- With the ICD-10 conversion behind us, most billing and coding hiccups caused by the transition are slowly becoming a distant memory. However, rising patient out-of-pocket expenses – expected to reach $420 billion in 2015 – are just beginning to show their effects. Healthcare providers will need to address this growing issue head-on if they hope to stay profitable and stay in business.
Due to factors such as the Affordable Care Act and health insurers' aspiration for continual quarter-on-quarter earnings growth in a mature market, it is increasingly common for patient deductibles to be upward of $5,000 for in-network providers, and $10,000 for out-of-network providers – which for ACA plans includes many if not most specialists.
Today, patients often have co-insurance rates as high as 30 percent. Yet given that 62 percent of Americans have less than $1,000 in savings, many patients lack the liquidity to cover these out-of-pocket expenses.
Some may borrow from loved ones or creditors to pay bills; others may neglect them entirely—translating to losses for medical providers that refuse to update their business practices.
Healthcare providers should consider taking the following steps to mitigate these effects and minimize loss:
Verify insurance coverage
Providers should always verify patient coverage and that the plan is active just prior to all visits and procedures. During verification, providers should inquire about the patient’s un-met deductible, co-payment, and co-insurance responsibilities.
Collect the patient's responsibility at the time of service
On average, claims processing, payments, billing, bad debt and other aspects of revenue cycle management cost the healthcare industry $315 billion annually—with providers taking the brunt of these expenses.
By requiring that all patients fulfill their financial responsibility at the time of service, medical providers can simultaneously transfer the financial risk to entities such as banks that are in the business of lending and collecting money, and decrease billing-related expenses for the medical provider.
Additionally, the medical provider may also reduce frivolous malpractice claims filed solely to avoid payment by not having to collect from the patient after the time of service.
Obtain an accurate estimate of allowable amounts
It is critical for providers to use accurate estimates when collecting the patient responsibility, as inaccuracies can generate added follow-up expenses, such as refunds and bills, which may turn profitable procedures into losses. Since obtaining current allowable amounts directly from payers can be challenging, to say the least, providers should use software tools that assess historical data and estimate allowable expenses for specific payers and procedures.
When presenting the estimated allowable for a procedure, or collecting for a visit at the time of service, providers should use the interaction as an opportunity to educate patients so that they may better understand both their coverage and financial responsibility.
It is very helpful to provide handouts (bi-lingual) that clearly define key terms such as premium, co-pay, deductible, co-insurance, and allowable.
De-code the codes
Provider billing systems and CMS claim forms were traditionally designed for communicating with insurers, listing secret codes and meaningless usual and customary fees. CPT and ICD-10 codes are difficult for patients to understand, and the usual and customary billed charges only cause confusion.
Providers should include layman’s descriptions for codes, and a plain language calculation of the estimated patient responsibility, so that patients can understand why they are writing a check.
Simplify the collection process
For providers that collect from a patient following a procedure, rather than at the time of service, it is imperative to simplify the collection process; this not only maximizes revenue and reduces days in A/R, but also increases the likelihood that the patient will return for future visits.
Providers should look for opportunities to consolidate bills and improve collection communications, including: summarizing services alongside the status of insurance claims, clearly indicating what is due, providing multiple payment options - such as online and phone bill pay - to meet patients’ personal preferences, and providing contact information to engage with patients who have questions.
Discussing financial responsibility is a sensitive part of the patient-provider relationship, but by actively engaging with patients and resolving accounts with the least amount of hassle, healthcare organizations can go a long way in enhancing patient satisfaction, while improving their bottom line.