Worried about shrinking margins? Address patient liability at the point of service

By Erica Franko, Senior Vice President and Managing Director of Advisory Services | Posted: 05/22/2018

Patient Liability

According to a recent survey by the American Hospital Association (AHA), uncompensated care is a $35.7 billon problem, with greater than 80 percent of self-pay bills and 50 percent of patient costs after insurance ending up as bad debt. Trends exacerbating patient liability include an increasingly complex reimbursement landscape and rising consumerism, not to mention ever growing costs from innovations, technology and pharma, as well as expanding utilization by an aging and sicker population.

What to do? Instead of losing sleep with worry, it is important to first understand why patient liability, defined in simple terms as patient’s financial responsibility, is now a major industry problem. Second, the answer lies in addressing the problem upfront to mitigate risk.

An increase in high deductible health plans

Along with an increase in America’s insured population the health care industry has also experienced an acceleration in high deductible health plans (HDHPs), which many are struggling to pay. High-deductible health plans are likely here to stay, resulting in a growing number of patients who cannot afford their care after insurance. Gone are the days of simple co-pays, with more complex financial arrangements like co-insurance and deductibles now commonplace.

We now understand that patient payments are not the issue of the uninsured, but rather, patient liability impacts both the insured, underinsured and uninsured, and can take a variety of forms, including uninsured or “true” self-pay, individuals with co-insurance and those with a deductible, co-pay or both.

Today, approximately 40 percent of American adults have an HDHP, defined legally as a plan where patients are responsible for at least $1,350 as an individual, or $2700 as a family. This trend this doesn’t just apply to the newly insured, with the market experiencing a 3.2 percent increase in the number of HDHPs offered by employers.

By understanding the problem, we can best formulate the solution. With patients now representing, on average, the third largest payor, providers need to develop interventions to address patient liability before it becomes bad debt. One way to address this liability is to improve your capabilities pre- or at the point of service. Providers must have the ability, and in some cases are required by regulation, to quickly and accurately estimate the patient’s liability prior to their visit. By informing the patient of their liability, providers have the greatest opportunity to support the patient through financial counseling services, financing services or education, while also ensuring that the provider is paid for the services rendered.

Preparing for patient liability

According to a survey by nThrive, 43 percent of hospital administrators feel that their organization is not adequately prepared to handle increasing patient liability and consumerism. Just as important, they identified patient liability and consumerism as one of their top issues, second only to value-based reimbursement and alternate payment models.

In the same survey, 56 percent also identified Patient Access as the top revenue cycle management function to help address the growing threat of patient liability. Shifting some of the traditional patient financial functions such as collections to Patient Access is helping to increase revenue, accelerate cash flow and reduce bad debt, primarily because patients are more willing to pay prior to service than after.

Today’s leading practice Patient Access organization should be equipped to perform everything from scheduling, financial clearance and financial counseling to secure upfront payment, as well as patient check-in and check-out. Patient payment portals and customer service are also shifting to the front end, with many states requiring health care organizations to provide estimates prior to service, along with online payment capability. As Patient Access evolves, web-based portals providing self-service estimating are also expected to be commonplace.

Orchestrating a best practice Patient Access function requires a symphony of interconnected steps, including:

  • Accurate contracts
  • Price estimator tool
  • Eligibility and insurance verification
  • Workflow and scripting

Both process design and training are essential to ensure adoption for the best results. Indeed, leaders at NAHAM 2018 identified education as their top priority to better train staff on point-of-service collections. To further improve revenue, it is also important to enhance backend collections, ensuring that providers submit charges in a timely fashion – ideally within 24 hours of service, along with processing credits in a timely manner and more.

Supporting the patient journey

At nThrive, we believe all of these actions are about better supporting the patient journey, from Patient-to-Payment,SM both improving revenue and better serving patients. For instance, with the help of nThrive, Palmetto Health is now on track to collect one percent of net patient revenue annually at the point of service. They’ve also dramatically reduced denials and are providing approximately 10,000 automated estimates per month.

Another medical center in South Carolina has experienced a 32 percent increase in Medicaid approvals on inpatient accounts and a 42 percent increase in outpatient accounts. By securing appropriate Medicaid coverage, they’ve reduced their overall patient responsibility population and resulting bad debt while improving access to revenue. Patients also expressed gratitude for the assistance, care and respect they received.

Contact nThrive to discuss how a combination of process design, education, analytics and technology can accelerate your ability to promote patient and colleague satisfaction while reducing bad debt.