January 30, 2015 •Brian Watson
With the growing popularity of high-deductible and consumer-directed health plans gradually shifting revenue operations towards a retail-based model, providers will increasingly need to pursue financial and engagement strategies that more closely align with the needs of consumer-minded patients.
Although just 26% of workers are currently covered by a high-deductible or consumer-driven health plan, their popularity with employers is growing quickly.
For example, eighty-one percent of large U.S. employers said they would be offering at least one consumer-directed health plan to employees this year, up from 72% in 2014. And one-third of companies said that a consumer-directed health plan is the only option they will offer employees in 2015, a year-over-year increase of 50%.
But it’s not just patients covered by employer-sponsored plans that are facing higher deductibles. Anywhere from 60% to 80% of plans available through Healthcare.gov exchanges in 2015 can be categorized as high-deductible options.
The unsurprising result of this trend is that the portion of healthcare costs shouldered by patients continues to steadily increase. The average general annual deductible for an employee with single coverage was $1,217 in 2014 – up 70% since 2006.
Moving From Patient to Consumer
Money is an effective motivator. So it’s no surprise that patients are quickly becoming seasoned healthcare consumers.
Research suggests that patients enrolled in a high-deductible plan are more likely to show consumer-like behavior: checking to see if insurance covers specific encounters or treatments, intentionally opting for generic prescription drugs over more expensive alternatives, and investigating the costs of care prior to service.
For more and more patients, evaluating treatment options is no longer a passive endeavor. Instead of following physician referrals and assuming insurance will cover most of the cost of care, these patients are now shopping for elective or non-emergency procedures like they would day care, a new car, or roof repair – carefully evaluating different options to find the best combination of cost and quality.
And that has a number of far-reaching consequences for providers – from patient engagement, to financial performance, to marketing efforts.
In the rest of this post, I’ll present four simple, patient-friendly statement processing and bill payment strategies your organization can use to embrace healthcare consumerism and improve revenue cycle operations.
Increase Transparency
Nearly two-thirds of Americans are consistently surprised by their medical bills – with 62% reporting that they were either sometimes or always confused by out of pocket costs, according to a 2014 TransUnion patient survey. Yet only 25% were offered a pre-treatment cost estimate.
That type of disconnect often leads to revenue cycle issues that go beyond the discussion of healthcare consumerism. Patients that haven’t been made aware of their financial obligation are frequently unprepared to pay an outstanding balance – increasing providers’ bad debt levels and leading to additional financial stress and strain for consumers.
More to the point of this article: consumerism simply doesn’t work without transparency. To accurately compare cost and quality for similar services among providers, patients need access to information that is up-to-date and easy to digest.
Over 40 states currently make information on charges and repayment rates available to the public. And in 2014, the Center for Medicare and Medicaid Studies began posting average cost information for services related to the 100 most common Medicare inpatient stays.
While that’s a good start, more deliberate action is needed.
Because transparency is something that patient are demanding – regardless of coverage type. More than 8 in 10 Americans report that upfront cost estimates would have a positive impact on their decision to use a provider. That ranks alongside clinical factors, like accurate diagnosis and bedside manner.
To meet the need of consumers, providers are increasingly turning to tools and strategies that provide patients with the information they need to make smart treatment decisions.
• Real-Time Adjudication
Collecting and verifying patient insurance and demographic information at all points in the treatment process – during scheduling, at treatment, and post-discharge – enables providers to offer patients a custom snapshot of out-of-pocket costs that’s essential for discussing financial obligation.
• Payment Estimates
Providers can increase transparency by offering patients personalized payment estimates for common procedures. In addition to provider-directed estimated, many organizations are offering self-service online cost estimation tools that provide custom pricing based upon a patient’s insurance.
Payment estimates not only help patients more accurately compare treatment options, they’re also a good way for providers to move collection tasks from post-discharge to during admission, in-patient, or at discharge – increasing the likelihood of a positive payment outcome. Additionally, point-of-service payment also reduces the cost to collect, as statement print and mail ops and targeted staff outreach can be eliminated from the process altogether.
Expand Financing
In order to quickly and easily collect from patients in a retail setting, providers need to upgrade point-of-service collection and financing tools. And that goes beyond card swipes and eCashiering systems.
