President and CEO, LGS Health Care and Chief Strategy Officer, Capio Partners, Cleveland, OH
Industry experts estimate that selfpay payments make up more than 30 percent of a provider’s annual revenue. That puts providers at risk of losing onethird of their cash flow unless they have a strategy to maximize collections of self-pay dollars directly from patients. In addition, while it would seem self-pay is going away, it is not. Here is why:
- Under the Patient Protection and Affordable Care Act (PPACA), a maximum of 60 percent of a patient’s healthcare is covered
- National out-of-pocket healthcare expenses will rise to more than $400 billion by the end of 20161
- Nearly 30 percent of Americans are enrolled in employer-based high-deductible insurance plans
- Self - pay is the third most common form of compensation to providers behind Medicare and Medicaid
- Underinsured patients are becoming less collectable
Mandated coverage by the PPACA has increased basic insurance plans, leaving the patient to cover up to 40 percent of the cost of their care. Thus, self-pay takes on new meaning as more Americans become insured under new healthcare laws. Moving forward, “insured” does not necessarily translate to “covered.” While some providers have resolved to outsource the entire collections process, other providers prefer to handle most collections internally. To do this successfully requires best practices and policies that, when properly executed, result in higher returns and greater overall efficiency in the collections process.
Educate, Educate and Educate
To optimize revenue cycle performance, providers should implement a strategy that makes patients more likely to pay their bill and explore all options to collect bad debt. Doing this successfully involves:
- Creating a clear and present selfpay policy.
- Providing payment options and incentives for early payment.
- Creating a culture for patient advocacy.
- Adequate internal talent and resources.
- A trusted partner to help with uncollected balances.
Providers who operate high performing revenue cycles use strategies to maximize both early and late-stage self-pay collections while still maintaining good standing with patients and the community. Offering payment plans and utilizing loan programs, estimator tools, propensity to pay scoring technologies, early-out programs and selling debt are all best practice financial strategies.
Creating an Understandable Self-Pay Policy
At the core of every great relationship, you will find good communication. It ’s all about setting boundaries and clearly establishing where expectations lie on both sides. This is true between patients and providers as well. Best practice patient communication begins with easy-to-understand policy notices. The following is an example:
Your good health is our number one concern. Quality care is the result of communication and understanding between you and your care provider. Our policy ensures that you clearly understand your responsibilities. Our policy includes payment options that can help you reduce your bill by up to 30 percent.
We require all of our patients to pay for their care when they receive it. This allows us to provide you with affordable quality care. If we present a charge to you that you don’t understand or don't agree with, please let us know. We want you to be comfortable that you are getting the care you deserve based on the fees for that care.
Establishing expectations before providing a service helps patients understand and appreciate their obligation and instills a sense of duty to pay for the services they receive. And, should the account go unpaid long enough for it to become bad debt, this initial clarification about the patient’s financial responsibilities serves as a reference point and reminder of the initial agreement between them and a provider’s practice.
Collection Compliance for Non-Profit Organizations
Requirements for 501(c)(3) Hospitals Under the Affordable Care Act, enacted March 23, 2010, added new stipulations that hospital organizations must satisfy in order to be deemed a non-profit organization. Section 501(r) requires providers to disclose their entire revenue cycle management policy to patients.
This means the patient must understand how you intend to handle their account should they be unwilling or unable to pay. The requirements extend beyond that. The law requires that providers disclose their intent to turn over an account to a collection agency or sell the debt if their account will be reported to a credit bureau, if it is subject to a lien and if they could be charged interest on all unpaid balances.
Creating a Culture for Patient Advocacy
The key to creating the right culture is creating an environment where your employees (or those of your partner) truly want to help your patients understand and resolve their bills. This fundamental premise has moved many organizations’ cultures from a “collector” mentality to a “financial counselor” mentality. A best practice operational procedure is to divide duties and roles among collectors into two distinct buckets. The goal of this process is to help patients reach a clear level of understanding regarding their bill and, ultimately, move them from bucket two to bucket one.
Bucket one – Patients who understand what they owe and need to talk through payment terms, settlement strategies, etc. These need to work with a staff member who is skilled in determining each patients specific set of circumstances and can advise them on the best payment option to fit their needs.
