Strategies on How Providers Can Reduce Bad Debt in 2020

Hospitals today are struggling with increasing bad debt. They are struggling to collect payment from uninsured people, and with the rise of high deductible health plans, they are also being snubbed by insured patients who can't or won't pay skyrocketing out-of-pocket costs.

Bad debt refers to patient debt that is considered unrecoverable. Providers may report bad debt when unemployment or bankruptcy prevents patient payment, according to a new accounting standard that changed the definition of bad debt in 2018 — called the Revenue from Contracts with Customers (or Topic 606).

In 2018, 11-hospital Piedmont Healthcare had $250.7 million in bad-debt expense (about 8% of its $3 billion revenue that year — up from 6.5% of revenue in 2017). According to the American Hospital Directory, the national average for bad debt expense as a percentage of revenue for US acute care hospitals in 2018 was 1.73%.

A survey of 100 hospital executives conducted by Sage Growth Partners in 2018 revealed the following:

  • 36 percent of executives reported their health systems face more than $10 million in bad debt
  • 6 percent reported bad debt of over $50 million
  • About half of these executives indicated their hospitals could recover more than 10 percent of what they’re owed

As of 2018 data, hospitals have provided $41.3 billion in uncompensated care (i.e. care for which no payment was received from the patient or insurer). Uncompensated care is the sum of a hospital's bad debt and the financial assistance it provides (charity care).

According to a study from TransUnion, more than two-thirds of patients are also not paying their entire hospital bills, and that number could increase to 95 percent by 2020.

Reducing bad debt continues to be an uphill battle that hospitals face. Hospitals have employed a variety of strategies to address this concern, including point-of-service collections (with some hospitals requiring 25% upfront payment). Other strategies include providing enhanced technology for better cost estimates and offering low-cost financing or payment plans.

Patient Financial Education

A common feature among the different strategies is educating patients about their financial responsibility. Providers can give their patients a huge amount of support just by educating them about the portion of their medical bill that is their responsibility and taking into account the specifics of their insurance plan (what is and is not covered by their health insurance). Also, letting patients know which providers, services, and facilities are in their insurance network.

Providers should seize the opportunity to educate patients in the pre-registration process, informing patients of their responsibility. By engaging patients early in the process, hospitals avoid potential miscommunications regarding scheduling, collections, bad debt, and ultimately payment. A patient who knows what they are paying and why will have a better experience.

Sufficiently Identify Charity Care and Potential for Bad Debt Up Front

Healthcare providers often have difficulty in distinguishing bad debt from charity care. If hospitals identify patients who are eligible for charity care early in the process, hospitals can spend less time pursuing bad debt and more time focusing on high-level concerns.

With 501(r), non-profit hospitals are required to make “reasonable” efforts to determine whether or not a patient is eligible for charity care before engaging in “extraordinary collections” against the individual. Failure to fully adhere to the 501(r) requirements can result in the hospital losing tax-exempt status.

Depending on a variety of factors, including whether a patient completes an application for financial assistance, care may be classified as either financial assistance or bad debt. Even when hospitals have streamlined documentation requirements for charity care eligibility process, patients fail to fill them out.

Here are some reasons:

  • There may be language barrier problems
  • Some patients are just plain embarrassed and don’t apply
  • Some patients think charity care doesn’t apply to them
  • Some patients are unaware such an option exists

The challenge lies in finding out who qualifies for charity care within the steady flow of patient accounts (hundreds or thousands of new accounts every day). It is estimated that about 20% to 30% of bad debt could have been handled by diverting to charity care or other payers (e.g. Medicaid, marketplace exchanges, disability insurance, third-party payers, etc.), offering patient discounts, charging to available credit balances or offering extended payment arrangements, nonrecourse loans or other financial options.

Here are other points to consider:

  • Providers need to proactively keep charity out of bad debt.
  • Put in place processes to identify who can and cannot afford to pay in order to anticipate whether the patient’s care needs to be funded through an alternative source.
  • Providers should also continue efforts to identify patients who are unable to pay during the billing and collection process.

Leverage Data Analytics

Many hospitals are turning to predictive analytics to make valid assumptions about who is likely to be eligible for charity care. By using third-party data, hospitals can also identify which self-pay accounts can be pursued for collections and which accounts are presumptively eligible for charity care.

Leveraging data analytics can also enable a hospital’s financial counselors to provide consistent (unbiased) and efficient methods for identifying which patients are eligible for financial assistance.

Using data analytics allows hospitals to accelerate the segmentation of aged self-pay accounts into different buckets: for payment, for charity, and for bad debt. By segmenting patients into the "charity bucket" even as early as pre-service, hospitals can cut down on bad debt and facilitate reimbursements for greater cash flow.


Keeping Up With Trends and Challenges Facing Nonprofit Hospitals

According to the American Hospital Association or AHA, 79 percent of the 4840 U.S. community hospitals today are nonprofit (59 percent are private nonprofit and 20 percent are operated by state and local governments). This means that these nonprofit hospitals may qualify for favored tax treatment under federal—as well as a variety of state and local income, property, and sales—tax laws.

In addition to tax exemptions, nonprofit status allows hospitals to benefit from tax-exempt bond financing and to receive charitable contributions that are tax-deductible to donors.

A study released in 2016 by Health Affairs revealed that 7 of the 10 most-profitable hospitals in the US are nonprofit hospitals, each earning more than $160 million from patient care services. However, current trends such as lower reimbursement rates, shift to outpatient care, growing merger and acquisition activity, and rising ambulatory competition has transformed the healthcare landscape.

For two straight years, expenses have surpassed revenues for nonprofit and public hospitals, creating instability and further pressuring hospital margins, according to the fiscal 2017 sector medians from Moody's Investors Service.

Yet there seems to be hope as falling margins have reversed course in 2019 according to Fitch Ratings, with median margins improving over 10% compared to last year. Although this would appear to be light at the end of the tunnel, the challenges facing hospitals will still likely continue in the future.

For example, hospitals across the board (whether for-profit or nonprofit) may find patients increasingly seeking financial assistance as patient financial responsibility increased 12 percent from 2017 to 2018, according to TransUnion. The popularity of high-deductible health plans and greater cost-sharing arrangements with health plans is adding more fuel to this trend as patients are forced to pay more out-of-pocket costs.

Keeping Tax-Exempt Status: 501(r) Compliance

With the IRS policing compliance with Section 501(r) of the Internal Revenue Code, nonprofit hospitals need to do more than ever to keep their tax-exempt status.

In 2017, the hospital industry took notice when for the first time, the Internal Revenue Service (IRS) revoked a hospital’s tax-exempt status because the hospital failed to perform a community health needs assessment (CHNA), adopt an implementation strategy and make it broadly available to the public.

