Revenue cycle management is a complex interaction of services, billing codes, benefit analysis, and successful invoicing. Historically, hospitals and most other providers received 90% of their reimbursement from insurance plans, with the patient portion receiving significantly less concern, since it was traditionally such a small part of overall revenues.
That's no longer the case, with more Americans being insured under high deductible plans. It looks like patient responsibility could ultimately stop at around 30% of their medical costs. The problem is, for every patient dollar that's billed, hospitals have historically collected less than 50 cents.
Traditional billing has been designed to collect fewer, larger amounts from insurance companies rather than more, smaller amounts from individuals, and sound revenue cycle management requires that this mindset evolve.
Reasons Bills Go Unpaid
Even before the Affordable Care Act, high-deductible health plans were becoming more common, and with these, reimbursement patterns started shifting.
In the past, hospitals and practices didn't really have to develop interactions with patients about bills, because they collected the vast majority of their reimbursements from insurers. They focused their efforts on insurers and many didn't develop good ways of interacting with patients to encourage payment of their bills.
Plans with $2,000 deductibles are not uncommon today, and with the majority of Americans having less than $1,000 in savings, this clearly presents a potential problem.
Make Sure Technology Is Up to Speed
One important step both hospitals and independent providers can take is to make sure their technology is in step with the tech-saturated, mobile world most patients live in.
That means offering online and mobile tools for booking, confirming, and canceling appointments as well as online payment portals. Online payment options have been shown to accelerate collections from self-pay and insured patients and greatly reduce the number of accounts outsourced to collection agencies.
The convenience of not having to use paper bills, stamps, and the postal service doesn't just help your patients, it also reduces your overhead costs. Statements costs are more than paper. Consider the time invested into the process as well as the envelope and the stamp. Adding these factors together usually lands patient statements costs around $5 per statement which can turn into an annual expense of $27,000.
Let’s say a practice sends out 450 statements a month at a cost of $5 dollars a piece. 450 x $5 = $2250 x 12 months = $27,000. If one sends out 1000 statements a month, which I’m sure a large practice can easily do, the cost can add up to $60,000 under the $5 cost assumption.
If patient statements are costing you $27,000 or more each year, why aren't you focused on eliminating statements all together?
An online payment portal for patients can be set up to reduce the number of statements being sent out each month. Online patient payment portals help make bills clearer and more understandable to patients which helps reduce the frustration some patients encounter when they receive a patient statement. Online payment portals can also speed up the time it takes for your practice to receive a payment. Patients are used to paying bills online today. If you aren't offering an online patient payment portal you are hurting your revenue cycle.
Confirm Billing and Coverage Information
The simple task of confirming patient coverage and billing information before the patient encounter can make a tremendous difference in collections. As just one example, Children's Orthopaedic & Scoliosis Surgery Associates used practice management software to confirm coverage and check on things like pre-authorization requirements.
By doing so, they received payments faster, cut average accounts receivable days, and even enjoyed higher clean claim rates. Confirming coverage and pre-authorization is one more step that adds clarity to the billing process for patients.
Updating your billing process to better handle the increase in high deductive health plans doesn't always start with an expensive technology or a complicated strategy. It is often as simple as training your front desk staff to confirm coverage and have financial/payment policy conversations with patients.
Stop Making Bills Complicated
Most people want to pay their medical bills, but they don't understand them. They may, for example, after an emergency room visit wait around for all the bills and explanation of benefits statements to arrive and then try to make sense of it all. Yet this is remarkably difficult for the average person.
Most people simply want to know how much they owe and what they're paying for, and any steps providers can take toward that will increase collection rates. If patients feel baffled, taken advantage of, or simply that providers don't care about them, they're less likely to pay their bills promptly and in full.
Is someone at your clinic dedicated to answering patient questions about statements, insurance, etc.? Most of the time this isn't something that is considered a "must-have role" at a medical practice however it can deliver real results in terms of patient satisfaction and getting bills paid timely.
Offer Financial Counseling
An increasing number of practices are offering financial counseling so that high-deductible policyholders and self-pay patients can have a better handle on what their responsibilities are up front and their options for satisfying their obligations.
Often, what financial counseling is available is only used late in the billing process, though it makes more sense to offer it earlier in the revenue cycle, letting patients know what to expect and how they can pay for their expenses. Counseling offered only after patients are overwhelmed and confused is far less likely to produce the results hospitals and providers want.
Patient co-pays account for about 20% of a physician practice's revenue, and practices only collect around 60% of co-payments. Delays in collecting co-payments result in lower collection rates, so it's wise for providers to develop a strategy for prompt co-payment collection and communicate with patients about how it is handled early on.
REVENUE CYCLE MANAGEMENT
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