How Healthcare Orgs Can Manage Patient Financial Responsibility

Out-of-pocket patient financial responsibility has increased by 10 percent over the past five years, shows a survey from the Healthcare Financial Management Association (HFMA), leading to frustrations for consumers and potential revenue cycle warning signs for healthcare organizations.  

When patients are responsible for their  healthcare expenses, which often total significant sums, there is the chance that they will not be able to reimburse their providers, leaving revenue cycles in the red.

While there may be some incentive for healthcare organizations to adopt strategies to engage patients in out-of-pocket bill pay, few are currently doing so. According to the HFMA survey, only 20 percent of revenue cycle executives reported robust strategies to improve out-of-pocket bill pay.

Healthcare organizations may be able to mitigate potential losses by identifying problem areas for bill pay, targeting payment collection strategies in a patient-centered manner, increasing patient engagement, and improving their overall price transparency.

Identify problem areas in the payment process

The key to overhauling any process  is to first identify potential problem areas. In the case of supporting patient financial responsibility through patient engagement, healthcare organizations need to assess what does and does not work for their bill collection methods.

At Central Maine Orthopaedics, practice leaders took a look at their financial workflows to determine where they should make improvements. The practice’s logistical method for taking payments – collecting credit cards at the point of care and then running them in one of the practice’s two machines – was vastly inefficient.

These inefficiencies not only detracted from patient care, but adversely affected the hospital’s revenue cycle, said Central Maine Orthopaedics’ Supervisor of Revenue Cycle Operations Kathie Phillips. By identifying this issue, practiceleaders worked to develop a system that allowed providers to better explain to patients their out-of-pocket costs and their payment options.

In an article co-authored with Navicure’s Jeff Wood, Vice President of Product Management, Philips says Central Maine Orthopaedics’ process now includes the following steps:

• Present a care estimate
• Discuss the amount due at the time of service and secure commitment to pay
• Discuss payment options such as a scheduled payment plans for post-service, thus ensuring the balance is paid in full
• Collect and securely store the patient’s debit card, credit card or automated clearinghouse (ACH) information
• Turn on the patient’s automated payment plan, which sets the recurring payments in motion

Create bill pay solutions catering to patient needs

Confusing or counterintuitive bill pay options may also lead to lost revenue.  When patients do not understand or cannot access a practice’s bill payment system, the practice could lose out on that revenue.

According to David Clain, manager at athenaResearch, r online bill pay via the patient portal makes the process easier for patients.

“One thing that we’ve heard repeatedly – and these are anecdotes, but they’re anecdotes that come up a lot in conversations with clients with high portal adoption – is patients even without a ton of emphasis from practice staff will often choose to pay online,” explained Clain.

“It’s easier in a lot of cases, especially for tech-savvy patients, to get a bill electronically, to go online, see what they owe, see why they owe that amount, what visit it’s from, and pay by credit card right there rather than having to submit a check in the mail,” he continued.

athenaResearch’s data backs up these claims. Clain says total patient bill collections increased by approximately 30 percent last year.  Bill collections via the patient portal, however, increased by 77 percent.

Central Maine Orthopaedics  also adopted patient-centered payment protocol. After identifying their barriers to patient engagement and revenue cycle, the organization created a payment process geared toward empowering patients.

“[Central Maine Orthopaedics] leadership and staff saw the opportunity to help patients by creating processes that benefited them. They understood the difficulties many of their patients faced in understanding their financial responsibilities,” Phillips and Wood said.

Through personal discussions about bill payment, staff were able to customize payments for individual patients. Some patients were able to establish payment plans while others began automatic payments. Both of these tracks improved the likelihood that Central Maine Orthopaedics would eventually receive a full payment.

Increase price transparency

Price transparency is a critical aspect of patient-centered care. Boosting price transparency empowers patients to shop around for the best price rather than foregoing care altogether.

“We can create a better set of incentives to encourage providers and patients to actually talk ahead of time and have more price transparency, allowing patients to compare prices,” said Devon Herrick, senior fellow at the National Center for Policy Analysis, in an interview with HealthPayerIntelligence.com.

“The research shows when people are told they need an MRI or a lab, if their cost-sharing is high, a lot of people don’t really understand that prices vary. What they often do is say, ‘I can’t afford that’ or ‘I won’t pay that’ whereas if they just look around, they could find that service at a lower price.”

Price transparency is considerably lacking, the HFMA survey shows. Only 30 percent of patients are receiving notifications about their out-of-pocket costs. This lack of transparency leads to a bit of sticker-shock, as 61 percent of patients reported being surprised when they received their final bill.

Healthcare organizations are working to make improvements. In the HFMA survey, 39 percent of healthcare organizations ranked price transparency as their number one priority in boosting patient-centered revenue cycle tactics.

Price transparency must also go beyond telling patients the cost of their services. Providers must discuss patient financial responsibility in easy-to-understand language.

“This is a very significant challenge both in terms of plain language and understandability but it’s also a challenge in terms of ensuring up-to-date and accurate information,” said Mary Richards, executive director at Partners for Better Care, a patient advocacy group.

The healthcare industry is filled with complicated jargon. In order for patients to make informed decisions, providers need to be clear about what they are communicating.

According to Richards, it is also important for providers to be transparent about their bill collection methods, and for patients to have a voice in that process.

Whether it is through patient councils or patient advocacy groups, in order to facilitate a more patient-centered revenue cycle, the patient must in some way be present in decision-making processes.

As the number of patients bearing financial responsibility for their medical bills increases, it will continue to be important for healthcare professionals to support patient-centered revenue cycle tactics.

By ensuring these patients are able to pay their medical bills and maintaining a sense of patient satisfaction, providers could help contribute to the industry-wide commitment to patient-centered care.

Dig Deeper:

• Patient Engagement Cuts Healthcare Spending Among Payers
• ​How Do Patient Engagement Strategies Cut Healthcare Costs?