There are four specific areas that nonprofit hospitals have to address to keep their tax-exempt status:

  • Establishing a Community Health Needs Assessment (CHNA)
  • Establishing financial assistance policy (FAP) and emergency care policy
  • Limiting the amounts charged to FAP-eligible individuals
  • Making reasonable efforts to determine eligibility for assistance prior to engaging in extraordinary collection actions

There are some common issues regarding 501(r) compliance which hospitals need to look out for since they may trigger the IRS to do a full review, impose fines, or worse even revoke tax-exempt status:

  • The CHNA is not updated or comprehensive enough
  • The hospital fails to adopt an implementation strategy
  • There is inconsistent or selective application of the hospital’s FAP
  • The plain language summary or PLS is not readily available or in appropriate languages

Ensuring compliance with the policies in different situations within a complex industry like healthcare is quite a big challenge. It would be helpful for nonprofit hospitals to appoint key individuals who will be responsible for monitoring compliance with Section 501(r) in the long-term.

Revenue Cycle Concerns

Nonprofit hospitals face the same pressures as for-profit hospitals, with shrinking volumes, smaller federal reimbursements and rising costs. One of the key areas most impacted by the 501(r) requirements will be your hospital’s revenue cycle management. At the core of these requirements is the patient’s financial health.

For example, the hospital facility needs to make sure the patient has an opportunity to apply for financial assistance for several months after discharge. When a patient is FAP-eligible, the hospital also needs to make sure they aren't overbilled and that the bill complies with the limitations on charges requirement.

In most cases, a hospital may not know on admission if the patient qualifies for financial assistance. Hence, a hospital facility may presumptively determine an individual’s FAP-eligibility based on information other than that provided by the individual or based on a prior FAP-eligibility determination.

However, hospitals still need to perform reasonable efforts to determine FAP-eligibility even when doing a presumptive determination that an individual is eligible for less than the most generous assistance available under a FAP. This can be done by:

  1. Notifying the individual regarding the basis for the presumptive FAP-eligibility determination and how to apply for more generous assistance available under the FAP
  2. Giving the individual reasonable time to apply for more generous assistance before initiating any extraordinary collection actions to the discounted amount owed for the care
  3. Processing any complete FAP application the individual submits by the end of the application period or, if later, by the end of the reasonable time period given to apply for more generous assistance

In addition, hospitals can also leverage data to identify which self-pay accounts can be pursued for collections and which accounts are presumptively eligible for charity care.


Mnet Health on Best Practices to Ensure 501(r) Compliance

There is a slew of regulations that impact hospital revenue cycle and the IRS 501(r) is one of them. For 501(c)(3) nonprofit hospital organizations, they need to comply or possibly lose tax-exempt status. In addition, a hospital could be imposed with a $50,000 excise tax for violations of Section 501(r)(3) CHNA requirements.

Hospital organizations must meet the requirements imposed by Section 501(r) on a facility-by-facility basis in order to be treated as an organization described in Section 501(c)(3). To comply, hospitals need to meet 4 requirements:

  1. Conduct a Community Health Needs Assessment (CHNA) and adopt an implementation strategy at least once every three years – IRC §501(r)(3)
  2. Establish written and widely publicized financial assistance policy (FAP) as well as emergency medical care policy – IRC §501(r)(4)
  3. Limit the amount charged for emergency or other medically necessary care to individuals who fall under the hospital’s financial assistance policy – IRC §501(r)(5)
  4. Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions against the individual – IRC §501(r)(6)

Best Practices and Things to Watch Out For

Strategic Communication Initiatives

All four elements mentioned have implications with strategic communication initiatives that prioritize charity patients and vulnerable uninsured populations. A facility should ensure that the required signage regarding the availability of financial assistance is conspicuously posted in various areas throughout the facility.

Leveraging Data 

The use of data can help in quickly determining if a patient is eligible for charity care or other financial assistance. It can also identify which self-pay accounts can be segmented for payments and collections and which can be qualified for charity care.

Your facility should leverage its own data or third-party data that can help streamline eligibility. Data sources could come from public records and credit-based data from credit reports. Remember that thin files or no-hit credit files are common for charity-eligible patients. You might need to get data from multiple sources and employ a cascading approach so that all patients can be scored and categorized into various payment and charity buckets.

CHNA and Implementation Strategy

The IRS often requests both the most recent and previously conducted CHNA, as well as the corresponding implementation strategies. If these documents are not readily available in a hospital’s website, the IRS will likely do a full compliance check. Here are more helpful tips:

  • The CHNA should be current and compliant
  • Every hospital facility must have its two most recently conducted CHNA’s widely available on their website
  • There should be a written implementation strategy in tandem with the CHNA
  • Two of the most recent implementation strategies should also be widely available on the hospital’s website
  • There should be evidence of adoption of these documents by the organization within meeting minutes of the board of directors

Financial Assistance Policy (FAP) and Emergency Medical Care Policy

Your facility should ensure that all required documents (Financial Assistance Policy, Plain Language Summary, and Financial Assistance Application) are widely available on the hospital’s website and translated into any required Limited English Proficiency languages.

One important thing to note is the FAP must include the following:

  • eligibility criteria for financial assistance for uninsured and underinsured patients
  • methods for applying financial insurance
  • calculating amounts for charity care discounting
  • actions hospitals can take for non-payment.

Here are more helpful tips:

  • Be familiar with specific rules outlined in IRS Notice 2015-46.
  • The hospital’s FAP should be widely available—on a website, upon request for free and conspicuously displayed throughout your facility.
  • The FAP should be readily available in paper form throughout your hospital facility, including admissions and the emergency department.
  • The FAP conspicuously posted on the hospital’s website in plain language.
  • The FAP should be available in alternate languages (if there is a significant portion of the hospital’s community that speaks a language other than English).

Limitation on Charges

Your facility should be able to explain the basis for calculating the amounts charged to patients, “Amounts Generally Billed (AGB)” methodology and calculation. The hospital must either include the percentage and show the calculation in the FAP or describe in the FAP how that percentage and calculation can be accessed.

Billing and Collection Policy

Many hospitals find it helpful to combine the FAP and Billing & Collection Policy. The Billing & Collection Policy must explicitly state the actions the hospital may take in the event of non-payment. The FAP must also explain how members of the general public may readily obtain a free copy of that Policy.


3 Challenges Facing ASC’s and Tips to Overcome Them

With patients having more financial responsibility for their healthcare, outpatient settings like surgery centers are becoming more attractive to patients. In general, surgical procedures at ASC’s are 35% to 50% lower than hospitals.

Research from Bain & Co. estimates that the number of procedures taking place in outpatient surgery centers will rise from 23 million in 2018 to 27 million in 2021. ASC’s performed more than half of all outpatient surgeries in 2017 (up from 32% in 2005) and this trend is set to increase in the coming years. This steady growth for ASC’s presents new opportunities but also new challenges.

The major challenges include:

Rising patient costs (even in outpatient settings)

Aside from patients taking on more financial responsibility with high-deductible health plans, healthcare costs are also rising even in outpatient settings. According to a TransUnion study, patients' out-of-pocket costs averaged $1,109 for an outpatient visit in 2018 (up 12% compared with $990 in 2017). A survey by The Commonwealth Fund found that 79 million Americans have problems with medical bills or debt.

