CEO, Patientco, Atlanta, GA
Over the past five years, healthcare finance departments have found themselves straddled with unprecedented levels of responsibility, both for the stability and sustainability of their organizations. The Health Information Technology for Economic and Clinical Health (HITECH) act in 2009 and the Affordable Care Act in 2010 created an avalanche of regulatory change that impacted everything from medical records to insurance coverage.
The financial stakes for healthcare companies have reached surreal levels. As it stands, billions of dollars in government funding may or may not trickle into provider budgets. A single pharmaceutical breakthrough announcement can wipe out millions of dollars in cost savings. Dozens of new business models are being tested with varying degrees of success as CFOs scramble not only to shift from fee-for-service to value-based care, but to define value-based care in the first place.
Perhaps the worst part of this paradigm shift is that the patient understands very little of this change. This is bad news when these changes drove out-of-pocket costs up 11 percent this past year, according to a study by TransUnion Healthcare.
Accounts receivable, in particular, has suffered the brunt of these changes. Amidst the coming transition to ICD-10 and the shift of financial responsibility from the payer to the patient, providers have recently discovered their revenue cycle management (RCM) technology solutions, which, until recently, were adequate, cannot effectively manage the increased amount of patient financial responsibility.
Fortunately, a solution is at hand: a technology-enabled revenue cycle that begins and ends with the patient. By empowering the patient with the right information and technology before, during and after an episode of care, providers can quickly automate their patient payment process and return their focus to issues like ICD-10 and payer relationships.
For finance executives, upgrading to a patient-centric revenue cycle technology is an opportunity for a strategic win with a quick implementation cycle. Furthermore, it’s an opportunity to make a commitment to increasing patient satisfaction while increasing back-office efficiency and lowering costs at the same time.
Frustrated Providers, Confused Patients: A Two-sided Problem
The typical patient does not understand the dynamics between payers, providers, the government, vendors or doctors. In fact, the majority of patients have trouble understanding the basic tenets of health insurance coverage and how it affects their financial responsibility after an episode of care.
Likewise, the provider does not know a given patient’s financial situation. They may identify insurance coverage (or lack thereof) or propensity to pay. However, those who take the purely rational stance that patients should simply pay their portion are learning the hard way that it’s not as simple as checking out at the grocery store.
At the crux of this problem is the fact that patients don’t understand their medical bills. They don’t understand the terms of their insurance coverage. They don’t understand why they may receive five bills for a single episode of care. They misunderstand when they receive an insurance pending statement that reads “THIS IS NOT A BILL” followed by a bill from the hospital. They receive a bill with erroneous charges and spend months disputing it. These are all obstacles to successful account resolution.
A Challenge Unique to Healthcare
Hospitals and practices are becoming acutely aware of the challenges associated with collecting the out-of-pocket responsibility from the patient. Debt collection laws, billing errors and increased public scrutiny have resulted in a variety of proposed solutions. Every week a healthcare provider lands in hot water with the media over a charge deemed unfair by the general public. In the era of healthcare consumerism, that kind of publicity can be toxic to future revenue, as patients fear the same might happen to them. The increase in high deductible health plans, especially those with narrow networks, has patients correctly worried about large unplanned charges when they choose to seek care.
One school of thought suggests requiring patients to place an authorized credit card on file before receiving treatment—then, the patient has already committed to the payment and can be charged as soon as the responsibility is calculated. It makes perfect sense to the provider, because the patient will owe the amount regardless of whether or not a card is on file.
But for the patient this is a huge financial risk. Until an episode of care is complete, there is simply no way to know which tests will be ordered, which follow-up services will be necessary, which medications will be prescribed. Ask yourself…would you write a blank check for a service whose price might fluctuate by tens of thousands of dollars? Even for those with coverage, a trip to the emergency room can literally bankrupt a patient.
Other suggestions stress improvements to particular payment channels, such as online bill pay, interactive voice response (IVR) phone systems, or the statement itself. The reality is that every part of the patient payment process has room for improvement and providers should start by offering multiple convenient payment options in the first place. If a hospital in rural Iowa can reach nearly 40 percent patient adoption of its online payment platform, what does that say about your current solution?
Defining a Patient-Centered Revenue Cycle Building a patient-centric revenue cycle requires eliminating as much complexity as possible for the patient while still empowering him or her with all of the information and tools to resolve the balance. Besides having secure, working technology with a trusted partner, a patient-centric revenue cycle offers consolidated payment options, provides visibility for both patients and providers, allows for enterprise scalability and increases patient satisfaction.
Consolidating Patient Payment Channels
One of the toughest parts for patients who receive multiple bills for an episode of care isn’t just that the charges are divided by which entity performed the service; it’s that each bill may have its own unique format, call to action, payment options, and customer service center. Lack of billing standardization among separate providers is (for now) a reality that must be dealt with.
Consider the following scenario: a patient receives care from multiple entities during an emergency room visit. He or she not only receives multiple bills for a single episode of care, but the bills themselves might come from different billing partners and have different formats, language and payment options. For example, an invoice from the radiologist that offers no online bill pay option, or a bill from the physician whose bill pay information can’t be found on his or her website. This only serves to confuse the patient further, especially when combined with any correspondence from the insurance company. For a complicated procedure like surgery or giving birth, a patient may receive more than five separate invoices.
Now consider a different, though not mutually exclusive scenario. A patient receives only one invoice from a provider but with several disparate payment options. He or she makes a partial payment online through the provider website, but pays the remainder of the balance over the phone a few weeks later. Confusion ensues when the patient receives a call requesting the payment he or she has already made, due to the second payment not having posted. In the first scenario, the burden of complexity falls on the patient. The patient is responsible for tracking and paying each invoice and this is often a tedious exercise in organization. Come tax season, the patient must revisit each invoice for exact dollar amounts. There is a growing industry of patient billing advocates, who are hired for the sole purpose helping patients navigate the billing process.
