Optimizing Self-Pay Collection to Aid Patients, Revenue During COVID-19

Healthcare is the industry most at-risk during the coronavirus (COVID-19) pandemic. Providers are on the front lines of response efforts. At the same time, the financial implications of the pandemic are also creating significant revenue cycle challenges, putting providers even more at risk during the pandemic.

Individuals are postponing non-emergency care for many reasons, from concerns about clinic visits to an inability to pay. Aside from this immediate drop in revenue caused by delayed elective procedures, the climbing unemployment rate puts health systems at risk of even more significant long-term financial challenges.

With over 36 million Americans claiming unemployment at the end of March 2020, the number of individuals without health insurance is reaching record highs. If projections by the Federal Reserve hold up, upwards of 7.3 million workers and their family members will become uninsured by the time the pandemic has run its course.

According to David J. Law, chief client officer with Zotec Partners, this crisis strikes in an environment that is already struggling to close the payment gap even for insured patients. “Growth in consumer financial responsibility has been a defining trend in recent years. Significantly, this growth has far outstripped both inflation and wage growth,” he says.

Payments for health insurance deductibles increased by 229 percent – over seven times the 31 percent rate of increase in wages during that same period, according to Kaiser Family Foundation. For households with limited resources, the simple fact is that growing financial responsibility for out-of-pocket expenses was already competing with basic needs, such as mortgage payments, car payments, and food. Today, these challenges are even more emotional and overwhelming for many patients as they face unemployment for an unknown period. This spells trouble for healthcare providers who are treating COVID-19 patients, including those without healthcare coverage.

Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), $100 billion has been allocated to the Public Health and Social Services Emergency Fund (PHE Fund), in part to "cover providers' costs of delivering COVID-19 care for the uninsured." However, these costs will be repaid at Medicare rates, significantly less than amounts paid by private insurers—and hospitals are not permitted to bill uninsured COVID-19 patients for the remaining balance.

This convergence of factors threatens the long-term financial security of hospitals and health systems, leaving revenue cycles at risk of becoming underfunded not only now, but into the foreseeable future. Addressing the challenge of self-pay collections becomes more critical than ever in an already critical time.

Health systems and medical groups see value in using automated tools on the front-end to improve the revenue cycle through patient communication and point-of-service collections.

Self-pay collections need to engage patients where they are

Friction — an aspect of patient financial interactions negatively affecting patient experience — can occur at any point in the payment process, complicating a provider's ability to collect.

In the past, the most common source of friction was patient confusion about how much he or she owes for services after insurance. Today, with roughly 45 percent of Americans being inadequately insured, an increasing number of patients are stressed about making ends meet. This financial uncertainty means it is more important than ever for patients to understand the upfront payments required at the time of care.

It is also essential for hospitals, health systems, or medical groups to provide digital tools that allow patients to keep them involved in the revenue cycle over time.

"It's clear many organizations haven't found the best solution to maximize the time they spend [speaking on] the phone with patients or sending out [collection] letters — whatever approach they take to interact with patients," says Law. "And in the current healthcare environment, or even after the pandemic has ended and we ramp back up to normal, those low-touch approaches may not close the gap."

Hospitals and health systems have already made significant investments in front-line PPE, more intensive care equipment, and other measures to meet the top priority of protecting staff and patients. These commitments may have exhausted some of the already limited capital for investment purposes, meaning the next steps for health systems must be strategic.

"It's essential to maximize IT resources at this time and make the investments that will improve the bottom line while also communicating with patients in the method and manner they prefer," Law says. "Technology can help us endure this crisis by making the payment side of healthcare more transparent and allowing empathy to drive interactions."

When health entities try to make the most of their IT investments, they may use software patches and manual workarounds to make older legacy systems meet modern business needs. Although this might initially seem like a cost-effective solution, Law has found this approach to be more expensive and resource-intensive than purchasing new technology upfront. This insight rings especially true in revenue cycle management, where inefficient IT not only contributes to expensive overhead but can also cause organizations to leave revenue on the table.

Rather than purchase technology, a common way healthcare providers have responded to self-pay collections has been to hire additional personnel to bolster revenue cycle infrastructure — mainly registration, coding, billing, and collections. However, with budgets now likely to be reduced, Law says this method is unlikely to be financially efficient.

"Technology exists today that can minimize the risk of not getting paid and maximize reimbursement for services rendered — and with far less overhead," Law says.

Three digital solutions driving patient financial experience and providers' bottom lines

Digitizing patient collection strategies using automated tools is crucial to facilitate faster payments and a higher collection rate. Here are three ways technology can overcome self-pay challenges, even in a time of underinsurance for a significant number of patients.

1. Price estimation. "If you can reduce friction before the patient walks through your door, then you're one step ahead of the game," Law says. "The way to do that from a financial perspective is to emotionally prepare [patients] for what they're going to owe before they arrive."

Helping patients understand what they owe and why is key to developing an action plan for patient collections. A recent survey by HealthEdge linked increased price transparency to both improved patient satisfaction and patient payment rates. Giving patients accurate price estimates on the front-end — rather than expecting them to use online estimators at home — ensures patients understand their responsibility and gives them time to prepare, thereby improving providers' likelihood of receiving payment.

2. Assessing propensity to pay. What a patient owes and what he or she can afford may differ, especially when they are just returning to work and may have other bills to catch up on. Tools that forecast a patient’s ability to pay can be just as valuable as price estimators in developing more effective collection strategies. These tools help organizations fine-tune the financial counseling aspect of making payments by determining a patient's likelihood of paying out-of-pocket expenses based on credit history and past payment behaviors, among other factors. This knowledge enables patient services employees to connect patients with appropriate payment options or financial assistance in advance of services.

Law sees a significant opportunity for growth in this area. Only 14 percent of providers use advanced modeling tools for predicting patients' propensity to pay in 2017, according to a survey of 125 CFOs and revenue cycle executives.

3. Flexible communication infrastructure. Patient financial engagement means understanding the patient population's diverse needs and what the healthcare organization is doing to meet each patient where they are, Law says.

For instance, baby boomers may want a printed statement with the option to speak to someone on the phone about their bill before writing a check. Millennials, accustomed to ordering services through digital devices, might be more comfortable interacting with the revenue cycle using a mobile app. While these individuals may be struggling with mental health or reduced budgets due to the COVID-19 pandemic, meeting them where they are increases their likelihood to pay or at least stay engaged in conversation.

Using patient demographics, providers can enhance patient financial engagement by investing in flexible communication strategies that put patients in control of their financial interactions.

By providing patients with a range of communication channels and opportunities, patients are more likely to engage with the channel that works best for them, thereby improving patient engagement and providers' chances of recouping payment.

Picking the right financial partner

Taking the time to make provider-patient financial communication more efficient and cost-effective is not just about the bottom line anymore. It's about extending the hand of emotional consideration and humanizing the financial side of healthcare at a time when doctors, administrators, staff, patients, and everyone else need empathy and understanding.

Choosing the right financial solutions partner is key to satisfying parties on both sides of the table and staying true to deeper values during this global crisis and the resulting period of recovery that will inevitably come.

"Financial relationship management tools ensure the sanctity between provider and patient remains intact," Law says. "The patient has their health, and their doctor gets paid. In the end, the results positively impact the relationship and keep us all moving forward."