The number of Americans enrolled in health plans with high deductibles is on the rise and is expected to continue as employers look for ways to cut costs in this tough economy. This trend creates challenges for ASCs and hospitals as they begin to see more and more patients who are responsible for significant out-of-pocket expenses for treatment.
More than 17 percent of Americans 65 and under with private health insurance are enrolled in a high deductible health plan (defined as a private health plan with a deductible of $1,100 or more for self-only coverage or $2,200 or more for family coverage), according to the NCHS. Additionally, 95 percent of insured individuals face significant cost-sharing expenses, even after their deductibles have been met, for inpatient and outpatient procedures.
The prevalence of HDHPs will continue to grow; 37 percent of employers in a survey by the Kaiser Family Foundation indicated that they would likely increase their deductibles in the next year.
So what can ASCs and hospitals do to ensure that this trend does not affect their ability to receive payment for services?
Here are five best practices for healthcare providers to help address the increase in patient out-of-pocket expenses.
Experts agree that thorough insurance verification is the first step in ensuring that patients are able to pay out-of-pocket expenses required for a procedure.
According to Lisa Rock, president and CEO of National Medical Billing Services, it is imperative that healthcare providers such as surgery centers are properly verifying patient insurance coverage.
“ASCs collectively aren’t doing their due diligence on insurance verification,” she says. “When things get busy, and they get behind, maybe they skip over this step. When the economy was strong, centers were okay if they let this slide. Now, however, ASCs must make sure they are following the verification procedures they have put into place.”
Donna Smith, an administrator at The Surgery Center in Oxford, Ala., agrees that insurance verification is extremely important in today’s economy. She estimates that one-third of the patients that present to her center have HDHPs. Her facility, which averages 16 days in accounts receivable, follows strict verification and patient education procedures to help ensure that the ASC receives payment for services provided.
“I’ve found that some surgery facilities only verify primary insurance,” says Jennifer Bailey, business office manager at the Oxford facility. “Our center verifies all insurance coverage. Having this information helps us better inform our patients of their responsibilities,” she says.
Experts also recommend that insurance verification should be done by qualified staff with knowledge about accounts receivable and experience working with insurance providers.
The Surgery Center in Oxford employs two staff members who are able to verify patient insurance. “It is crucial that your verification staff is knowledgeable and has an extensive background in insurance,” says Ms. Bailey.
Ms. Rock agrees. “At some facilities, you may find a nurse making these verification calls. That nurse may get the information, but it may not make sense to her. Having staff that understands the information and can translate it for patients is becoming more and more important,” she says.
Patients who are educated about their financial obligations before a procedure are more likely to fulfill those obligations, sources say.
“Patients may not realize what their estimated responsibility may be for their procedure, so we contact them before the date of service to prepare them for these costs. It seems to be really appreciated,” says Ms. Bailey.
Lindsay McQueeney, director of product management for SourceMedical, adds that healthcare providers should begin this process as soon as possible. “It is fundamental that centers work with both the insurance company and the patient as far in advance as possible so that the patient really has a chance to understand his or her coverage and so that the patient is prepared to meet his or her portion of the obligation,” she says.
The best way to ensure that patients pay their out-of-pocket expenses for a procedure is to require payment before the procedure.
Ms. Smith says, “It is standard practice at our facility to ask that our patients pay in full, on the date of service, for any out-of-pocket costs. That said, we are still always willing to work with patients who may need payment arrangements or financial assistance.”
Ms. Rock agrees with the merits of this policy. “Upfront collections are definitely preferable. However, we must have professional courtesy with front-end collections,” she says. “We have to remember why it is we’re doing these procedures.”
Everyone interviewed for this article agreed that patient care should never be compromised due to financial circumstances or a patient’s ability to pay.
If patients have a large deductible that they cannot pay upfront, Ms. Smith says that her facility will require them to pay half up front or work with them to set up payment plans before the procedure.
