Imagine a district manager for a large appliance store chain reviewing her territory's numbers for the quarter. She sighs and notes that her checkout clerks only collected the correct amount due about 50% of the time.
Moreover, the clerks often failed to inform purchasers about their payment options, such as: credit, layaway, discounts for meeting certain qualifications, special offers and more. Further, 30% of the time the store clerks did not gather and/or validate accurate contact information for those purchasers who had set up payment plans, meaning the store chain lost even more money because bills were being sent to incorrect addresses. More and more, the store's customers are writing complaint letters that lament the chain's confusing policies, unclear charges and inconsistent payment options.
Now stop imagining. We know these situations don't happen within a large retail chain's revenue cycle today. No store allows money slip away like this because point-of-sale systems run smoothly and efficiently and clerks know how to handle most (if not all) customer interactions.
Conversely, we know that these scenarios are par for the course for many healthcare service providers that lack appropriate commitment, technology and processes to deal with healthcare's new "retail-like" environment, in which individuals are assuming more and more financial responsibility for their healthcare. Due to this changing structure of this financial responsibility, many hospitals and other providers are struggling to keep up because they have never changed their upfront collections processes to enable them to accept patient payments at point of service.
In the past, the primary payors in the healthcare industry were either private or public insurance organizations, and healthcare providers' systems were built specifically to bill and accept payments from these payors. This worked out fine until the portion due from the patient began to make up larger percentage of accounts receivable, which in turn led to more individuals being unable to pay and, subsequently, an increase in bad debt for most healthcare facilities.
10 Strategies to Get Patients to Pay
Today providers leave money on the table for one simple reason: They don't focus on the front end.
To help healthcare financial leaders obtain the payments due, get their balance sheets back on track, ensure all processes are handled fairly and guide patients through the payment system, here are 10 front-end strategies to help your hospital find the money:
1. Don't forget about COBRA. With today's high unemployment numbers (10% as of Dec. 2009), be sure to remember the COBRA continuation health coverage benefit as a source for reimbursement. Every employer with more than 60 employees must offer COBRA to those let go. If a patient tells you "I lost my job and I don't have insurance," find out if COBRA is an option. Proceed with educating the patient on the COBRA benefits, possibly assisting with COBRA premiums, and filing appropriate claims. Instead of immediately writing these accounts off as bad debt, you may be able to ensure your facility receives appropriate payment for services and provide great customer service in the process.
2. Apply for all federal and state assistance. In 2005, CMS allotted $250 million per year for 2005-2008 for compensation of emergency services for undocumented patients. By December 2009, only 17 out of the 50 states had exhausted these Section 1011 funds. Dedicate resources to staying informed of such programs.
3. Consider credit card options. If you haven't already, set up a system to accept patient payments at pre-service and point of service in the form of cash, check, credit card and debit card. Further, look for a payment processing solution that allows you to either post a one-time payment to a credit card or to negotiate and set up ongoing payment terms with the patient via automatic debits.
This results in recurring payments that are automatically posted to the patient's account over a set number of months via an Automatic Clearing House (ACH). You know what's coming and when it's coming, and you allow patients to tailor their own payment plan according to your business policies and rules.
4. Focus on federal/state program enrollment. As we've seen and will continue to see, the current economy and high unemployment numbers increase the number of patients eligible for federal/state program assistance. By some estimates, one in four uninsured patients is eligible for aid, but is not enrolled. Establish systems that ensure every eligible patient receives appropriate services.
Healthcare providers often unnecessarily write off cases as bad debt or charity care, a policy that has been accepted as standard practice in place of a more proactive approach: helping these patients obtain financial assistance and, in so doing, increasing your net revenue and improving customer service. Medicaid programs that cover children, assistance for Part B coverage for Medicare patients, and other such programs all add dollars to your bottom line.
5. Don't discount discounts. Do you have a streamlined system in place to automatically screen patients for discounts—either because they are "prompt payors" or low-income uninsured? Prompt pay discounts allow you to get at least a portion of your money upfront by collecting payments during registration as opposed to post-service (recovery rates for this process range between 80%–100%). After discharge, the likelihood of collecting outstanding debts drops to less than 40%.
Consistent discounts for low-income uninsured patients eliminates the risk of expensive lawsuits, and is just good business practice, as lawmakers and consumer advocates have taken action to ensure that low-income Americans are charged fair prices for their care and are protected from aggressive debt collection practices.
6. Don't assume charity is only for the uninsured. Don't automatically jump to the conclusion that charity care is only for the uninsured. These days, even insured patients struggle with their healthcare bills. With ever-rising deductibles and co-pays, your insured patients simply may not be able to cover their portions of the bill. One way to address this increasingly common scenario is to include your insured patients in your charity care review; some of them may be eligible depending on their income level and the amount due, and you may not have to write off these patient-due amounts as bad debt.
7. Stop elective services bad debt. This is a proactive, easy-to-implement policy that can help hospitals improve their revenue cycle. For patients with elective services scheduled, contact them in advance of their appointment to inform them of their expected financial responsibility, in addition to rescheduling (or canceling) those procedures that may be elective and cannot be paid for.
Set up a front-end process that allows your staff to easily review the financial expectations of the hospital with the patient or guarantor prior to the date of service and be sure to establish proper financial arrangements for the account to be paid. Following through on this suggestion can nip your elective services bad debt in the bud.
8. Properly process non-emergent ER patients. Reviewing financial expectations with non-emergent ER patients (including "frequent fliers") will often result in those individuals seeking care at a free clinic, primary care office or other more appropriate venue. Implement a front-end solution that allows your ER staff to proactively discuss fees and care options once the patient has been properly medically screened (according to EMTALA guidelines). Make sure all patients (even in the emergency room) are discharged through the business office. Understand the full meaning of EMTALA and put appropriate policies in place.
9. Verify insurance at every visit. As plans are changing, and people are dropping coverage or opting for higher deductibles due to the economy, point-of-service staff need to put major focus on this step. Unfortunately, it is one task that remains especially error-prone and time-consuming. Often, systems don't provide the benefit information in a usable format for the registrar or financial counselor. Although delivered electronically, many require staff members to print a cumbersome 15-page report (or more) to try to determine benefits. Finding and implementing a streamlined, real-time insurance verification solution that is integrated with your business policies and the patients' information can go a long, long way in righting the old insurance verification wrongs.
10. Know your patients. Understanding your patients' capacity to pay is a critical step in today's healthcare revenue cycle. Hospitals must know the overall (as well as individual) financial demographic of their patient base in order to properly, and consistently, handle financial accounts. For example, in 2008 about 9 million of the uninsured in America were in households with incomes greater than $75,000. That's a piece of information that can help your facility identify patients who may need extra financial guidance when they arrive at your facility. Providers need real-time, accurate tools to identify truly needy patients and help them down the right road toward obtaining assistance or charity care.
Irene Barron is chief operating officer and product management officer of nTelagent, Inc. Barron has more than 25 years of experience in business office operations and revenue cycle management, with extensive knowledge of registration, insurance billing, collections and reimbursement, as well as overall monitoring and reporting of accounts receivable.
