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Succeeding in an Evolving Industry - A Look at the Most Influential Trends in Healthcare Payments


An article by Bill Marvin, taken from the September/October issue of HBMA Billing.

The latest trends in the healthcare industry are driving change in the payments process for billing services. These include the rise of consumerism, increasing pressure on administrative costs, and ongoing reform mandates. In order to maximize performance for their clients in this evolving environment, billing services must be aware of how the industry is changing, acutely understand the challenges, and focus on specific areas of their services and solutions to improve performance and ultimately succeed and thrive in this new climate.

This article details some of the most influential industry trends for billing services, and what they can do to ensure success for themselves and for their clients.

Trends in Patient Payments

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 plans, resulting in an overall decrease in payer payments and, consequently, an increase in patient payments. This trend will continue as the Affordable Care Act rolls out throughout the next decade.

However, while providers rely on patients for an increasing portion of their revenue, they face challenges with collecting, as demonstrated by how providers wrote off an estimated $65 billion in bad patient debt in 2010 [McKinsey Quarterly, 2010].

In order to collect more from patients and reduce administrative costs, billing services need to enable their clients to offer more convenient, consumer-friendly payment options. For example, electronic payment options, such as online payments and payment plans, are quickly becoming more prevalent for patient payments. Since 2009, the number of payments made via payment plans has doubled and the number of online payments has tripled.

Furthermore, patients are willing to pay using these alternative methods. According to a 2011 poll, 70 percent of U.S. patients said that they would be interested in paying their healthcare bills online, and 63 percent said they would pay bills via a payment plan.

Trends in Payer Payments

Healthcare reform is a major factor driving change in payer-to-provider payments, pushing the industry to increase efficiency and decrease costs on both the payer and provider side of healthcare. To reduce administrative costs and meet new mandates, providers are implementing more efficient payer payment methods. One method is to utilize electronic remittance advice (ERA) and electronic funds transfer (EFT) with as many payers as possible.

Since 2009, the number of payer payments made via EFT – in comparison to the number made via paper checks – has increased by over 30 percent, as providers switch to this method to reduce costs and simplify the entire payer payments process.

Opportunities for Billing Services

The changes in the healthcare industry present challenges to billing services, including pressures to reduce administrative costs­ and increase patient payments for their clients.
Patient responsibility continues to increase and it now represents a material portion of a provider's revenue. Therefore, billing services need to implement the technology and processes required to collect more patient payments for their clients. For starters, billing services should enable their clients to offer more convenient payment methods, such as online payments and payment plans. Billing services can further increase patient payments for their clients by implementing tools and processes to estimate patients' responsibilities and pre-authorize patients' payment methods.

To process payer payments more efficiently while reducing costs, billing services should adopt technology that will allow their clients not only to receive payer payments electronically, but also to integrate the ERAs and EFTs to streamline payment posting and reconciliation.

By understanding the most influential industry trends and implementing business changes to meet the new challenges, billing services and their clients will continue to achieve success as the industry evolves.

Source: Trends in Healthcare Payments Annual Report: 2011 (InstaMed)

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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