One in four families struggles to pay medical bills, according to a 2014 National Center for Health Statistics study. To support retail collections, health organizations need to ensure that they have financial policies that are sophisticated enough to meet the needs of all patients – those that can easily pay out-of-pocket responsibilities as well as families that might struggle with the financial burden.
• Interest-Free Line of Credit
Interest-free payment plans provide patients facing high out-of-pocket costs with a fair, affordable way to pay an outstanding balance over a period of time – without the hidden fees and high interest rates of healthcare-specific installment loans or credit cards. Under this type of arrangement, a patient’s credit score isn’t affected unless they default on payment.
Not surprisingly interest-free payment plans are well-received by patients, as they provide a budget-friendly way to manage the financial impact of a large, unexpected payment. They also make solid financial sense for providers – helping to reduce defaults, lower administrative overhead, and increase collections.
Improve Outreach
Many providers are caught in a difficult revenue crunch.
As healthcare consumerism continues to take hold, more and more patients are actively shopping among treatment options for the best combination of cost and quality – putting additional strain on already thin margins.
Hospitals especially are in a tricky position. For patients covered by high-deductible plans, cost often trumps quality – especially for non-emergent services like vaccines, diagnostic testing, and routine screening. Competing with freestanding providers and retail competitors like CVS and Wal-Mart on price alone is often a losing proposition.
Given the stakes, it’s more important than ever for healthcare organizations to implement an integrated engagement strategy. That includes emphasizes both the non-price ‘intrinsic’ benefits of your organization – quality awards and recognition, staff expertise, and emerging medical procedures and technology – as well as competing on price with targeted discounts and promotional offers.
• Trans-Promotional Statements
Patient financial communication is a simple, high-ROI marketing channel providers can use to efficiently increase demand for specific treatment options and value-added services, like classes or health screenings. By using open space on patient statements and letters to promote targeted marketing offers, providers can leverage existing processes to reach a captive audience and boost share-of-wallet spend – without increasing costs.
Emerging data management and variable statement printing technologies are helping providers do more to reach patients with trans-promotional messaging. Best-practice examples include:
- Targeting and personalizing offers based upon the unique demographic profile of the recipient – for example, delivering a heart screening to one patient segment and an offer for flu shots to another.
- Integrating full-color, attention-grabbing marketing graphics, instead of simple, plain text-elements.
Build a Better Billing Process
High-deductible and consumer-driven plans don’t just change the way patients shop for and compare treatment options. They also increase the opportunity for billing confusion and frustration, as patients become a more active part of the payment process.
Managing payment becomes much trickier when patients have to track both what a procedure will cost and how it will affect their deductible status or HSA balance.
Smart statements, multiple easy-to-use pay channels, and tools that help track and analyze patient spend will be increasingly critical in this new revenue environment.
• Post-Encounter Letter
Post-encounter letters help set patient expectations for the billing process. Providers often introduce financial assistance policies, verify patient insurance information prior to initial statement print and mail, and introduce payment channels – such as the steps to register for an online payment portal.
• Patient-Friendly Statements
Clearly communicate key billing and payment information, insurance paid and pending, payments that the patient has made, and what is owed out-of-pocket.
• Billing Glossary
Even patients with high-deductible or consumer-driven plans often struggle with common billing and payer terms like deductibles, coinsurance, co-pays – and how they relate to what is actually owed out-of-pocket. Including a billing glossary or list of frequently asked questions can help head-off potential issues.
• Multi-Channel Payment
Accelerate the payment process by giving patients the ability to pay bills using the channel they are most comfortable with – by mail, via the phone, online, or from the mobile device.
Conclusion
The growing popularity of high-deductible and consumer-driven health plans continue to increase the amount of revenue providers receive from direct patient sources.
One consequence of this trend is that more and more patients are shopping a number of different providers to find the best combination of treatment quality and cost.
From a patient financial perspective, providers can meet the challenge posed by consumer-like patients by:
• Increasing cost transparency through real-time adjudication and personalized payment estimates;
• Expanding financing offered, including payment plans with no-interest lines of credit;
• Better engaging with patients via trans-promotional statement messaging;
• Providing patient statement and financial communication that is easy for patients to understand.
What patient financial strategies are you introducing to better meet the needs of patients covered by high-deductible plans?