Healthcare Payments Optimization

by Mike Lichtenberger

Healthcare providers spend an estimated $282 billion annually on billing and insurance-related costs, according to a report by The Center for American Progress. Providers are collecting less and spending more money than they should. Denials, underpayments, and patient balances owed continue to increase, unpaid claims remain in collections, and there’s a lack of visibility into what is driving AR performance.

Simultaneously, patients’ ability to pay health care costs is declining with a 150% increase in deductible costs from 2009 – 2018, according to a Commonwealth Fund survey. In addition, the average out-of-pocket costs have increased by about 70%. What does this mean to practices and patients? More and more of the costs are transferred from insurer-paid to patient self-pay. The average family spends $6,000 out-of-pocket each year.

Optimizing revenue capture in healthcare requires proactive communication between providers and patients with transparency. To interact more efficiently, practice objectives should seek a more durable payment strategy through staff education and assessing their patients’ likelihood of payment while anticipating slow pay and potential bad debt. Facilitating provider-patient interaction is integral to bad debt avoidance.

The right revenue strategies – on recoveries from insurance, complex government reimbursements, and accounts receivable and denials management – can help you identify and capture money left behind.

To maximize payments, healthcare organizations should determine:

  • Patient obligations and terms for payments
  • How to improve communications, processes, and other billing strategies
  • What external resources can help expedite collections and recoveries

Increasingly, healthcare practices and payers are embracing electronic payments to strengthen revenue cycle management, whether accepting credit/debit cards, recurring payments, ACH check acceptance, or similar digital platforms. Traditional payment models are based on volume and are moving from reimbursing separate patient claims to network- or enterprise-level reimbursements. A provider may now receive a single-use virtual payment card for the sum of all patient billings with the insurer. 

But what about the rest? Healthcare providers will usually expect their patients to cover their financial responsibilities at the time of their visit, and, pending receipt of the insurers’ explanation of benefits [EOB,] they will issue a billing statement for any balances owed. This might include a co-pay and any unmet deductibles, which is when the office becomes a billing center to collect account balances and outstanding amounts owed.

Traditionally, healthcare organizations have found additional revenue opportunities by scanning their self-pay accounts for missed coverage. Self-pay accounts represent up to 60% of missed coverage. That’s a logical starting point. However, if you’re not reviewing all accounts for missed coverage, you’re leaving money on the table.

Patients are asked to present their insurance benefits card, but they may not know about self-pay, co-pay, and individual deductibles. Today, practice management software solutions can assess, in real-time, patient eligibility and benefit verification at the point of service and then charge a patient’s credit/debit card on file for out-of-pocket and non-insured costs. 

For the healthcare practitioner, it is about accelerating revenue.

For patients, it is about a frictionless experience at the time of service.

At the heart of payment, acceptance is the reduction of outstanding patient balances and the reduction of bad debt. According to one study by Aite Group, as much as 40% of patient responsibilities are uncollected.

To optimize healthcare payments, providers need an effective tool in practice management that would include integrating patient statements with EOBs, payment options at the time of service and afterward, in-office and remote [telehealth] payment options, and comprehensive patient education for payment management. The US healthcare system is complicated, and affordable care remains challenging for providers and patients alike. Billing rules and regulations change frequently and can cause revenue losses due to billing errors and revenue cycle failures.

Billing tips to maximize revenue include having a clear collections process with terms and conditions for patient responsibilities, managing claims properly and understanding the difference between a rejected claim and a denied claim, minimizing coding errors, handling denied and rejected claims with prompt appeals and resubmissions, finding ways to improve to implement proactive billing practices, and then tracking performance for efficiencies.

Given today’s economic realities and healthcare affordability, many patients are in high-deductible plans and focused on managing out-of-pocket expenses – especially for exclusions, unmet deductibles, and self-insured costs. Offering real-time information and collecting balances due at the time of service is becoming the norm in healthcare.

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