5 Steps for Consumer-Friendly Payment Options that Raise Satisfaction and Revenue

As patient responsibility grows, providers should go beyond eligibility verification and move toward implementing financial triage workflows.

Rapidly changing industry dynamics, regulatory changes brought on by the Affordable Care Act (ACA) and other legislation, and increased patient responsibility pose significant challenges to an industry already operating on thin profit margins. Based upon these challenges, healthcare organizations and providers need to think about new ways to protect and help improve revenue and cash flow.

Increasing Denials

A recent analysis performed by Change Healthcare found that providers submit an estimated $3 trillion in claims every year. Of those, $262 billion are denied. The average cost of a denied claim is approximately $118, representing on average $4.9 million per hospital—nearly 3.3 percent of net patient revenue. The analysis was done based on claims sent to Change Healthcare from more than 700 hospitals in 2016. In addition, the Centers for Medicare and Medicaid Services reports that 60 percent of denied, lost, or ignored claims will never be paid in full. The best way to avoid losses associated with denied claims? Increase the percentage of claims that are approved on the first pass.

Facilitating Full Payments by Commercial and Government Payers

Collecting timely and full payment from commercial and government payers continues to be top of mind for industry executives, as 91 percent of respondents from the 2014 Health Leaders Media Industry Survey said reduced payments was the largest threat they would face that year. Between underpaid and unpaid claims, American medical practices may be leaving a total of $125 billion on the table every year. Payments at contracted amounts will help providers realize optimal revenue for services rendered.

Rising Cost of Uncompensated Care

For the first time since the ACA went into effect, the rate of uninsured Americans rose by 1.3 percentage points to 12.2 percent in 2017.  Based upon this change, self-pay patients continue to remain a significant source of financial risk for providers. According to the American Hospital Association, hospitals of all types have more than $576 billion in uncompensated care costs since 2000. By the end of 2016, it was estimated that 27.6 million Americans still did not have coverage. Providers need a strategy to address this population or face significant impact to their bottom line.

Increasing Patient Responsibility

Today, one in five patients struggles to pay their medical bills. The shift to high deductible health plans means providers can no longer rely on health plans to bear financial responsibility for the majority of medical bills. An increase in patient responsibility also lengthens the amount of time payments sit in accounts receivable, as 45 percent of uninsured patients wait more than a month to pay medical bills.

Opportunities to Capture Revenue

The complexities and challenges of today’s healthcare landscape are driving healthcare providers to take advantage of the following opportunities to capture revenue.

Step one: Help your patients get insured. Reducing the number of self-pay patients can help reduce non-payment risk. During the 2017 open enrollment period, 12.2 million enrolled in 2017, including 33 percent who were new enrollees. Forrest General Hospital in Hattiesburg, Miss., has been actively helping uninsured patients enroll in Medicare and Medicaid for years; in 2014, the hospital system expanded its efforts to include plans available on the federal health insurance exchange. Part of this plan included community outreach to educate patients about the ACA and how they could benefit from it.

With the expansion of Medicare and Medicaid in many states, each patient who is eligible can enroll to help improve payment.

Step two: Streamline patient financial clearance. As patient responsibility grows, providers must go beyond eligibility verification; they need an efficient workflow for full financial triage. This includes verification of identity; checking eligibility and benefits; gaining prior authorization or checking for medical necessity; accurately estimating and communicating patient responsibility; and collecting patient payment, before or after the delivery of care.

Creating a culture of patient education and payment request is critical to financial clearance success. The added transparency helps build consumer trust, simplify the patient billing cycle, and improve the overall patient experience.

Step three: Optimize payment for each episode of care. Make sure payers are meeting their negotiated, contracted payment rates. Concurrent retrospective and ongoing reviews of contractual denials and underpayments, as well as recovery of zero-balanced third-party accounts, will ensure you are getting paid the right amount the first time.

In 2015, Medicare and Medicaid underpaid U.S. hospitals by $57.8 billion. Double-check all DRGs, specifically Transfer DRGs, to ensure proper payment from Medicare. Twelve to 15 percent of Transfer DRG claims are underpaid, which amounts to an average payment reduction of approximately $3,500 per instance. In aggregate, hospitals may lose an estimated $4 billion dollars to miscoded Transfer DRGs annually.

Step four: Proactively address denials and rejections. The American Medical Association estimates providers could collect an additional $12 billion if insurers used automated systems to process and pay medical claims. Determining benefit eligibility and getting medical necessity documentation prior to and during care delivery helps ensure claims are submitted correctly on the first pass, which itself reduces subsequent administrative expense. Employing technology or expert services is an easy way to catch administrative errors and reduce the number of claims rejected for formatting errors. Analytical tools will proactively identify opportunities to increase cash flow and stem revenue leakage. This in turn helps providers reduce the risk of audit and/or non-payment.

Step five: Efficiently collect payments. Many consumers prefer the ability to manage their finances electronically. Reduce the risk of delayed payment or non-payment by communicating with patients and payers in the way they prefer to receive and send information. Just as you submit claims electronically, enrolling in electronic payment services allows patients and payers to submit funds electronically, eliminating mail lag and improving posting accuracy. While some consumers still prefer paper statements to make payment via checks, mobile technologies are shifting the preference to electronic messaging and digital payments via smartphones and tablets.

Increasing patient responsibility and the risk of non-payment are forcing hospitals to rely on innovative consumer-friendly revenue capture solutions. Providers benefit significantly from implementing technological and non-technological solutions that integrate with operational workflows to mitigate leakage and increase cash flow.

Stuart Hanson is senior vice president and general manager of Consumer Payments at Change Healthcare, and a member of HFMA’s First Illinois Chapter.