Accelerating Patient Payments in Healthcare

By Mary Dees Griffith, President & COO, Preferred Health Technology, Inc.

There is a shift occurring in the way medical practices are paid for the services they provide. Patient copayments and deductibles make up larger percentage of total treatment dollars. This trend is resulting in higher accounts receivable, longer collection cycles and increased write-offs for providers.

Every day across the globe, commerce occurs quickly, efficiently and electronically. Consumers purchase products and services, which, in the vast majority of times are paid for in full at the time the services are consumed. In some cases (as with hotels and car rental services) consumers don’t know how much they will owe at the time they begin to consume the service. However, consumers don’t expect to check into a hotel, or drive away with a rental car without having made some type of payment arrangement giving the hotel or car rental agency a high degree of assurance that the service that they are about to provide will ultimately be paid for.

Why then are US healthcare providers never paid for over 50% of what is owed to them by their insured patients and more than 80% of what is owed to them by uninsured patients? The difference – unlike retail, hotel or car rental, is that the ultimate cost of healthcare treatments is not known at the time of service. An insured patient’s actual cost of service, and ultimately what they owe, is decided thirty or more days after services are rendered.

Today with the growing popularity of consumer directed health plans (CDHPs) and high deductible health plans (HDHPs) to reduce health insurance expense, patients are faced with an increase in upfront and total healthcare treatment costs. With patient copayments, coinsurance and deductibles making up a growing percentage of the total dollar volume of a practice’s accounts receivable, provider’s office are affected. According to major studies [1], only 50% of the dollar amount billed by healthcare providers to patients is actually collected. This represents $45 to $60 billion annually in uncollected accounts receivable for healthcare practices, medical offices and other private care facilities for services rendered.

In today’s environment, because a patient’s final amount due is not determined until the provider files their claim and that claim is adjudicated, patients receive medical services and then walk out the provider’s door virtually “tab” free. While the healthcare practice holds the open tab for their patients, a complex calculation is performed over the next 30 to 60 days between the insurer and the medical provider with regard to the specific covered benefits under the patient’s plan, reflecting the patient’s deductible, coinsurance and copayment amount. The final determination of what an insurer will pay and what the patient will owe is not known until this 30 to 60 day process concludes. This trend has resulted in medical practices facing higher accounts receivable, longer collection cycles and increased write-offs translating to $300 billion annually lost on claims processing, billing and bad debt.

When the final “patient due” amount is received by the practice from the patient’s insurer, 30 or more days after the time of the patient’s service, only then can the provider actually prepare and mail the patient’s bill for treatment or service – and begin waiting for the patient’s payment for the treatments rendered 30 or more days before. In US healthcare today, patient accounts receivables represent 15% to 30% of the $1.9 trillion spent on healthcare each year. Patient collection cycles on these outstanding accounts receivable average three months or longer. Simply translated, a medical practice treats patients without receiving payment in full for those for services for roughly four months.

In healthcare, because third parties frequently determine the cost of a patient’s service due to negotiated network discounts, as well as may also pay a portion of the service, one of the most important pieces of information a medical practice must know is whether the patient is covered on the day of service by some form of insurance. An insurance card in the patient’s hand does not translate to approved treatment coverage or an eligibility status. A provider must determine – each time the patient visits – that the patient’s insurance plan is active and what their coverage is for certain services. In most cases today, in order to validate a patient’s insurance information, the healthcare provider’s office staff spends time on the phone with the patient’s insurer. Failure to perform the patient insurance verification process may leave a healthcare provider financially exposed without recovery options.

Technology exists today to bring the same type of processes used in the retail, hotel and car rental industry, to healthcare. Through a card swipe terminal, similar to traditional retail stores, or through a card swipe reader attached to their PC, provider’s offices can access a patient’s insurance benefits, from all major national carriers and government programs, in seconds. The real-time verification process allows a provider to validate whether a patient’s insurance is active and to gain insight as to the general makeup of the patient specific insurance plan. Patient copayments, in network and out of network benefits, individual and family deductibles, amounts of deductible met to date, coinsurance percentages, any annual visit maximum for certain services, pre-certification requirements, and other data, may all be retrieved and automatically provided to the healthcare practice.

With real-time insurance verification, providers have insurance data available in seconds, at the time of patient service. Electronic benefits verification allows medical practices to estimate the patient’s ultimate liability. Through this innovative technology, a provider’s office can provide a patient with a liability estimate, collect their preferred payment method – debit card, credit card or check, and automatically collect the actual amount the patient owes when it is known. The actual collection of the patient’s payment is triggered based on remittance data received from the patient’s insurance. Automatic payment plans can be offered to allow a patient to make regularly scheduled payments against their accounts receivable utilizing their preferred payment method. Check payments processed through the system are converted for electronic debit from the patient’s checking account and electronic deposit to the provider’s bank account – automatically, without the requirement for a physical deposit of a paper check.

With the shift from managed care programs to consumer directed health plans and high-deductible health plans, more patients are becoming responsible for paying a larger portion of their overall healthcare costs. With rising copayment, coinsurance and deductible amounts, healthcare providers are faced with the challenge of collecting all – or a higher percentage of patients’ receivables - after the patient has left the provider’s office. Currently, with healthcare providers collecting only an estimated 50 percent of patient receivables each year, incorporating payment and verification systems like Preferred Health Technology’s A-Claim™, can make a significant impact to a healthcare providers bottom line by improving cash flow and reducing write offs.

The business of healthcare is becoming increasingly complex. Today, providers need solutions to speed their accounts receivable collection, reduce administrative costs and improve their cash flow management. The healthcare specific functionality of A-Claim creates greater efficiencies’ and cost-savings for providers and increased convenience for patients’.

About Preferred Health Technology, Inc.
Preferred Health Technology, Inc., operator of A-Claim, is headquartered in Carrollton, Texas, and is a full-service payment processing provider to the health care industry. Its parent company operates one of the largest health care insurance data center sites in the world in support of Medicare, Medicaid, TRICARE, the Federal Employee Program and Medicare Advantage health plans, as well as other private health plans.

A-Claim is the electronic payment solution specifically designed for healthcare providers. A-Claim utilizes payment and verification processes to dramatically improve revenue collection at the time of service. Providers improve cash flow while reducing patient accounts receivable and bad debt with A-Claim’s technology-forward, user-friendly and compliant web-based solutions. A-Claim is easily integrated and is designed to work with a provider’s current practice management or EMR system.

Reference:
[1] Celent, The Retailish Future of Patient Payments and McKinsey Studies