Slideshow The Changing Landscape for Health Care Payments

  • May 15 2012, 12:35pm EDT
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The Changing Landscape for Health Care Payments

InstaMed, which operates a national payments network for more than 200,000 provider organziations, recently released data gleaned from providers, payers and patients about industry-wide trends in health care payments and revenue. Following are a few of the significant findings.


In 2011, the U.S. health care payments market was projected to grow to an estimated $2.7 trillion, as a total of both payer and patient payments. Of the two, patient payments are growing the fastest due to the rise in health care consumerism.

However, while providers are relying on patients for an increasing portion of their revenue, they face challenges with collecting: providers wrote off an estimated $65 billion in patient bad debt in 2010. Likewise, payers face problems with the administrative costs of the paper-intensive payment process, which contributes to inefficiencies that collectively cost them $300 billion each year.

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Growth in EFT

The growth in the use of electronic funds transfers has been significant in the past few years; in 2011, the transaction count of payer payments disbursed via EFT was 68% for all payer payments, compared with 51% in 2009.

Still Hooking Up

However, 63% of the 2,000 payers polled for the survey said less than half of their provider networks accepted EFT in 2011, and 67% of payers said less than half their networks accepted electronic remittance advice.

For their providers that did not accept EFT/ERA in 2011, 48% of payers said the primary reason was that providers did not have the tools/technology, and 43% said the providers preferred to receive paper checks and/or remittances.

Payer/Provider Payment Issues

When asked about their top issue dealing with their provider networks in 2012, 45% of payers said it was contractual issues and 40% said it was reimbursement models.

When asked about their top issues with providers regarding claim remittances and payments in 2012, 45% of payers said it is claim adjustments and prior payment reconciliation, and 40 percent said it is reconciliation of claim remittance and check/EFT payment.

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Patients Picking up the Tab

Patients were responsible for paying 26% of their bills in 2011 in the form of co-pays, deductibles, balance billing and self-pay. That’s up from 21% in 2009.

And they’re increasingly doing it online: In terms of gross dollar payments, 12% of all patient payments were made online in 2011, compared with 4% in 2009.

Patient Sentiments

* 32% of patients said they did not know their payment responsibility before leaving the provider office.

* 92% of patients said they received their health care bills via mail and 8% said they received their bills via e-mail.

* 55% of patients said they normally paid monthly bills, such as utilities or cable bills, online.

* 70% of patients said they would be interested in paying their health care bills online.

Payment Plans

Sixty-three percent of patients said that if they had the option of paying their health care bills via a monthly payment plan, they would use this option.

And the number of patients opting to use payment plans jumped dramatically; From 2009 to 2011, the number of payment transactions made via payment plans on the InstaMed Network increased by 100% on a cumulative basis, showing that, when payment plans are offered, patients are willing to make payments using this method.

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Big Shift in Provider Concerns

When questioned about their primary revenue cycle concerns in 2012, 35% of providers said they were primarily concerned about a decrease in payer reimbursement, 20% were concerned about the increase in patient responsibility, 17% were worried about days in A/R, and 16% were concerned about changes associated with ICD-10.

That’s a big shift from 2011, when 30% said they were primarily concerned with days in A/R, 27% were concerned about increases in patient responsibility and 20% about the decrease in payer reimbursement. In addition, only 8% were concerned about changes from ICD-10/HIPAA 5010 in 2011, a number that doubled in 2012.

Point of Service Payments

In 2011, 82% of providers said they had a mechanism in place to collect payments at the point of service, up slightly from 79% in 2009.

Of the 18% in 2011 that did not have the mechanism in place, 30% said it was because the patient responsibility was unknown at the point of service, 18% said because there was no point of service (such as treatment by an anesthesiologist) and 14% cited patient resistance.

All in all, even if they had a POS mechanism in place, 45% of providers said they did not know patient responsibility during the patient visit.

Collection Conundrum

In 2011, 81 percent of providers said it took more than one month to collect from a patient after claim adjudication; in addition, 8% said it took three to four months, and 9% said it took more than four months.

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Methodology, More Info

The payer data for the InstaMed research comes from respondents representing over 2,000 payer organizations. The group of survey respondents comprises 43% third-party administrators; 33% Blue Cross Blue Shield plans; 13% regional payers; and 5% health maintenance organizations.

The provider feedback comes from respondents representing over 10,000 health care providers. The group comprises 72% medical practices or clinics; 12% durable medical equipment providers, labs or other offices; 10% billing services; 5% hospitals, health systems or integrated delivery networks; and 1% ambulance services and managed service organizations.

The patient data comes from respondents representing over 200 patients nationally who visited a health care provider in 2011.

More info is available at