Patient balances after insurance grew 67 percent from 2012 to 2017, according to a TransUnion Healthcare study announced earlier this summer.
The good news is that patients with insurance tend to pay more on their balances than self-pay patients. Based on a 2017 Crowe Horvath analysis, uninsured patients pay approximately 6.06 percent on the dollar, while patients with insurance pay 15.51 percent overall.
The bad news is that patients with insurance who have higher and higher deductibles have increasingly lower payment rates. For instance, for patients with balances from $1,451 to $5,000, the payment rate is more than 25 percent, but when the balance goes up to $5,001 through $7,500, the payment rate is only 10.2 percent. For balances of $7,501 through $10,000, the payment rate is 4.1 percent, and with a self-pay balance at more than $10,000, providers can expect about 0.9 percent payment rate.
Also in the bad news column, a recent Commonwealth Fund report indicated that the uninsured rate of working adults ages 19 to 64 also rose 3.3 percent in 2018. That means more patients who fall into the 6.06-percent-on-the-dollar rate that Crowe Horvath uncovered.
And together, high deductibles and a growing uninsured rate translate into greater patient debt. According to a July 2018 study published in Health Affairs, one in six Americans have past-due health care bills on their credit report, which totals around $81 billion of debt. And though older Americans typically have greater healthcare expenses, the study found that 11 percent of those with medical bills in collections were 27-years-old — the largest share observed in this new study. Not only did fewer older adults have medical debt, the average size of medical debt decreased as patients grew older, dropping nearly 40 percent from patients age twenty-seven to sixty-four.
As the extent of the problem with patient billing becomes clearer, the potential solutions become more complex.
Point-of-service collections are one strategy healthcare providers are using. From the doctor’s office to the emergency department to the surgical suite, collecting as much of the patient balance as possible as early as possible means more overall revenue. It also necessitates having the right staff in the right positions, trained and ready for collecting.
“It’s one thing to ask insurance companies for money; it’s another to ask people for money,” said Louis Longo, managing director at BDO Consulting. “Having the right people that know how to effectively and appropriately ask for payment is important.”
Collecting money from patients at any point in the revenue cycle, but especially at point-of-service, also means educating patients who may not understand basic features of their health insurance policy or the likelihood of receiving bills from multiple providers for a single visit.
“Many patients today who purchased health insurance for the first time on the Affordable Care Act marketplaces don’t fully understand their benefits or health plan design,” writes Brooke Murphy. “The responsibility falls on the front-end revenue cycle staff [or any staff member engaging directly with patients] to educate patients.”
Multiple Payment Options
Another strategy is to have multiple payment options and to keep expanding that list as technology develops. According to Black Book’s 2017 Revenue Cycle Management survey, 62 percent of medical bills were paid online in the first half of 2017 and 95 percent of consumers polled said they’d pay online if given the option.
But providers need to think beyond the typical online patient portal to all the ways patients pay for other kinds of products and services. For instance, 71 percent of respondents in the Black Book survey said mobile pay and billing alerts improved their satisfaction with a provider, and 89 percent of provider financial administrators expect healthcare payments will be made on phones and mobile devices by the end of 2018. However, at the time of the survey, just 20 percent of providers were ready for such electronic payments.
Offering payment plans also may help patients chip away at their balances. In that Health Affairs study referenced above, where 1 in 6 Americans had medical debt, interestingly, more than half of all the bills identified in the study were less than $600 each. Divided up over a year, that’s only $50 a month, an amount that might be more doable to a cash-strapped patient than the $600 bill staring him down.
Other technology options, like payment propensity analysis, automated calls and texts, statements sent by email or text, and more, can help providers create a more personalized patient experience that also can improve payment rates.
Pathways to Payment
In addition to providing more payment options once the service is rendered, when it comes to collecting patient balances, providers need to think even further back, before the patient ever comes in to be treated. According to that Blue Book survey, the other two features most in demand are insurance eligibility verification (91 percent) and cost estimation (85 percent). As well, providers can ensure patients receive all possible insurance benefits by taking extra care with prior authorizations, checking for new insurance eligibility with government payers, and by carefully documenting demographic information and other details relevant to submitting claims.
Submitting Clean Claims
Finally, providers need to understand documentation and coding guidelines in order to keep claims being paid at their fullest potential. Payer policies, like Anthem’s denial of emergency department claims that they don’t consider truly an emergency, mean carefully documenting medical necessity of every service performed is more important than ever.
A Glimmer of Light
There is a small glimmer of light on the horizon. As the healthcare industry continues to shift and change, the tide may be turning away from high deductible health plans.
“Skin-in-the-game isn’t working,” Dr. Atul Gawande, the new CEO of a healthcare venture of Amazon, Berkshire Hathaway and JP Morgan Chase tweeted recently. “Average deductibles for employer health plans tripled, and most patients can’t afford to do anything except forgo care and treatment.”
To that end, the annual large-business survey by the National Business Group on Health, released earlier this week, showed that the share of large employers planning to offer only HDHPs declined for the first time in seven years. Also, the share of employers expecting to offer only HDHPs in 2019 was 30 percent among the 170 companies surveyed, a drop from the 39 percent in 2018.
But what comes next for patients … and providers … is yet to be seen.
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