Occasionally, a patient may be charged more on the day of service than what the patient actually owes due to lag-time in billing clearance. If there are accounts with overestimated patient responsibilities, Ms. Smith recommends that facilities refund any overpayments made by the patient immediately. “Our patients are willing to pay if they can be assured their money will be refunded quickly and without a hassle. We strive to get the money refunded to these patients before most even realize that they are owed a refund,” she says.
Hospitals and surgery centers should start to see billing and payment as retail transactions rather than just the transfer of funds between a facility and a private or public payor.
Earl Winter, CEO and founder of nTelagent, a company that provides self-pay management systems to healthcare providers, says that providers have to take a retail approach toward their billing and collections in order to be successful.
“Healthcare providers have systematically approached billing as an issue between the healthcare facility and some type of public or private payor,” he says. “All computer systems that the facilities use for billing were built to bill private and public insurers, not actual people. Now that has switched. More and more responsibility for payment lies with the individual patient, and many facilities haven’t yet figured out how to think like a retailer in their payment options.”
Thinking like a retailer means that healthcare providers should evaluate each patient individually and offer different payment options based on that evaluation. For example, a facility may offer a discount to encourage a patient to pay upfront for services; however, a facility would probably not want to offer that discount to a patient who would be willing to pay the full price upfront.
“Solutions are out there to help providers determine a patients’ ability to pay. This information can help business managers offer payment options that are most appropriate for each patient,” says Ms. McQueeney.
Mr. Winter, whose company offers one of these solutions, says that providers need to be careful in how they determine ability to pay. “When determining patients’ ability to pay, providers should be most concerned about predicting the likelihood that they’ll pay healthcare bills, which can be tricky,” he says. “Some facilities use credit scoring, which alone can be legally problematic. Plus, credit scores only show how patients have paid in the past. You have to use other predictors, such as demographics, to figure out the likelihood that they’ll pay in the future.”
Ms. McQueeney recommends that facilities develop business rules for offering discounts, credits or payment plans to patients after they have determined their ability to pay. Facilities may also benefit from offering payment plans regardless of the patient’s ability to pay. “Centers may increase patient satisfaction by offering automated monthly withdrawals from the patient’s bank account or a recurring charge to their credit card. These types of payment plans offer flexibility while ensuring that the facility receives the entire payment,” she says.
Mr. Winter, however, warns that some facilities may not have enough information to develop sound business rules or lack the technology to offer certain payment options, such as automatic reoccurring billing from a patient’s credit or debit account.
“I see a lot of facilities that either have trouble figuring out where it makes financial sense to provide discounts or have trouble offering the ones they’ve implemented,” he says. “You might have an employee with a bunch of post-its on her computer screen trying to figure out what to offer to which patients. Or you have a front-office employee who has to call a business manager to approve every discount. Neither of these processes is efficient.”
While sending bills to collections is an option, sources say that facilities should do everything possible to avoid this last resort.
“I’ve seen statistics that say that less than 15 cents on the dollar is recovered during back-end collections,” says Mr. Winter.
Ms. Smith concurs. “Once a patient leaves a facility, the chances of receiving any payments from them decreases drastically,” she says.
According to Mr. Winter, healthcare providers need to do everything they can to keep even relatively small bills from going to a collection agency. “Most people think that outliers with huge bills cause the biggest problems for facilities, and that just isn’t true,” he says. “The average bill in collections is usually around $700-$1,100 dollars, depending on the services offered by the facility”
Providing other payment options are also a good alternative to help ensure that money is collected upfront, sources say. Ms. Bailey says her facility occasionally allows patients to post-date checks if necessary. The ASC also offers patients financial assistance through CareCredit, which extends some loans with no interest for 12-18 months, according to Ms. Smith.
“This assistance allows us to collect on the date of service, and the financial provider works with patients directly on any defaults,” she says.
Healthcare providers must anticipate the increasing prominence of patient out-of-pocket expenses. By moving collections to the front-end and using sound business principles to offer payment options to patients that will keep bills out of collections, facilities can prepare themselves for the business challenges caused by this trend.
Ref. Becker’s Healthcare
This post was first published April 2, 2009 and was updated April 17, 2018.