Non-payment of services

According to a TransUnion Health study in 2016, 68 percent of patients with up to $500 in medical bills didn't pay off the full balance, a 19 percentage point increase from 2014. The main reasons are higher deductibles and the increase in patient responsibility from 10% percent to 30 percent over the last few years.

Slower patient collection times and higher A/R days

A Crowe Horwath study revealed that collection rates for patient accounts with balances greater than $5,000 were four times lower than those with low-deductible health plans. The same study also revealed that the outpatient payment rate for self-pay after insurance patients was just 23.7 percent on accounts with balances between $1 and $5,000. However, the outpatient payment rate declined to just 4.7 percent among patients who owed more than $5,000 but less than $7,500. Therefore, the average self-payment payment rate for patients who had out-pocket-costs for outpatient services was 18.2 percent.

With the challenges mentioned above, how would your ASC respond? Here are 3 tips for ASC’s to improve their revenue cycle:

  • Addressing costs and transparency

Most patients expect to make a payment, and more than 90 percent want to know their financial responsibility before a provider visit or procedure. ASC’s need to make sure estimates don't deviate too much from the patients' actual bill, else the patient experience will suffer.

  • Prioritizing the patient financial experience

With the patient financial portion steadily going up, it’s important to customize the financial experience so that patients have more options to pay in full. To improve the patient financial experience, ASC’s would do well by adding online payments, mobile payments, and payment plans. Patients are more likely to “partially” pay hospitals for their financial responsibility as shown by a TransUnion Health analysis (the proportion of individuals making partial payments toward their hospital medical bills rose from about 89 percent in 2015 to 77 percent in 2016).

  • Optimizing patient collections 

In addition to providing financial estimates before or at the point-of-service, ASC’s can optimize patient collections by implementing point-of-service or pre-service payment options.

According to a TransUnion survey, about 46 percent of younger patients claim they would be able to pay more patient financial responsibility at the point-of-service if they received a cost estimate. Place more emphasis on collecting at point-of-service and on self-service collection so that paying a bill is as convenient as possible


How ASC’s Can Use Technology for Better Patient Financial Experience

With an increasing number of patients with high deductible health plans, it is essential that ambulatory surgery centers leverage technology and automation to improve the patient financial experience.

According to a ResearchAndMarkets analysis, the ASC market could grow to reach $120.8 billion by 2026 at a 6.1 percent compound annual growth rate (CAGR). While advanced technologies have increased ASC’s scope of procedures and have driven market growth, there is also a great need in using technology to improve the patient financial experience.

High hospitalization costs are driving patients toward outpatient settings. As individuals with high-deductible plans, patients now have greater financial responsibility for their healthcare and will seek solutions that make the best financial sense.

If patients have a terrible financial experience with your ASC, it will be difficult to collect from them and they will go somewhere else next time they need care. Patient collections have moved beyond simply collecting patient co-payments and sending billing statements. Providers now need to maximize reimbursement not only from health insurers but from patients as well.

With increased risks associated with self-pay patient accounts, automation is becoming the new standard. The cost to collect could reach up to three times higher than on commercial insurance accounts. In addition, the longer a self-pay balance goes unpaid, the harder it is to collect it. Hence, automation can be beneficial by boosting collection efforts of past-due medical debts, decrease human error, maximize productivity, reduce costs, and streamline processes

Using Technology Before and During Service 

Many practices are implementing automated tools that can evaluate patient benefits and eligibility and produce an accurate time of service quotes. Having this information will better prepare front office staff and set proper expectations for the consumer. This type of technology implementation helps to streamline the time of service collections process while ensuring that patients arrive prepared with a full understanding of their responsibilities.

For example, using an automated eligibility verification tool enables ASC’s to verify critical insurance information automatically so that staff can focus on resolving those minimal instances that fall out of the automation system. ASC’s get two benefits from this tool: help with prioritizing staff workflow and preventing eligibility denials (which happens to be the largest cause of denials).

Using Technology for Post-Service: Billing and Collections

Nearly all 900 healthcare financial executives recently surveyed by HIMSS Analytics said their organizations still use paper-based billing and collection strategies. The same survey also revealed the following:

  • More than half of patients prefer electronic billing methods.
  • Patients were more likely to pay their medical bills if they had the option to do so online.

There is a great need for ASC’s and healthcare providers in general to transform their manual patient collection processes to address this changing, consumer-focused trend.

Underpayments could result in a 5% to 7% loss in net revenue. However, if technology is properly utilized, a net collection rate of 96% can be achieved.

Providers can use technology to automate daily payment updates and adjustments on self-pay accounts as this can provide meaningful data on a patient's propensity to pay. The actionable insights that can be gleaned from this data can be very helpful in improving collection processes.

A positive or negative financial experience has an impact on the patient’s perception of care received and overall satisfaction. This experience can consequently affect collection rates and ultimately your surgery center’s bottom line.

By using technology in smart ways, your ASC can improve the patients’ financial experience and improve their cash flow. ASC’s need to continually look for ways to implement new technologies to promote accuracy and efficiency while positively impacting the patient experience.


Three Proactive Approaches for Improved Claims Denials Management

In order to maximize revenue with improved claims denials management, healthcare providers need to follow this advice by Benjamin Franklin: “an ounce of prevention is worth a pound of cure.” For surgery centers and healthcare providers, being proactive means preventing revenue leakage and being profitable. Building a solid strategy and doing regular checkups to maintain a healthy bottom line sets your facility up for growth.

In a traditional revenue cycle structure, departments tend to be siloed – patient access, coding, billing, etc. Everyone is focused on their own tasks and responsibilities (i.e. account resolution). This system can work well until there are issues that need to be addressed, such as claim denials.

The revenue cycle is generally understood as the administrative, financial and clinical functions that contribute to the capture, billing, collection and management of patient service revenue. High-performance revenue cycle is not just about integrating multiple transactions, but about taking a step back and trying to prevent problems in the future. It is actively engaging and integrating these functions to ensure care is properly documented and reimbursed.

Here are three proactive approaches for improving your revenue cycle and claims denials management:

1. Identifying which risks or challenges are present in a revenue cycle

It is not hard to find surgery centers who are “reactive” in their approach instead of being “proactive”. It's only after receiving less payment than expected (or no payment at all) for a service that they investigate the situation and make changes. With days to bill often exceeding 30 days, the service could be performed many times before anyone realizes that something is amiss.

Being proactive means evaluating your center’s practices ahead of time based on the available data and analytics and identifying the risks present in your revenue cycle. Think of it as preventive care for your revenue cycle.

For example, your surgery center needs to have visibility into how many coded claims are denied and the financial impact those denials have on your organization. A 2018 HIMSS Analytics survey found that 76 percent of C-suite executives reported that denials are their biggest revenue cycle challenge. The need to accurately capture and record care is critical to ensuring complete reimbursement, but a large proportion of organizations are currently struggling in this area.

