Patient Responsible Balances: Healthcare’s Neglected Opportunity

Strategies to capitalize before and after the patient appointment

By Matt Rolfes, President and CEO, MedEvolve
Twitter: @MedEvolve

The shift toward greater patient financial responsibility is not slowing in healthcare. This trend—predicted by experts and underway for several years now—continues to tilt the reimbursement scale away from insurance claims and onto the patient.

This change requires a shift away from the traditional provider-to-insurance relationship to a more consumer-driven relationship where convenience and customer service will dictate the patient’s overall satisfaction with their experience. Patients will demand to have the highest levels of customer service and great medical outcomes—the results of which could ultimately determine if a provider is paid for the patient-responsible portion or not.

Multiple factors are converging to create a perfect storm of patient financial responsibility. Growth of high deductible health plans (HDHPs) continues to up the ante on copays, leaving many patients in a “self-pay” situation. A recent KFF report found that the average annual deductible for an individual with a HDHP and health reimbursement arrangement in 2020 was $2,195, and the average out-of-pocket maximum was $4,458. Further, the report noted that COVID-19 exacerbated the “self-pay” situation as many employees lost jobs and became uninsured.

While this reality has been evolving for a number of years, many practices have yet to employ strategies that ensure proactive and timely collection of patient responsible balances. Another 2021 report revealed that providers currently only collect 55% of what is owed by patients. Notably, our team is seeing a 35% increase in patient debt across physician groups, and many provider organizations are operating with greater than 75% of accounts receivable over 60 days. Physician practices across the United States write off tens of millions in potential income each year to bad debt, much of which could be preventable.

The good news is, there is significant opportunity for improvement. Teenagers to seniors are equipped with Apple and Android phones, and regularly use mobile technologies in banking and retail applications. The healthcare industry has been somewhat slow to adopt the use of web and mobile technologies, although these can be an important enabler of financial clearance strategies and can reduce the cost of front-end and back-end processes. Practices that implement appropriate front-end and back-end processes via optimal financial clearance, convenient ways to pay and financial counseling strategies are poised to significantly improve bottom-line performance.

Before the Appointment: Assuring that Patients Understand their Insurance and Financial Responsibility

As a business owner, you know that getting a surprise invoice from a vendor is aggravating at best. Patients often feel the same way when they receive an unexpected bill from a physician. In either example, a good explanation is warranted before payment is rendered. Patients benefit from having more information up front about what they can expect to pay, how they can pay and when. Plus, this lays the foundation for a better physician-patient relationship: patient gets the care they need, and the doctor can continue their mission to serve the community by remaining financially viable.

A 2019 KFF report suggests that most people want to be in the driver’s seat when it comes to their healthcare financial obligations. The survey found that 92% of consumers want to know payment responsibility prior to a provider visit, and 74% are confused by the Explanation of Benefits (EOB) provided by their insurer.

Equipping patients with this information early naturally enhances the overall patient financial experience. It also improves the chance of capturing this revenue pocket and improving a growing problem in today’s physician offices—increased bad debt.

Securing a financial commitment from a patient prior to service has become essential as practices try to recoup losses that resulted from the 2020 COVID-19 pandemic and position for future sustainability. Healthcare is one of the only remaining direct-to-consumer industries that will allow a consumer to receive a service without any payment at the time of service. Fifteen years ago, when patient financial responsibility was much lower, missing out on the patient responsible portion of the fee may not have been material to a physician’s income. Today not addressing the change in your payer mix can cost you millions.

Phone or text outreach along with web-enabled check in applications can work in tandem to verify insurance and co-insurance, identify missing demographics information, confirm insurance benefit coverage and estimate patient liability. Equipped with the right information, front-end staff can produce procedure cost estimates and secure all or a portion of the expected patient balances up front. If a practice wants to provide payment options, they could setup a payment plan before the patient arrives for a service which could allow for the full balance to be prepaid. In addition, administrators should be identifying patients on the schedule who have a previously unpaid balance and attempt to secure payment prior to seeing the patient again.

If there is hesitancy to engage with a patient on previously owed balances, physicians should remind themselves that the money collected from all payers supports the mission of the practice. Patients appreciate great medical care and are typically willing to pay their share to support the doctor they love.

After the appointment: The Power of Financial Counseling

When payments are not fully secured on the front-end, it’s important to have back-end processes in place that ensure capture of revenue owed by patients. This is where outreach strategies that incorporate financial counseling come into play.

A tricky area for many practices, the key to success with back-end collections is the ability to communicate with patients and reconcile balances while maintaining positive experiences. That’s why optimal financial counseling strategies bring together empathetic, knowledgeable counselors and flexible payment options—from the standpoint of both payment plans and multiple options for bill pay.

The singular reliance on in-house staff to reach out to patients by telephone for payment often achieves lackluster results for the amount of effort put in. Consider that 97% of adults in the United States have a cellphone device, and 92% of adults over 65 have a cellphone (Pew Research). Mobile technologies give nearly on-demand communication with patients of all ages and are increasingly an expectation within the framework of healthcare experiences. A recent Trends in Healthcare Payments report suggests that 85% of consumers prefer an electronic payment for medical bills. A significant part of any financial counseling strategy is the use of secure text, email and cellphone communication.

Identifying your patients preferred communication method—whether by phone, email or text—not only increases the likelihood of receiving a payment but also improves patient satisfaction. If you don’t have communication preferences stored in your practice management software, there are third party services available that can assist.

The right technological infrastructure and digital tools can vastly improve the ability of today’s physician groups to proactively communicate and educate patients about their healthcare costs. When these strategies work in tandem with optimal workflows, revenue cycle processes become stronger, delivering significant ROI to both the bottom line and patient experience front. Forward-thinking physician practices should consider both financial clearance and financial counseling strategies to improve business and operations now— creating an open dialog with their patients — and positioning for long-term sustainability.