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.