With denials for example, the earlier your facility identifies them, the greater chance you have to resolve the issue. However, many healthcare providers still struggle to identify denials early enough to be effective. This could be due to lack of technology or not being familiar with coding from the payer.

2. Drill down into root causes and come up with a plan to resolve the issues

Get a sense of the current state of your revenue leakage (e.g. denials) and drill down into root causes. Root causes can range from flawed internal processes and technology errors to insurance and clearinghouse mistakes.

A proactive approach means doing something now to prevent problems later. It's about making decisions based on data and analytics.
For example, in denials management, most teams just default to focusing their efforts on revenue recovery. To be proactive, you need to prevent denials in the first place. Preventing denials is always better for your bottom line than recovering them. It’s important to remember that while only about two-thirds of denials are recoverable, 90% of them can be prevented.

Though prevention is not easy, fixing the root cause of denials has a much larger financial impact than overturning them.

In order to find out the root causes, dig deep into the denial data and find out:

• Details on denials types and typical causes
• Insight on denial resolution and the effort involved to overturn denials
• A breakdown of pan-revenue cycle concepts showing the value of coordination between patient access and the business / back office
• Financial impact that denials have on your bottom line

Creating a dedicated team and reporting structure can also help improve denials prevention. Your center needs to engage strong leaders from across multiple departments who are affected by denials and establish a structure of finding out the root causes and resolving them (e.g. scheduling a firm monthly meeting and having each department leader share their top two denial issues).

3. Keep track of your efforts and progress

The reality of a clinical environment is that preventing revenue leakage is not the top priority every day. The average 350-bed hospital saw denial write-offs jump by 79% between 2011 and 2017, from $3.9 million to $7 million.

For example. too often, denial resolution efforts are abandoned by the hospital’s internal billing staff or primary accounts receivable (AR) management firm once the claim reaches a specific age. According to MGMA, an estimated 65% of claim denials are never corrected and re-submitted for reimbursement. Typically claims that exceed 300 days are frequently written off.

Things you can do:

• Keep track of each denial appeal to see if it is successful and then build on those successes
• Know the payers you're having success with and go back and identify the accounts that are denying with that payer with that same issue


Trends Impacting the ASC Landscape: 5 Things To Know

According to McKinsey research, nonhospital-provider segments are primed for growth and could account for almost 55 percent of projected profit pools by 2021. This includes everything from diagnostics, pre-, non-, and post-acute services, surgery centers, physicians and other healthcare professionals.

The pre-acute, non-acute care providers segment (which includes ambulatory surgery centers) is estimated to reach $26 Billion in EBIDTA in 2021 with an annual growth rate of 5-6% from 2017 to 2021.

Different healthcare trends in the areas of utilization, reimbursement, and efficiency will shape the future. In a rapidly changing healthcare landscape, it is critical to understand these trends; otherwise, surgery centers may be missing opportunities to optimize payment and enhance their bottom line.

Graying Population

As the US population ages, payers are seeking to keep the elderly out of hospitals and skilled-nursing facilities if lower-cost settings can provide comparable or better care.

According to the US Census Bureau, from now to 2025, the population aged 65 and older will grow more than four times faster than the total population will grow. Hence, outpatient sites that offer options like 24/7 or weekend care will be poised for growth as they capture the healthcare demands of an ever-graying population.

ASC Reimbursement Trends

In 2019, CMS awarded ASC’s a 2.1 percent reimbursement rate increase on average per procedure.The CMS final rule also included several provisions to level the playing field by raising ASC’s to the higher rate used for hospitals’ outpatient departments and ensuring better reimbursement for devices. The Ambulatory Surgery Center Association (ASCA) estimates that the latter means that ASC’s can now afford to provide 142 additional procedures to Medicare beneficiaries.

In addition, the definition of "surgery" has also been expanded under the ASC payment system to include select "surgery-like" procedures, such as 12 cardiac catheterization procedures. CMS added five additional cardiac catheterization procedures to the ASC covered list as well.

Improvements in Efficiency 

Ambulatory surgery centers are realizing the benefits of scale through their efficiency.

For example, data suggests that the average time for an ambulatory-surgical visit for a Medicare patient in an ASC was 25 percent to 40 percent shorter than for those in a hospital’s outpatient department (HOPD) and that the procedures in ASC’s took 17 percent less time.

In addition, there is a growing demand for “one-stop shopping” from consumers and suppliers. On the consumer side, patients want care that is affordable (especially considering the increases in patient financial responsibility), competent, and convenient. This healthcare-on-demand preference is seen in the rise of ASC’s, urgent care centers, and retail clinics, among others.

To address this need, an increasing number of ASC’s —typically larger operations — are adding ancillary services. These include imaging, pathology, and physical therapy. Such investments can make an ASC more attractive to patients, physicians, and potential business partners.

Millennials’ Mindset Towards Healthcare

The TransUnion Healthcare multi-generational survey found that approximately half of Millennials (46%) would be more apt to pay their medical bills if they were provided an estimate of their healthcare costs at the point of service.

In addition, 57% of Millennials self-reported either ‘no understanding’ or ‘limited understanding’ of their healthcare insurance coverage, compared to 42% of Baby Boomers who said the same.

Despite challenges and trends healthcare providers are facing, Millennials are indeed interested in responsibly paying medical debts, while at the same time, healthcare providers will need to engage patients early.

Increase in Self-pay patients

The volume of direct consumer payments to providers increased 58 percent from 2013 to 2016, according to InstaMed’s annual report. This means that the patient is now the payer and is a very important financial class.

A TransUnion analysis showed that 30% of self-pay accounts (those patients without health insurance or those that have a patient balance after insurance) will generate more than 80% of the self pay revenue collected by hospitals. Another analysis by TransUnion Healthcare also revealed that patients experienced an 11% increase in average out-of-pocket costs in 2017.

ASC’s which can use these trends to their advantage and implement improvements to their revenue cycle strategies will be better poised for future financial growth and boosting their bottom line.


Consumerism in Healthcare: What ASC’s Need to Know

Consumerism in Healthcare: What ASC’s Need to Know

The ASC market is expected to grow at a 4 percent compound annual growth rate (CAGR) from 2017 to 2027, according to Future Market Insights, with multispecialty ASC’s expected to dominate reaching $76.8 billion over the next decade. As the industry moves toward value-based care, patients are increasingly interested in lower priced settings such as outpatient surgery and ASC’s which are disrupting traditional care models.

However, ASC’s are in a delicate place in terms of meeting patient’s ever-increasing and rapidly changing expectations. Consumerism in healthcare has been an ongoing complex study which is a challenge even for ASC’s.

ASC’s have a lot to learn from customer-centric business models implemented within other industries like retail and tech. Here are just a few of the things that ASC’s need to learn in order to adapt to the increasing consumerism trend:

The four pillars of consumerism: access, experience, pricing, and infrastructure

Kaufman Hall’s 2019 Healthcare Consumerism Index reveals the challenges that legacy healthcare providers face in adapting to the ever-rising bar of consumer needs and expectations.

