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Consumerism in Healthcare Payments


Achieving Payment Assurance
By Bill Marvin

taken from the May/June issue of HBMA Billing

The sweep of consumerism in healthcare has brought changes to the healthcare payments process, driving billing services to evaluate their collection tactics. While providers previously relied almost exclusively on payer payments for their revenue, patient responsibility payments are now an increasingly important provider revenue source. Billing services must increase their focus on collecting from patients.

On a nationwide scale, the number of people enrolled in high-deductible health plans (HDHPs) has increased from one million to more than eleven million since 2005. This is impacting all providers, from solo practitioners to large hospital systems.1 This jump in HDHPs translates to a drastic increase in the amount of energy and resources spent to collect, as the costs to collect from patients are three to five times greater than the costs to collect from payers. Additionally, these efforts have brought minimal success, as, according to McKinsey Quarterly research, providers wrote off more than $65 billion due to bad patient debt in 2010.2

If patients – the consumers – regularly pay their other bills, why is it so challenging to collect from patients for rendered healthcare services?

The Patient's New Role: The Consumer

Patients now have a more prominent role in the healthcare payments process. As consumers, they have payment expectations that have been shaped by their experiences in other industries. For instance, patients expect to understand their payment responsibilities as well as the terms and timing of the payment process. In addition, they expect to be able to use their preferred payment methods and to be proactively notified of payment due dates.

However, providers frequently do not know how to meet these expectations and therefore are unable to collect.

To collect from patients, billing services need to focus on the demands of patients as consumers and put in place the required tools, policies, and processes in order to achieve payment assurance.

Achieving Payment Assurance

Included in this article is a list of requirements for billing services to meet in order to achieve payment assurance. The "Payment Assurance Level One" requirements enable billing services to increase collections by 20–40% and decrease operational costs by 20–40%. Furthermore, by meeting the additional requirements listed in "Payment Assurance Level Two," billing services can increase collections by 40–200% and decrease costs by 40–60%.

Billing services are in a unique situation for patient collections because they support two different patient engagement models. First, hospital-based: providers who do not interact with the patient at the point of service (radiologists, anesthesiologists, etc.). Second, office-based: providers who interact with the patient at the point of service (family practitioners, primary care facilities, etc.). To acknowledge the varying patient collection needs required in both of these scenarios, the requirements that apply only to the office-based model are indicated with a "•".

Payment Assurance Level One Requirements

  • Prior to patient visits and at the point of service, verify eligibility and inform patients that they will be expected to pay for all patient responsibilities, including co-pays, deductibles, and co-insurance, per their plan benefits.
  • At the point of service, collect accurate patient demographic and eligibility data.
  • At the point of service, capture the patient's preferred payment method (e.g., payment card or bank account)
    in a secure and compliant manner.
  • Deliver easy-to-read patient statements detailing patient responsibilities.
  • Accept all payment methods, including all cards (credit, debit, HSA, FSA), checks, and cash.
  • Accept patient payments in every way possible! (e.g., via phone, mail, and online)
  • Offer payment plans and clearly define policies for patients and staff regarding payment plan terms, minimum amounts, and payment frequencies.
  • Deliver automatic, electronic notifications to patients and staff when patient payments are processed.
  • Train staff on patient interaction policies that focus on listening to the patient, empathizing with the patient, agreeing on the problem, and partnering on a solution.
  • Define collection policies and processes for aged receivables.
  • Manage all patient payments through a private, secure cloud network that is not only compliant, but also independently certified and audited against the Payment Card Industry Data Security Standards (PCI-DSS) and HIPAA (check MasterCard, Visa, and EHNAC for a list of independently certified solutions/vendors).

Payment Assurance Level Two Requirements

  • At the point of service, estimate patient responsibilities based on fee schedules, eligibility data, financial data, and other metrics. Communicate the payment terms, timing, notifications, and process with the patient.
  • Pre-authorize the patient's preferred payment method to ease the collection of patient payments upon claim adjudication.
  • Identify or verify accurate patient addresses and demographics.
  • Automate and extend the ability to collect patient payments via phone through the use of Interactive Voice Response (IVR) solutions with integrated patient collection capabilities.
    • Integrate solutions using open technology standards to automate the patient collection process.
  • Automate patient payment posting into the practice management system.
  • Assess the need for patient payment incentives, such as discounts, for prompt payments.
  • Assess the need for a collection agency for aged receivables.

Opportunities for Billing Services

By increasing the focus on collecting from patients and using the tools, policies, and processes required to achieve payment assurance, billing services will increase patient collections while decreasing the time and operational costs to collect. Using these tactics to maximize patient collections, billing services and their clients will succeed in the evolving healthcare payments industry.

To learn more about achieving payment assurance, download InstaMed's Healthcare Payments White Paper for Providers at

Bill Marvin has been in the revenue cycle industry since 1993 and is the co-founder and CEO of InstaMed, the leading Healthcare Payments Network. 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.

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