Ten Ways to Protect Your Hospital from Rising Risks of Self-Pay
Whitepaper | Ken Carr, MSL
Vice President of Revenue Cycle Management, Change Healthcare
Ken has over 30 years of experience in practice operations, AR management, process improvement, and advanced reporting. He has national responsibility for revenue cycle consulting for providers.
As businesses of all sizes struggle with skyrocketing healthcare costs, employers are looking to employees to help shoulder the burden, often by shifting to Consumer-Directed Health Plans (CDHP), which include higher medical deductibles and a higher share of payment responsibility for the employee. The increase in patient pay responsibility brings with it a significant problem: A sizable number of patients can’t (or won’t) pay for healthcare without employer subsidies. Research indicates that consumers at all income levels are more likely to pay their mortgages, insurance, loans, utilities, cable TV, Internet, lawn care, and newspapers before paying their healthcare bills.2
At the same time, healthcare reform is bringing added coverage to millions more people, further increasing revenue pressure as hospitals struggle to get ahead of the patient pay trend. Those that don’t are likely to experience more bad-debt write-offs, putting their bottom lines at risk.
What Can Be Done to Offset the Self-Pay Cycle? Plenty.
You can offset these challenging self-pay trends by improving collection and communication at all three stages of patient contact: pre-service, point-of-service and post-service.
This is the easiest time to collect and identify alternative sources of payment. As part of the pre-service process, you should:
1. Stratify payment potential
A recent study found as much as 31% of self-pay revenue written off to bad debt collection actually met provider charityeligibility guidelines.3 The right technology can make it easy for front line agents to conduct charity screening interviews as part of the pre-registration workflow. This enables quick determination of whether patients should be placed on a financial assistance pathway or patient payment pathway, which enhances your ability to collect payment for services rendered.
2. Verify eligibility
To ensure the most complete and accurate eligibility verification, providers need information from both EDI and web-based searches; real time queries ensure the latest information while scheduled batch queries ensure ongoing checks for changes or updates in patient eligibility and coverage. Together, they enable more accurate bill estimation, better management of patient expectations, and the ability to catch errors and updates quickly. This reduces denials and rework, and can improve your AR significantly.
3. Verify patient data and identity
Half of all required billing elements on a claim originate at the point of access, so correct information at registration is vital to an efficient revenue cycle.
4. Estimate patient responsibility
Systems that can help staff calculate a patient’s financial obligation for services and his/her ability to pay make it easier to communicate accurate expectations of financial responsibility, collect deposits, and set-up payment plans. Such clear, accurate communication has been shown to improve the likelihood of on-time bill payment, and increase patient satisfaction.
Even if you’ve already verified eligibility, updated charity status and estimated patient bills, you should complete the following tasks at the point-of service:
5. Set up and confirm payment plans
Technology and propensity-to-pay scoring systems should be used to create appropriate deposit and payment schedules. You can also take advantage of retail consumer strategies to collect payment, including:
- Collecting deposits
- Providing contracts that clearly set out payment schedules and expectations
- Securely storing credit card information to improve future point-of-service collections
6. Collect payment
E-cashiering systems can post patient payments directly to the patient accounting system. Organizations that employ these systems routinely report collection increases and AR reductions.
7. Advance your point-of-service policies beyond co-pay, fee schedule, and flat-rate collections
More complete, credible and defensible estimates can help you expand collection activities while providing patients with a more precise understanding of their responsibilities. Again, this improves both collections and patient satisfaction.
With most collections work already complete, post-service becomes the time to ensure accuracy, consistency and efficiency, with activities that include:
8. Confirm changes before billing
Plan enrollment, data collection, coverage limits, and dependent coverage are subject to change unexpectedly, and constant enrollment changes in governmental plans like Medicare Advantage and Medicaid HMOs will increase the likelihood of errors and rework. Double-check all of these items to keep your final billing from hitting any snags.
9. Make billing information and process clear and simple for patients, including:
- Easy-to-read statements that improve patient satisfaction and increase willingness to pay earlier in the revenue cycle
- Consolidated family payment information to help guarantors better manage their accounts
- Consolidated bills from the lab, physician, and hospital, which make the bill easier to understand, therefore more likely to be paid
- Online account management to reduce patient billing questions and phone calls, which lowers costs, improves patient satisfaction, and accelerates post-service payment collection
- Online payment plans, which lower self-pay AR and reduce processing costs by as much as $10 per transaction
10. Improve collections efficiency
It costs significantly less to collect from large insurers with millions of patients than to collect from individual patients. On average, consumers pay twice as slowly as all payers except Medicaid.5 Many providers find it more effective, efficient, and profitable to outsource all selfpay accounts to ensure maximum collection potential.
Improvement Bonus: Performance Analysis
Improving self-pay strategies through all points of service will deliver benefits. But a thorough performance analysis can take results to a new level. Drilling down into self-pay data helps you identify trends and better identify:
- Patients most likely to pay, including which ZIP codes' patients tend to pay bills by the second statement
- Physicians bringing the highest– and lowest– yield patients
- Referring doctors' patients that have the highest propensity to pay
Options and Opportunities
The rise in self-pay receivables is a significant issue for hospital financial performance. For many, receivables are growing faster than patient revenue. Estimating cost of services before and at the point of service, as well as providing an efficient self-pay process, can make it significantly easier for patients to pay their outstanding balances.
At the same time, development and implementation of these essential functions and processes can be extremely time consuming, requiring more time than most hospital administration teams can afford to commit. The right outsource group should be able to support the process as an extension of your business office. With the right solution in place at every patient contact, you will be able to achieve higher levels of patient satisfaction – and achieve faster recovery of payment. Add in the ability to identify and analyze important trends, and you should be able to significantly improve performance.
Change Healthcare can help address self-pay challenges and improve profitability with revenue cycle management services designed to help hospitals maintain their focus on patient care. See how our self-pay services can help optimize collections and shorten collection cycles.
1 MGMA Medical Practice Today
2 Improving Self Pay At All Points of Service," RelayHealth Whitepaper, 2011
3 Ledue, C. (2009) Study: 31 percent of patient bad debt misclassified, should be charity. Healthcare Finance News. Accessed online 13-Sep-10 at http://www.healthcarefinancenews.com/news/study-31-percent-patient-bad-debtmisclassified-should-be-charity.
4 HFMA (2009) Changing Face of Self-Payment in Hospitals. Healthcare Financial Pulse. Accessed 13-Sep-10 at http://www.hfma.org
5 Improving Self Pay At All Points of Service," RelayHealth Whitepaper, 2011
6 MGMA Medical Practice Today