As health insurance deductibles rise, healthcare organizations are increasingly responsible for collecting larger amounts of medical bills from patients. It's a new world for most organizations, which are ill-prepared for the demands of working out payment arrangements with patients.

However, providers are adopting technology and adjusting workflows to improve the patient collection process to limit the financial risks.

"Insurers have put more of the weight on patients, who have higher deductibles, passing the cost on to consumers," says Tim Ledbetter, director of revenue cycle operations at Granger Medical Clinic in West Valley City, Utah. "Because of the burden of co-pays and deductibles, it costs more now to collect, whereas in the past it fell on the insurance side and was relatively straightforward. Now, it's the patient's responsibility."

"Patient responsibility has been growing significantly year over year," says Jeff Lin, senior vice president of product management at healthcare payments vendor InstaMed. Lin argues that increases in consumer payment responsibility and out-of-pocket payments are driving a greater need for transparency from providers.

InstaMed, the healthcare payments network, serves more than 1,500 hospitals, 70,000 clinics and practices, and 100 billing firms, linking them to more than 3,000 payers. The company's fifth annual report on healthcare payment trends released earlier this year found that nearly 20 percent of consumers have unpaid health bills, a result of an unfamiliar and confusing payment process. Some 72 percent of providers indicated that it took more than one month in 2014 to collect on bills. In addition, 75 percent of providers in the study said that it takes more than one billing statement to collect a consumer payment.

Adjustments in billing

To address this new reality, Granger Medical Clinic builds more time into its billing cycle, enabling the organization to issue multiple patient statements. Unfortunately, it can take three billing statements and a final letter before the clinic makes progress on collecting a payment.

"We're talking about 90 to 120 days before it goes to collections," Ledbetter says. "Cash flow is king, and it's very difficult in today's environment to collect within that timeframe without having some type of deductible conversation up front."

Part of the problem is that 63 percent of patients in the InstaMed survey said they did not know their payment responsibility before they received care from a provider. Consequently, Ledbetter recommends having those conversations with patients about deductibles as soon as possible in the process. Nonetheless, he cautions that one of the challenges is competition among medical practices vying for patient business and different payment policies.

"Our physicians are very concerned about today's market and deductibles," he says. "If you ask a patient to pay a deductible up front, they say 'Well, the other doctor down the street doesn't ask me, so I'm going to go there instead.' There's this inherent fear of losing patients."

Payment plans

The best approach is a program in which practices talk about deductibles and copayments in such a way that they get a future commitment for payment, he advises. Granger Medical Clinic sets up 12- and 18-month payment plans, which Ledbetter describes as an effective solution.

InstaMed's latest study found that, with the increase in consumer obligations for medical expenses, more providers like Granger are enabling consumers to pay larger balances over time through automated payment plans. These plans reduce collection time and costs by eliminating paper statements and follow-up phone calls. Not surprisingly, InstaMed's study found that the total number of annual transactions for payment plans grew by 314 percent from 2011 to 2014-a trend it sees continuing.

Granger now has about 140 physicians in its practice, and it expects to have more than 200 by the end of the year. "Providers in today's market cannot survive on their own, and doctors are joining groups to share the overall costs of the industry," says Ledbetter, who adds that physicians run their practices independently but take advantage of the "economy of scale" through shared revenue cycle management and administration as part of a larger group.

With 58 percent of providers in InstaMed's report revealing that their primary revenue cycle concern is related to consumer collections, providers are looking to technology to help remedy inefficient, disjointed payment processing and costs associated with paper-based billing and administrative processes.

The New Realities of Collections

"We are bringing in technology to help with patient collections," says Granger's Ledbetter, including cost estimator tools "that let patients know exactly what they're going to pay so they are not surprised by the total amount. Estimators are great because they put information in front of the patient and get the two parties talking."

Ledbetter adds, "We get a commitment up front from patients, and they don't have to pay until the insurance companies come back with their explanation of benefits, which gives them 30 to 45 days in the future before they start on their payment plan."

Patients of Granger Medical Clinic can access their billing statements electronically and pay them through the group's patient portal. Increasingly, patients are looking for ease of payment over the phone and online. In fact, according to InstaMed's 2014 Trends in Healthcare Payments report, 93 percent of consumers want to pay their healthcare bills online.

"It's all about educating the patient and letting them know at every stage that we're available for them," Ledbetter says. "What we're asking for is the promise of payment, not necessarily the actual payment. The patient gives us a commitment in the future by giving us a credit card number today. It's a great way to reduce our costs so we're not processing patient statements multiple months at a time. We're just trying to collect a few dollars."

"It's not about collecting it all up front," agrees Lin, who says that last year, 71 percent of providers said they offered payment plan options to their consumers. At the same time, as providers are saving credit card numbers linking to patient bank accounts for automated payments, he advises that they have solid security safeguards in place.

"We're hearing a lot of issues with data breaches and information being compromised," he says. "You have to make sure it's secure. It's great to make patient collection simple and convenient. But the moment you have a breach, you compromise the trust of your patients and everything is negated."

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