5 Best Practices for Using Payment Plans to Ensure Patient Payments
What You Need to Know
An article by Bill Marvin, taken from the May/June issue of HBMA Billing (hbma.org)
As health insurance premiums continue to grow (at an average annual rate of 7.1 percent [AHIP 2010]), employers are switching to lower cost, high-deductible health plans. This trend is resulting in an overall decrease in payor payments and a consequent increase in patient payments. This will continue throughout the next decade as the Affordable Care Act rolls out. As a result, billing services and their clients are more dependent on patients for revenue. To collect more from patients, many billing services have started to use patient-centered strategies, such as payment plans. However, to improve results and increase efficiency for their clients, billing services need to ensure that they have implemented best practices.
A Growing Trend
Data from the 2011 "Trends in Healthcare Payments" report shows that the use of payment plans for healthcare payments has doubled since 2009.1 In the same report, 63 percent of surveyed patients said that they would utilize payment plans for their healthcare bills if given the option.
Five Best Practices for Successful Payment Plans
- Automate Payments
Many billing services support payment plans manually by managing a calendar that shows when each payment is owed and by calling patients to collect every month. This method is a step in the right direction, but it adds to the billing service's work effort, does not ensure payment for the client, and has security flaws. Whether the payment plan is set up while the patient is in the office or after a statement is sent, billing services and their clients should securely collect and store payment information so they can automatically collect payments when they are due.
- Automate Communications
Even when a patient authorizes automated monthly payments, he or she may still forget about the payment until it shows up on their next statement, which may create confusion and costly chargebacks. Improve communication and offer payment transparency by automating email notifications to patients prior to each payment transaction
Tip: Provide clients with a one-page "FAQ" for patients explaining how payment plans work, including payment timing, notifications, and payment card security.
- Draw a Line
It is great for billing services to give patients some flexibility and choice in how much they pay each month, but it is also necessary that they set parameters and stick to them. As a standard best practice, billing services should charge a minimum monthly payment of $100 or require that the bill be paid in full within 12 months.
- Collect Something Upfront
Payment plans work well for patients who are unable to pay the full bill at once, but billing services should avoid allowing payment plans to become a way for patients to put off paying at all. Establish a policy that patients must pay a certain percentage of the bill upon setting up a monthly payment plan.
- Tailor Payment Plans to Patient Needs
Depending on the scenario, there are three main types of payment plans to offer patients:
- Installment: Collect payments against an outstanding balance and deactivate the plan automatically when the total balance is paid.
- Recurring: Collect payments at a regular, ongoing interval as a subscription service.
- Save on File: Save a patient's payment card on file to collect the remaining amount owed when the claim is adjudicated. This is useful when the patient's payment responsibility is unknown during the patient visit; for example, if the patient has a high deductible.
By following best practices when offering patient payment plans, billing services can ensure payment for their clients, even from self-pay or high-deductible patients. Automated, scheduled payment plans save billing services a lot of time and costs to send multiple patient statements and make follow-up calls to patients as well as improve patient communication and clarity around the payment process.
Bill Marvin has been in the revenue cycle industry since 1993 and is the president and CEO of InstaMed. Prior to InstaMed, Bill was an executive in Accenture's Health and Life Sciences practice, focused on payer to provider connectivity. Prior to Accenture, Bill founded CareWide (now a part of AllScripts after three acquisitions), a practice management system for provider offices.
1 Source: 2011 Trends in Healthcare Payments Report: www.instamed.com/trends-in-healthcare-payments-annual-report-2011.