Here are some key takeaways from their report:

Only 8% of hospitals and health systems demonstrate strong consumer-centric performance
A staggering 68% of organizations either have not begun (29%), or are in the very early stages of their consumerism efforts (39%)
For ASC’s and the healthcare industry as a whole to catch-up in an online, convenience-obsessed, and increasingly consumer-focused world, they would need to excel in the four pillars of consumerism.

Access: Today’s consumers increasingly demand quick and easy access to any and all services through a variety of access points—whether physical or virtual—with digital tools to add convenience.

More than half of respondents offer urgent or ambulatory care centers, but only a third offer widespread, basic online scheduling for existing patients.

Experience: Enhancing the consumer experience has a lot to do with patient communication. Some strategies include: automated appointment reminders, centralized call routing, electronic messaging between patients and providers, consumer-friendly billing and payment options.

Few offer real-time scheduling and communications necessary to keep pace with today’s digitally connected consumers.

Pricing: A recent Kaufman Hall survey of how US consumers find and select providers and services found that more than a third research costs in selecting where to go for comparable services. As expectations rise and federal and state laws move toward requiring greater transparency, healthcare providers must implement effective pricing strategies and tools to communicate price estimates to consumers conveniently and accurately.

Only few of healthcare providers offer true price transparency.

Infrastructure: Overall efforts to build an infrastructure of consumer insights and analytics continue to be sub-optimal relative to its critical importance for competing effectively in the marketplace

More than half of hospitals and health systems have developed consumer-centric missions and strategies, but a majority have not yet built infrastructures needed to support such objectives.

Patients are taking an increasingly active role in their healthcare

The rise in healthcare consumerism is driven by a lot of factors, one of which is patients having greater financial responsibility (higher co-pay, deductibles, and overall costs). With such high costs, patients tend to “shop” for surgical options.

Patients’ expectations are also changing, driven by their experiences from other industries like airlines and retail. Patients demand improved services and enhanced experiences when engaging with providers and health systems.

As patients are faced with increased treatment choices, care options, and cost concerns, they are now becoming highly active in their healthcare choices.

Patients are increasingly prepared to interact as consumers rather than as passive patients. As consumers, patients want to be in control of the services that they would want to afford. They want to be involved and informed of every step that will be made throughout their healthcare experience.

ASC’s have long led the way in cost-effective and quality care, serving as role models for other providers trying to determine how best to navigate today's evolving landscape that rewards quality over quantity. The number of procedures performed in ASC’s has continually been on the rise, with surgery centers now performing more than 20 million surgeries annually. ASC’s still have a long way to go to be on par with other industries in meeting, or exceeding, a patient’s expectations. Now is the time to ensure that your ASC is on the right track and not lagging in the consumerism trend.


News & Notes:
August 2019

Mark Your Calendars: Pelosi Expects Drug Pricing Bill in September

A top aide to Speaker Nancy Pelosi (D-Calif.) said House Democrats will unveil their long-awaited bill to lower drug prices in September. Wendell Primus, Pelosi’s top health care adviser, in July said House leadership was almost ready to release the proposal but opted to hold off so that drug companies could not attack it during the August recess, according to a news report published by Kaiser Health News. To read more Kaiser Health News, visit https://khn.org/ or click here: https://tinyurl.com/y4ocquwp

Senate Health Committee Continues to Work on Lower Healthcare Costs

Senate health committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.) in late July released the following statement on the bipartisan Lower Health Care Costs Act of 2019: “The Senate does not have time before the August recess to consider the bipartisan Lower Health Care Costs Act, which the Senate’s health committee approved 20-3 on June 26, and includes proposals from 74 of our colleagues—35 Republican and 39 Democratic Senators.” To read more from the Senate Health, Education, Labor and Pensions Committee, visit its website at https://www.help.senate.gov.

For more health care collections news, visit ACA’s Health Care Collections page at www.acainternational.org/pulse.


Three Tips to Improve Your Revenue Cycle in
2019

Healthcare providers today face increasing cost pressures and inability to grow their revenues which can lead to diminished operating results. A survey conducted by AMGA in 2017 revealed that the operating loss per physician increased from 10% of net revenue in 2016 to a loss of 17.5% of net revenue in 2017. The survey participants included nearly 50 medical groups and health systems, representing more than 13,000 providers.

Unlike other businesses, medical practices can’t pass on rising costs (e.g. increasing rents, employee salaries, etc.) to patients, making it critical that they look for ways to control costs.

However, the same financial struggles that physician practices are experiencing are also present in hospitals. Both nonprofit and for-profit hospitals are seeing revenue decline and losses mount as new reimbursement models emphasize shorter stays and more care delivered in outpatient settings.

The results of the survey show that healthcare providers face a significant challenge to grow their revenues and need to reconsider their revenue cycle strategy. Here are 3 tips for improving your revenue cycle management:

Implement cost-effective technology for better financial performance

High tech can cause high costs for practices and ultimately average up to $32,500 per doctor annually according to the Medical Group Management Association (MGMA). That’s why it’s important for healthcare providers to implement cost-effective technological solutions and not just ride every digital wave. The transition to provide higher-quality, value-based care is becoming increasingly expensive.

According to MGMA, better-performing practices can do the following:

  • Control information technology (IT) expenses
  • Spend less on operating expenses
  • Achieve greater physician productivity
  • Implement better practice operations

MGMA also found that hiring more non-physician providers and support staff can make practices more profitable and productive.

Healthcare providers should use cost-effective technology every single day to deliver exceptional service in every patient interaction. Digital solutions in managing revenue cycle management is important for streamlining patient encounters and payments. HIMSS researchers suggested that healthcare organizations should consider a more automated approach to the revenue cycle management to improve work flows and decrease human error and labor costs.

Improve claims denial management

In revenue cycle management, if an error occurs in any part of the cycle, it could have a major and rippling effect of the overall revenue cycle performance.

A 2016 HIMSS Analytics Survey showed that approximately one-third of healthcare providers still use a manual approach to manage claim denials. It also showed that only 44% of the providers surveyed used automated claims denial management and 18% had an in-house program.

Reducing the number of denied claims can be achieved when healthcare providers include in their revenue cycle management a claims denial prevention system. This kind of system can track and pinpoint the root cause of claims denials, the number of claims denied, and who are the physicians involved. This can greatly help in determining denial rates and track these patterns. Every denial needs to be reviewed and effective improvement efforts need to be made collaboratively.

Track key performance indicators

What you can’t measure, you can’t manage. To put it simply, data should be the primary driver in your organization’s revenue cycle decisions and strategy. Key performance indicators and quality assurance checks inform revenue cycle managers about the financial health of their organization and ensure that data is accurate. Efficient revenue cycle management relies on measuring key indicators, setting goals, and continuous improvement.


What Keeps You Up at Night?

The cost of healthcare in the United States is a significant source of apprehension and fear for millions of Americans, according to a new national survey conducted by West Health and Gallup. With over $3.5 trillion—nearly one-fifth of the nation’s gross domestic product — spent in 2017 alone, the national poll indicates this financial burden causes a multitude of worries and anxieties for a large segment of American adults.