In the second scenario, the burden of complexity falls on the provider. In the patient’s mind, he or she has made two separate payments to the same entity, but to the provider the patient paid two billing entities which must then be consolidated and posted before it can be tracked and analyzed. The latter depends on both payment channels reporting in an accurate and timely manner. This is a risk of using disparate vendors for each payment channel.
Both scenarios cost time, money and sanity for both the patient and the provider. Though sometimes multiple invoices for the patient may be inevitable, providers can cut down complexity by consolidating their payment channels onto a single platform. Then, if the patient makes multiple payments through multiple channels, the money travels to the same place to be posted and the provider saves the time of making an unnecessary call. A medical center in Vidalia, GA is able to achieve $100k in operational cost savings by consolidating patient payment vendors, largely through adoption of self-service payment channels.
Visibility for the Provider
One of the biggest challenges in healthcare revenue cycle management is knowing where the money is after it has been collected from the patient. Managing an increasing number of payment channels can cause a lag in reporting, which in turn causes a lag in the ability to make the data-driven strategic decisions that finance executives are now expected to make.
At the single-provider/practice level, a CFO should have access to a dashboard of patient payment metrics that show how, when and where patients pay. This is only possible if all patient payment channels are consolidated into a single reporting platform that updates as constantly as possible. Once this data is collected, managers can get a series of insights that until recently were not available. As providers uncover their patient payment trends, they can more efficiently direct the activities of their staff. Billing offices can be staffed up when patients are most active and prioritize time-intensive outbound calling for the most pressing accounts for maximum return.
At the system level, benefits of scalable visibility become even greater. Not only can system CFOs drill down into each facility’s patient payment metrics, he or she can look at trends across multiple facilities and use data to establish benchmarks and best practices.
Visibility for the Patient
Patients, like all modern day consumers, are used to transparency when it comes to any kind of financial transaction. On any online store such as Amazon, you can instantly pull up your payment/transaction history with each transaction given an ID number a customer service representative can easily reference. Providers need to make every effort to match this level of visibility on the patient side not just because the patient expects it. A patient who must search or call through the billing department to get an updated balance is much less likely to pay than a patient who can login to a platform and view all invoices and payments from a provider.
For a health system that runs on a standardized patient payment platform, the value to the patient is even greater. For a patient that receives multiple bills from multiple providers in the same system, he or she need only log onto a single platform to manage and pay bills from each provider. This saves the patient hours of work for complicated episodes of care and minimizes dissatisfaction during the billing process.
Whether it be a large research hospital or a small group of physician practices, having software that scales effectively is a necessity in healthcare. As stated earlier, the impacts of regulatory change are arriving faster than organizations can forecast for them. Therefore, every software purchase or process implemented must be adaptable to anticipated and unanticipated changes in regulations, organizational structure and technology.
The increasing number of mergers and acquisitions in healthcare is a perfect example of why adaptable IT is a necessity. An acquisition of a dozen physician practices may include a combination of electronic health records (EHR) and disparate revenue cycle vendors. Some may be outsourcing, some may only take cash up front. In the event of a merger, having one scalable software solution for your patient revenue cycle allows for a quick implementation and standardization across the system.
One of the most important components of this scalability is cloud technology. Cloud software allows software and data to be stored across a series of secure networks, saving time and money while increasing security and stability. Cloud software does not require expensive servers that could malfunction or be physically tampered with. Many healthcare IT applications already run in this format and now is the time to make that switch in all business-critical functions.
Providers have been saddled up with more reasons than ever to boost patient satisfaction. Patient satisfaction is elusive, however, both in definition and in practice. Provider/patient incentives designed to boost patient satisfaction as defined by Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey or another experience survey could come at the expense of other important functions or, as The Atlantic suggests, even patient health.
Patients are indisputably becoming consumers in healthcare, especially those with high deductible health plans. While they may be constrained to the network defined by their insurance company, they will still choose if, when and where to receive the best care value. Even then, providers in a patient’s network still must compete with retail healthcare facilities such as CVS, Walmart and dozens of urgent care clinics, whose prices, branding and retail experience tend to appeal to patients more than the traditional hospital.
When it comes to billing, patients desire the same thing as providers: a prompt resolution of the balance with no surprises. While it’s up to the patient to actually make the payment, the burden is on the provider to remove as many barriers to payment as possible. This means giving patients a clear, concise statement that offers multiple payment options as well as a clearly defined process for negotiating disputes and payment plans.
As long as healthcare costs remain relatively complex, there will always be billing errors and confused patients; but successfully mitigating a billing dispute can be an opportunity to demonstrate superior customer service. Strive to beat your patients’ expectations.
Transitioning to a Patient-Centric Revenue Cycle
A successful transition to a patient-centric revenue cycle will result in both staff and patient satisfaction. Ease of implementation, a superior customer service track record and demonstrated client success are important factors in choosing the right partner.
The decision to insource or outsource your patient billing depends on your particular organizational structure, available capital and patient volume, as well as finding the appropriate partner. Some providers will even take a hybrid approach, using an external business office at days 90 or 120. No matter which approach you choose, put yourself in your patients’ shoes when evaluating the statements, software tools and customer service of prospective partners.
The Window of Opportunity is Open
As patient financial responsibility increases, providers cannot afford to rely on stringing together outdated payment technologies to collect and track out-of-pocket dollars. Now is the perfect time to make this shift before the transition to ICD-10 adds yet another wave of complexity to the billing process. Providers who engage the patient like a consumer will rise above the competition and those who try and maintain the status quo will fall behind.