Bucket two – Patients who simply do not understand what they owe and/or why they owe it. These patients need to work with an “education-minded” staff member. These team members should be prepared and willing to evaluate every detail of the account and explain in detail how and why the patient has responsibility for the amounts owed.
When following up with patients who still owe on their bill, it is crucial that staff avoid threatening behavior that can put the patient on the defensive. To avoid this, make sure your policies include followup that is predicated on the idea of helping the patient versus collecting from them.
With these guidelines in place, patients will feel that the provider is on their side and willing to work with them to come to a mutually beneficial resolution regarding any outstanding or unpaid bills.
The Do’s and Don’ts of Patient Advocacy
To ensure a high level of patient satisfaction during the collection process, be sure to consider these as you develop your policies and procedures for collecting unpaid accounts.
- Empower and train your team members to strive for 100 percent resolution on every call.
- Encourage team members to listen to each patient thoroughly and with compassion.
- Reward the right behavior and outcomes with your team (whether through bonus structures, department lunches/rewards or simply through broadcasting recognition freely and regularly).
- Use call recordings as learning experiences, not just grading tools.
- Overemphasize measurements that are not satisfaction oriented (e.g., call time limits, number of calls, etc.)
- Outsource patient contact to collection companies who are not that skilled in positive patient contact.
Talent and Technology Resources
Successfully asking patients for money and receiving it requires a special talent that involves a unique blend of people skills and systems management. Rather than relying solely on the billing and customer service departments to handle all collection matters, have dedicated collection specialists who are in charge of both the face-to-face and telephone communication with patients. Having a qualified person handling the following types of tasks can mean the difference between successful collection outcomes and poor collection results.
- Writing patient communication scripts used in the collections process
- Dealing directly with patient billing conflicts
- Understanding the entire billing process and patient payment information
- Collecting co-pays and balances at the time of service
- Collecting payment for services prior to rendering services
Having the right technology in place can also mitigate some of the pitfalls of collecting self-pay accounts. For example, software solutions can now ensure proper compliance and optimal patient contact. These systems operate by uploading recordings of every call and then parse through call data to look for key words or terms. For example, to ensure that all staff are following proper protocols, software can search recordings for forbidden words or phrases on every call. The system then tracks calls based on meeting quality criteria. This information can be used to reward staff who are doing their jobs correctly, as well as to retrain those who are not.
Choosing the Right Collection Partner
Once all internal efforts to collect are exhausted, most providers look to professional collection agencies to collect aged receivables. Many providers fear damaging the provider/patient relationship, therefore allowing patient accounts to stagnate by not placing them with a third-party collection agency.
Providers can follow several approaches to collect aged receivables. They can:
- Write off the debt and not collect it.
- Transfer the debt to a professional collection agency for collection.
- Sell the debt to a trusted third party and let them collect it.
Regardless of the collection strategy a provider chooses to follow, here are seven questions providers should ask when interviewing an outside collection vendor:
- How much can be collected while keeping a healthy patient relationship?
- Are the collection partner’s systems compatible?
- Do they share the same organizational values?
- Will the net financial return be greater if I attempt to collect my accounts receivables internally, sell the debt or place it with a collection agency?
- Does the partner have a reputation for maintaining patient satisfaction throughout the collection process?
- How have other providers benefited from collaborating with this vendor?
- Does the partner offer a low-risk trial period?
Ideally, the patient-provider relationship would be healthy enough to avoid the need for late-stage collection measures such as placing receivables with a third-party collector or selling uncollectable accounts. Unfortunately, the majority of responsibility paying for healthcare services no longer resides only on the shoulders of commercial insurance companies. Patients are now responsible for a larger percentage of medical costs. This change has precipitated a need for more progressive or creative approaches to collecting patient balances.
To minimize the amount of uncollected debt, providers can employ the following practices:
- Creating a clear self-pay policy;
- Providing payment options and incentives for early payment;
- Creating a culture of patient advocacy; and
- Employing internal talent and hiring qualified external resources.
1 Reference: Dig deep: Impacts and implications of rising out-of-pocket health care costs, Deloitte https://www2.deloitte. com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lchs-dig-deep-hidden-costs-112414.pdf