These findings were published in a report titled “The U.S. Healthcare Cost Crisis,” based on a nationally representative survey of more than 3,500 American adults on the impact of the high cost of healthcare on personal finances, individual healthcare choices and the level of satisfaction with the U.S. healthcare system.

Relative to the quality of the care they receive, the study revealed that Americans overwhelmingly agree they pay too much, receive too little, and have little confidence that elected officials can solve the problem.  Americans in large numbers are borrowing money, skipping treatments and cutting back on household expenses because of high costs, and a large percentage fear a major health event could bankrupt them.

More than three-quarters of Americans are also concerned that high healthcare costs could cause significant and lasting damage to the U.S. economy.  Despite the financial burden and fears caused by high healthcare costs, partisan filters lead to divergent views of the healthcare system at large: By a wide margin, more Republicans than Democrats consider the quality of care in the U.S. to be the best or among the best in the world — all while the U.S. significantly outspends other advanced economies on healthcare with dismal outcomes on basic health indicators such as infant mortality and heart attack mortality.

Republicans and Democrats are about as likely to resort to drastic measures, from deferring care to cutting back on other expenses including groceries, clothing, and gas and electricity. And many do not see the situation improving.  In fact, most believe costs will only increase. When given the choice between a freeze in healthcare costs for the next five years or a 10% increase in household income, 61% of Americans report that their preference is a freeze in costs.  Other key survey findings include:

77% of Americans are concerned rising costs will significantly damage the U.S. economy.

76% expect their costs for healthcare will increase even further in the next two years.

15 million Americans have deferred purchasing prescription drugs in the past year due to cost.

Nearly 3 million borrowed $10,000 or more to pay for healthcare in the past year.

Only about one-third report that doctors discuss costs with them in advance of procedures, tests or treatment plans, or for medicine required to treat their conditions.

The New York Times published an article titled, “Americans Borrowed $88 Billion to Pay for Health Care Last Year, Survey Finds,” that provides an in-depth analysis of the survey. In the piece, reporter Karen Zraick notes that West Health and Gallup will conduct similar studies going forward.


Data Security Issues in Offshore Revenue Cycle Management 

Offshoring revenue cycle management has been an increasing phenomenon in the healthcare landscape today. Primary drivers for this include cost-efficiency, controlled management, specialization and expertise, economies of manpower, and an affordable edge in information technology.

However, seemingly apparent economic advantages have given rise to controversies and popular debate against offshore outsourcing. With offshoring, data transfer is inevitable because once access is given to foreign third-party service providers, it is almost impossible to prevent data from leaving the company and the country. In the event of offshore data breaches, healthcare companies may become target of domestic lawsuits.

According to a 2013 Trustwave Global Security Report of  450 global data breach investigations, 63% were linked to third party component of IT administration. The report says that outsourcing, itself, is not necessarily risky but that bad decisions are being made. Part of the problem, according to Trustwave is that service providers don’t view security as being as valuable as their American clients do.

An example of an infamous data breach incident happened on October 7, 2003 which sent terror throughout the medical system. The University of California at San Francisco (UCSF) Medical Center received an email from a Pakistani medical transcriber threatening to disclose private records if UCSF did not pay her a certain amount she claimed it owed her in backpay. UCSF then verified the authenticity of the records she possessed and launched an investigation. Authorities uncovered a chain of subcontractors of whom UCSF was completely unaware.

Privacy violators are subject to both civil and criminal penalties. According to the United States Department of Health and Human Services Office for Civil Rights (HHS OCR), these are the penalties for each tier:

Tier 1: $100-$50,000 per violation, capped at $25,000 per year the issue persisted

Tier 2: $1,000-$50,000 per violation, capped at $100,000 per year the issue persisted

Tier 3: $10,000-$50,000 per violation, capped at $250,000 per year the issue persisted

Tier 4: $50,000 per violation, capped at $1.5 million per year the issue persisted

The healthcare industry has long been a target for hackers and it seems the trend is still increasing. According to the US Department of Health and Human Services' breach portal, in 1st quarter of 2017 there were 22 breaches recorded in the US while this figure soared to a high of 99 in 2nd quarter of 2018. Email was also the top source of data breaches in the healthcare industry in 2018.

An analysis of 1,138 health data breaches affecting a total of 164 million patients from October 2009 through the end of 2017 in the breach portal shows that the top cause of data breaches (42 percent of cases) was theft of equipment or information by unknown outsiders or by current or former employees. Another 25 percent of cases involved employee errors like mailing or emailing records to the wrong person, sending unencrypted data, taking records home or forwarding data to personal accounts or devices.

This means that more than half of breaches were due to internal negligence and thus to some extent preventable.

With recent data breaches surrounding outsourcing and offshoring, it is essential to assess your third-party vendors' operations, data security capabilities, and procedures in safeguarding member data privacy to avoid all that comes with a data breach.

It is essential for healthcare organizations to go beyond the standard HIPAA compliance standards.

Think twice before offshoring the more sensitive aspects of your revenue cycle.

Always have a data security program in place that allows your organization to stay on top of the latest cyber threats and be able to respond and then recover when a breach takes place. You may not completely get ahead of all online risks, but that doesn’t mean you can’t be prepared.

Data security problems arise from poor management and negligence. Whether the decision to offshore is on the table or not, healthcare facilities must regularly check measures and defenses to prevent threats to data breaches and cyberattacks.


How to Avoid Revenue Cycle Outsourcing Mistakes

In today’s evolving healthcare landscape, providers look for ways to better adapt to market conditions while sustaining profitability and gaining a competitive edge, so they opt to outsource some or all their revenue cycle functions to a third-party vendor.

Healthcare providers are under intense pressure to reduce spending while improving care quality and revenue cycle outsourcing has the potential to significantly decrease costs and increase efficiency.

A Black Book survey found that 80 percent of hospital leaders are considering or vetting full revenue cycle management outsourcing by the end of 2019. The surveyed hospital executives said they would partner with a third-party vendor to help manage their revenue cycle so that they could focus on decreasing costs and value-based care implementation.

The global healthcare revenue cycle management outsourcing market is projected to see significant growth at a compound annual growth rate (CAGR) of 11.9 percent from 2017 to 2023, according to one market report estimate, with the market reaching a valuation of $23 billion by the end of the period.

The decision to outsource revenue cycle management is complex but usually involves the elements of cost, access to expertise, technology, and scalability to be able to perform well under an increased and expanding workload and demand. Outsourcing allows providers to focus on their core functions and free themselves from the burden of paying a high amount of fixed costs for handling billing in-house.

Here are some benefits to revenue cycle outsourcing:

Lower overall cost (while achieving similar or better performance)

Advanced revenue cycle technology and optimized processes

Scalability of operations, such as adding new facilities

Access to experienced and centralized talent pools

However, there are also some pitfalls to outsourcing especially if providers are not able to work with the right partner.  In common cases, reports of high denial rates and their causes remain undetermined due to a general lack of effective analytics and transparency. Some third-party vendors can become less professional, unresponsive and exhibit a lack of cooperation compared to the initial sales period.

