Know Your Patients, Not Just Their Insurance

Author: Rich Racioppi, Regional Sales Manager, SearchAmerica

continued from HFMA Visions, Issue 4

The HSA offers the advantage of stock-piling tax-free funds to cover out-of-pocket medical expenses until age 65, and they are teamed with insurance policies with high deductibles. The rationale is that when/if these individuals need medical care their portion of the bill will be much greater, often $10K or more, and a savings plan that allows funds to rollover each year will encourage fiscal responsibility and consumer choice.

Experts agree that the HSA is the most dramatic revenue cycle change to hit hospitals in more than 40 years.

Hospitals must face this new reality by changing their Point-of-Service (POS) processes and increasing the patient's understanding of their financial commitment before services are rendered.

The bottom line for hospitals is 'Know Thy Patient, Not Just Their Insurance.'

Reversing Today’s POS Processes
The registration process has been designed to efficiently retrieve patient information for clinical and billing needs. Co-pays are usually the only collections performed at the POS, leaving most of the consumer’s responsibility until after the insurance claim has been fully processed.

The flow of today's billing processes is to accumulate a patient's healthcare costs during their visit, submit the claim to their insurance company, receive insurance adjustments and payment, and bill the patient for any outstanding responsibility.

Today's higher deductibles make the consumer's portion of the bill much greater. Large receivables remain unpaid until the final stage of the current process; often weeks after the services are performed. This delay increases a hospital's accounts receivable and strains its cash flow.

What if the process was overhauled and the patient paid their bill (or a significant portion of it) upfront with their HSA or other funds?

A hospital's collections could be avoided, or at least minimized, cash flows would be more stable, and patients would be aware of the costs of their healthcare choices prior to receiving service, when adjustments could be made if needed.

The good news is that as HSAs mature and become more prevalent, patients will be better equipped to pay their portion of healthcare costs at the point of service (POS), even in emergency situations. Unfortunately, this will take time for account balances to grow.

What Should Patients Pay at POS?
This is the million dollar question. The answer is that it depends on the patient. Some patients are good credit risks, some are not. Hospitals should ascertain the patient's medical credit score and related information to understand the probability of that patient paying their hospital bill on time.

It is just as important to understand the patient's ability and willingness to meet financial commitments, as it is to enter their insurance coverage correctly.

For example, high probability of payment patients should experience more lenient onsite collection procedures, as hospitals can expect full payment on the first billing. Lower probability of payment patients should result in predefined workflows. Each workflow should secure a portion of the patient's bill at the POS and/or direct the individual to a financial counselor to discuss the hospital’s payment options.

Payment stratification at POS has resulted in significant returns for dozens of hospitals, reducing aging of accounts and improving cash flow. Some examples:

• Integris Health – received payment from 'high likelihood of payment' patients 92 percent of the time within the first two collection attempts. 98 percent of the time, payment is received prior to an account going to a collection agency for further efforts.
• Resurrection Health Care – improved collections by 10-25 percent with focused, stratified collections.

Patients with a well-funded HSA should be equipped to make payments immediately, and a hospital's billing process should send statements to these individuals more rapidly for faster collections.

No one would dispute that the financial and clinical responsibility for one's health is more and more under the direct supervision of the patient themselves. Today's higher deductibles, new savings plans such as the HSA, and technology to stratify patients according to their payment probability, offer hospitals the incentive and ability to customize their financial interactions with each patient. Networks that improve their knowledge and interactions with the patient as an individual at the onset position themselves for a mutually beneficial relationship.

Rich Racioppi has more than 15 years of experience working with leading healthcare networks to streamline and improve their revenue cycle and patient relations. SearchAmerica leads the industry financially clearing patients using address verification, prediction of payment, and automated screening for charity, Medicaid, and other government programs with its Software-as-a-Service (SaaS) solutions.