platforms are equipped with real-time benefit eligibility, accurate and dependable estimates, automated functions, up-front payment capabilities, and are compliant with transparency legislation.  

Creating an up-front patient cost experience that accelerates cash flow earlier in the revenue cycle may seem like an impossible task, but with the right policies, procedures, and technology, healthcare organizations will see increased revenue, a happier patient base, a broader referral network, lower accounts receivable (A/R), and fewer balances going to collections.

Learn more at RivetHealth.com.

Sources

¹ “Healthcare Leaders Point to Their Biggest Revenue Cycle Challenges.” Medical Group Management Association. Nov. 2019, https://www.mgma.com/mgma-stats/healthcare-leaders-point-to-their-biggest-revenue-cycle-challenges.

² Heckman A, Joy T. “Patient Engagement is the First Step in Getting Paid.” Physician’s Practice. Feb. 2023, https://www.physicianspractice.com/view/patient-engagement-is-the-first-step-in-getting-paid.