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Providers bear the brunt of unexpected patient out-of-pocket ?expenses, both financially and in terms of patient satisfaction and loyalty.

A California retiree who has health insurance with a $3,000 deductible through her former grocery store employer was shocked when she received a $1,200 bill after consulting a cardiologist about her blood disease. “When you go to the doctor, you aren’t thinking about the money,” she said. “You are not thinking about the bill until it shows up.”

This retiree is far from alone in her reaction. As patient financial responsibility continues to increase due to high deductibles and other out-of-pocket expenses, medical bills are becoming a bigger flashpoint for consumers—and for providers. Too often, people do not understand their health insurance coverage, leaving them angry over unexpected bills, and for growing numbers of patients, unable to pay them.

While consumers do place some blame on their insurers, providers bear the brunt of these unexpected coverage shortfalls both financially and in terms of patient satisfaction and loyalty. HFMA and its members have been working for several years to reverse this escalating problem, with the Patient-Friendly Billing initiative and Best Practices for Patient Financial Communications.

Through this work and the overwhelming feedback from patients, it’s no secret now that patient-friendly billing really begins before the bill. However, there’s still more work to do. Hospitals and health systems need to continue to revamp their billing processes so they begin before treatment occurs, when possible, and focus on more than collecting payments up front.

Coping with Unexpected Patient Bills

In the past two years, 30 percent of privately insured Americans and 37 percent of hospital patients received a surprise medical bill after their health plan paid less than they expected, according to a 2015 survey by the Consumer Reports National Research Center. Among those patients, nearly one out of four received unexpected physician bills.

Studies show that patients routinely underestimate what medical treatment will cost. Aflac WorkForces Report released a survey in 2015 that found 54 percent of employees have less than $1,000 to pay for an unexpected out-of-pocket medical expense while 68 percent regularly underestimate the cost of illness or injury, including out-of-pockets.

Although many patients who receive higher-than-expected bills do pay them, healthcare providers are collecting just 18-34 cents on the dollar overall from patients with high-deductible health plans, says Christopher Kerns, managing director at the Advisory Board Co. In response, many hospitals and health systems have made concerted efforts to shift patient collections to the point of service (POS). In fact, median POS collections over the last four years have more than doubled from $700,000 in 2010 to $1.8 million last year, according to the Advisory Board.

POS Collections Do Not Equal Patient-Friendly Billing

While POS collections can bolster hospital finances, requiring partial or full payment before treatment actually makes the billing process less friendly for patients—unless the requirement is accompanied by additional patient financial services. In fact, consumer expectations for those types of financial services are rising sharply: Eight out of 10 patients say the opportunity to review cost estimates prior to undergoing treatment is just as important as bedside manner when selecting a healthcare provider, according to TransUnion. Nearly half, or 47 percent, also say an installment plan would be extremely helpful in paying medical bills, up from 40 percent in 2014.

Billing that is patient-friendly, then, starts at pre-service and POS, with the hospital presenting patients with their specific health benefits information and payment choices so they can reach financial decisions that work for their families and their budgets. These discussions require tools and training so patient access and other revenue cycle staff can:

  • Verify identity, benefits, and pricing in real time
  • Estimate patient balances
  • Evaluate ability to pay and eligibility for government or other financial assistance
  • Offer compliant customized payment options, from cash discounts to payment plans
  • Confirm patients’ payment choices, from accepting a deposit with a credit card to enrolling the patient in a financing plan, with appropriate paperwork and instructions indicating the financial next steps

This level of detail and personalization is critical to moving beyond patient financial transactions to true patient financial engagement. This approach embraces HFMA best practices that call for compassion, patient advocacy, and education in all patient financial interactions, supported by patient bills that are clear, concise, and correct, the goals laid out in HFMA’s Patient-Friendly Billing Project.

For better or for worse, patients’ financial experiences color their satisfaction, clinical engagement, and even health outcomes. Insured patients who have positive billing and payment experiences give higher quality ratings to providers than people who have billing issues, according to TransUnion, which also found that four out of five people say clear billing processes play a major role in how they choose providers. The billing process is a high-stakes opportunity for not only improving collections but making a lasting impression on patients.

Ann Garnier is COO, CarePayment, Lake Oswego, Ore.

Publication Date: Tuesday, December 01, 2015