Recently, Astria Health (a three-hospital system in eastern Washington) filed for bankruptcy, citing poor A/R performance from revenue cycle outsourcing as the primary cause behind their declining cash flow. The third-party vendor was put in charge of office billing, claims processing, and collecting but failed to process large amounts of accounts receivable (A/R) in a timely manner, resulting in a significant cashflow shortfall for Astria Health.

Therefore, here are some strategies to consider in avoiding revenue cycle outsourcing mistakes:

Performance is Key 

Performance should always be the key driver behind outsourcing decisions - not just cost, access to technology, expertise, etc. Pay attention to claim denial rates and patient collection times and compare it with other vendors.

A partner must execute transparency in its services. If they cannot illustrate results or past performance, they are likely not a good choice. They should not only have a competitive price point, but also have strong performance and industry expertise.

In defining contract terms with the third-party vendor, clearly and concisely define performance and service-level expectations, which could also carry bonus potential if the vendor overperforms. Setting objective metrics is crucial so that both parties know what the focus is and how they can work together to achieve their goals and enhance operational performance.

Carefully Consider What to Outsource

The providers should also take into consideration the aspects of their revenue cycle that their organization must outsource. That said, there are some variables that are especially significant. Some organizations outsource their revenue cycle from end to end while some only outsource revenue cycle components such as coding and accounts receivable follow-up and the rest are retained in-house. What course an organization chooses will depend on its characteristics and pain points. Selecting the right partner for the specific revenue cycle component you are outsourcing is crucial and requires careful evaluation.

Choose a Partner You Can Trust

Providers need to make sure that their relationship with their vendor is extremely transparent. Both sides need to understand that they are going to work very closely to succeed. Providers need to know their partner vendor’s support staff and capabilities well.  Are they offshoring any of their work?  Do they have experienced coders?  Do they have well-trained and friendly staff?  How do they handle claims denials?

Outsourcing can be a highly effective solution to gain a competitive advantage. By choosing the right outsourcing partner, providers can better manage change and move toward decreased costs and increased efficiency so that they can focus on delivering better quality of care.


3 Tips for Working with RCM Partners to Handle Self-Pay Patients

Patient balances present one of the most significant challenges in healthcare especially for surgery centers. With ever-rising healthcare costs, ambulatory surgery centers (ASC’s) see an increase in the number of patients that have high deductible health insurance plans. Patient obligations have increased 29.4 percent since 2015, and many are finding it difficult to pay off their medical bills and large out-of-pocket costs.

ASC’s invest significant resources and time to settle overdue payables from patients who are unable to manage paying off their medical bills. Many surgery centers find themselves reaching out to patients, sending letters, emails, and calls in an effort to collect from self-pay patients.

However, collecting from patients is not naturally the expertise of a healthcare facility, so surgery centers often get the help of an RCM (revenue cycle management) partner or collections vendor.

How can your ASC work more effectively with its RCM partners to handle self-pay collections? What do you need to look for in selecting a third-party collections partner? Here are 3 tips to consider:

1. Implement Digital Payment Transmissions

Interestingly, the increase of high-deductible plans has also coincided with the trend of healthcare consumerism. Patients now expect that they can pay their bills and manage their accounts online from their mobile phones or desktops.

Surgery centers can work with their RCM partners to step up their game and make it easy for patients to register by tablet and pay electronically and get payment in advance for elective procedures.

With self-pay patients, it is important to choose partners that are able to offer automatic enrollment in payment plans and financial counseling to avoid revenue leakage.

2. Leverage Automation Technology

By its nature, self-pay accounts are risky. The cost to collect could reach up to three times higher than on commercial insurance accounts. The longer a self-pay balance goes unpaid, the harder and costlier it is to collect it.

This is why automation is becoming the new standard in revenue cycle management. Choose partners that can use automation to step up collection efforts of past due medical debts, decrease human error, maximize productivity, reduce costs, and streamline processes.

Here are four essential areas that needs vendor automation especially for self-pay accounts:

Daily accounts submission

Daily payment and adjustment account reconciliation

Vendor collections automatically directed to existing merchant services

Automatic invoices that are gross remit and auto-paid

3. Focus on Personalization: Patient-Centric Financial Experiences  

With the help of your RCM partner and the use of technology, your facility can gain visibility into patient payment behavior and identify trends, bottlenecks, and needs. A one-size-fits-all approach doesn’t work with self-pay accounts. Hence the need for better personalization.

Here are some areas to focus on to create patient-centric financial experiences:

Improve medical bill (eliminate areas of confusion)

Using price transparency tools

Patient education strategies

Flexible payment methods

Patient financial advocates

Having trained and patient-friendly staff (front-end and collections)

Better patient communications

The key to better personalization is using technology and training your staff. Work with your RCM partner to have full visibility into where all payments are coming from and have daily activity reports on all types of payments received, categorized according to account number, source of payment, etc. By having a 360-degree view of patient payment behavior, your ASC can create strategies that would personalize self-pay collections and achieve higher success rates.


How to Prevent Revenue Leakage in Your ASC

The healthcare reimbursement landscape has changed dramatically in just a few years. Just five years ago, healthcare providers could get 90% of their revenue from government payers (Medicare and Medicaid) and commercial insurance companies, while the remaining 10% comes from patient payments.

Today, patient payments can make up as much as 33% of provider revenue. Last year, enrollment in high-deductible health plans surged to include nearly half (47 percent) of those privately insured.

The biggest challenge facing healthcare providers is the change from payer-based (insurance) revenue to consumer-driven reimbursement.

Many providers typically do not receive full reimbursement because patient collections are leaking throughout their revenue cycle. Some do not even detect the source or depth of their revenue loss.

Track Revenue Cycle Leaks

It pays to know how much revenue you’re truly missing out on, and where they are coming from. Leakage could come from coding errors, manual payment and collection processes, unbilled revenue, and poor denials management.

It is important to conduct thorough audits that can find even fewer common areas where revenue leakage can occur. For example, unbilled insurance can lead to lost revenue for your ASC. To solve this problem, create reports that track unbilled insurance. In the same way, you can also have a report that tracks unbilled patients, including self-pay, promissory notes and patient balances after third-party payor responsibility is met. Insurance/eligibility verification also helps to increase clean claims rates, eliminate costly rework and accelerate reimbursement. Hence, it is good to have reports that show who has been verified.

It’s essential that each procedure performed in the practice becomes a claim in the billing process. If your billing company does not audit and validate the receipt of your interpretation reports, you easily could be losing 10% or more of your revenue, no matter how effectively the rest of your billing process performs.

Stop Patient Leakage

In 2018, a survey of healthcare executives conducted by Sage Growth Partners and Fibroblast revealed that 43% of the respondents report losing 10% or more of their annual revenue due to patient leakage while 23% don’t even know how much they are losing. Patient leakage translates to revenue leakage.

“Patient leakage” is the industry term when primary care physicians refer patients to out-of-system providers (instead of those in their network), resulting in significant business losses. It could also refer to patients seeking out other healthcare groups (out-of-network) for their care.

Patient leakage also happens when a patient referral that should stay inside a health network ends up leaving for another or a patient that should receive care in the network doesn't follow through on the care.

Why does this affect an ASC’s bottom line? Your facility could lose considerable revenue and control when patients are being referred to other networks or to poorer performing providers within their own network. In a value-based care model, patient leakage can also pose a risk due to patients developing an event that is more acute than it should've been had they received care.

One of the key solutions to prevent patient leakage is better patient engagement and better care coordination. Modern and simple technologies like mobile EHRs, text and email messaging, and patient portals help create a personal connection with patients. In the long run, this builds loyalty and staying power. The provider-patient relationship is always on top of the list on what patients are looking for in their healthcare.

Here are more suggestions:

Providers should specify referrals in their network. In the survey, client data indicates that 80% of the time, providers neglect to even specify who a patient should see.

Follow up to see if patients received the care for which they were referred.


By preventing patient leakage and improving reporting and auditing, ASC’s can significantly drop their revenue leakage dramatically and protect their bottom line.


3 Strategies for a Patient-Centered Revenue Cycle in 2019

As patient financial responsibility grows, the patient experience becomes very important in your revenue cycle. Aligning the healthcare revenue cycle with patient needs becomes the key to improving revenue collection and increasing patient volumes.

Here are 3 strategies to consider for your revenue cycle:

1.Personalize Financial Plans and Options

Each patient’s circumstances are unique and require a different approach in terms of financial services and counseling. Some patients can easily afford to pay their bills while others would need payment plans tailored to their ability to pay.

The key to more personalization would be data on patient’s propensity to pay and also data gathered from patient engagement. Providers would then be able to predict the likelihood that patients will pay their out-of-pocket balances.

To achieve this, here are some of the things that a healthcare provider should do:

Estimate patient out-of-pocket obligations.

Verify patient information and benefits eligibility.

Predict the patient’s propensity to pay.

Offer payment plans tailored to each patient’s budget and ability to pay.

When appropriate, offer financial assistance programs especially to the uninsured.

2. Leverage Technology and Build Automated Systems

Eliminating redundant manual processes allows providers to better connect with their patients to resolve financial issues. With automated systems, your staff can focus on patient interaction and communication.  Technology can make the revenue cycle management process more efficient and more accurate by reducing missed appointments, verifying insurance information, limiting claims denials, and reducing coding errors.

Healthcare providers need to implement people and technology systems to automate and streamline workflows specific to patient needs. Here are some areas where automation can improve the patient experience:

Prioritizing staff workflow

Preventing eligibility denials

Gathering critical data

Self-pay vendor automation (daily account submission and real-time account adjustments)

3. Align Collection Strategies with Patient Consumerism

Healthcare providers can learn a lot from the techniques used by the retail industry in terms of billing and collections. Consumers are accustomed to flexible payment options, installment plans, and easy-to-understand bills. Consumers also know the price before they purchase services or items. But the key challenge in healthcare has always been clear price information (lack of price transparency).

As patient responsibility increases, understanding the cost of care prior to service will be critical to boosting patient collections. When patients are educated about their financial responsibility and given financial estimates, they are more likely prepared to pay in advance through point-of-service collections.

To be able to transform the collection process, patient should be provided with the following:

Online payment arrangements or online patient financing options

Online (or mobile) bill pay

Price estimates based on the patient’s specific payer information

Guarantor-level billing (family’s statements)

Healthcare providers now rely on their patients as much as their payers with regards to their bottom line. Improving the patient experience and meeting consumer demands will be more crucial to improving the healthcare revenue cycle in the coming days.


The Current Healthcare Payments Landscape and Future Opportunities

The overarching trend in today’s healthcare payments system is that high deductibles have become the norm and patients now have greater financial responsibility. Out-of-pocket expenses are projected to reach $608 billion in 2019 according to a report by Kalorama Information. Here are more trends defining the current healthcare payments landscape:

Confused Patients

Faced with higher deductibles more than ever before, patients are also struggling to understand their bills. A 2016 survey revealed that 72 percent of patients have received a medical bill that they didn’t understand. In addition, according to new research from NORC at the University of Chicago, 57 percent of US adults say they've received a surprise medical bill, and 82% say hospitals are "very" or "somewhat" responsible for their surprise bills,.

Antiquated Processes

Tasks like coverage verification, sending and receiving bills, and obtaining prior authorization (tasks which can all be automated) are costing healthcare providers $9.5 billion annually according to Business Insider Intelligence. These administrative tasks are also one of the reasons of increasing medical bills. Billions could be saved just by automating the antiquated processes in these areas.

Fortunately, healthcare providers and collection firms are investing in new digital payment solutions to combat these antiquated processes according to the latest survey by BillingTree. 54.5% of respondents plan on adding web payments (patient payment portals) within the next 12 months, and 27% plan to add “text to pay bill” (text payments) for the same period.

Paper Payment Systems

There’s still a lot of work to do in the healthcare payments landscape in terms of moving from paper to digital. In a recent InstaMed survey, 58 percent of providers said paper statements are the primary method for patient collections and a shocking 41 percent have not changed their billing process in more than 5 years. This is confirmed by the fact that 79 percent of patients said they have received a paper medical bill.

Most interestingly, a study of large data breaches (affecting 500 patients or more) by researchers at the University of Central Florida and at the United States Air Force Joint Base in Charleston, South Carolina, revealed that paper and films were the most frequent location of breached data, occurring in 65 hospitals during the study period. While network servers were the least common location, but network server breaches affected the most patients overall.

Future Opportunities: Optimizing Your Revenue Cycle

A recent TransUnion analysis showed that 30% of self-pay accounts (those patients without health insurance or those that have a patient balance after insurance) will generate more than 80% of the self pay revenue collected by hospitals. This means that hospitals may be leaving millions on the table if their revenue cycle is less than optimal. An optimized revenue cycle ensures that earned revenue becomes paid revenue.

Why is this significant? The number of patients without health insurance increased to more than 12% at the end of 2017. In addition, Patient Balances after Insurance (PBAI) grew from 8% of the total bill responsibility in 2012 to 12.2% in 2017. The uninsured rate also grew from 10.9% in 2016 to 12.2% in 2017.

When healthcare providers focus too much on cost control measures, they are missing the bigger picture. As an example in 2018, cutting costs was the highest priority for 63% of hospital C-suite executives, according to a Premier survey.  But a recent Advisory Board study indicated that the typical 350-bed hospital may be leaving $22 million on the table by focusing on cutting costs over optimizing their revenue cycle.

Inefficiencies in the billing process is a huge problem in the healthcare industry but it also creates a massive market opportunity for new and existing healthcare payment tech players.