Struggling with self-pay: two paths
July 13, 2020
By John Talaga
The COVID-19 pandemic has injected uncertainty into every aspect of healthcare, including whether the government will reimburse providers for the treatment of uninsured people who are hospitalized as a result of the virus. Some certainties remain, however. One is self-pay. As insurance companies have offloaded financial liability to patients, insured patients have struggled to pay their new share of medical expenses. Meanwhile, the percentage of uninsured Americans has ballooned back to 2014 rates, according to Gallup poll respondents. With insured family’s premiums topping $20,000/year and the average single deductible at double the average of a decade ago, affordability is a critical challenge facing the American health system, one that is only exacerbated by the present crisis.
It is falling to health care providers to decide how best to tackle this challenge.
Facing their own financial constraints, some hospitals are responding by demanding greater patient accountability. This path includes familiar steps such as contracting with collection agencies to pursue unpaid balances. Recently, though, it has led to more dramatic steps, including suing patients for unpaid bills and pursuing wage garnishment arrangements. As the New York Times reported in November 2019, “In some places, major hospitals now file hundreds or even thousands of lawsuits annually. Those cases strain court systems and often end in wage garnishments for patients.”
While hospitals are within their rights in trying to jolt patients into health care’s new normal, this path likely comes with a host of unintended consequences. Patient satisfaction will obviously suffer, but even more troubling is the potential chilling effect on utilization—a key to effective health care. The new affordability crisis is also implicated in a vicious cycle wherein health problems reduce income and lower incomes are linked to higher rates of morbidity and mortality. This cycle virtually ensures that the sickest patients will also be the ones least able to pay for the care they need.
What, then, is the financially prudent path for hospitals and health systems who also want to preserve appropriate utilization and patient trust? As many organizations have found, this path is one of responsive payment support.
The cornerstone of this approach is the insight, supported by significant patient surveys, that the majority of patients are actually willing to pay their medical bills. This insight means that the best way to approach the affordability crisis is by collaborating with the patient, in ways that are comfortable and familiar to them from other industries. There are 5 key steps hospitals and health systems must follow to deliver effective payment support:
1. Automate payment plan offers; do not waste both the patient’s time and your CSRs’ by negotiating each plan individually.
2. Use state-of-the-art data and timely analysis of patient financial standing to offer a range of payment plan installments and terms. Advanced segmentation data will help determine terms that are mutually acceptable to provider and patient.
3. Remove roadblocks: Make self-activation as simple as possible for all patient demographics. (That means accepting paper checks as well as online or mobile plan activation.)
4. Meet modern consumer expectations by offering real-time, 24/7 access to accounts and rolling up new charges into the existing payment plan arrangement (extending the term but retaining installment amounts).
5. Impress healthcare consumers by offering unique features like the ability for other family members to contribute to their loved one’s account.
6. Don’t squander the patient trust you’ve gained by exposing their credit card data to breaches. As hospitals and health systems already know, protecting credit card data can be expensive and time-consuming, typically involving the establishment of a new network or performing cumbersome audits of the existing one. Finding a payment solution that is validated according to the regulatory Payment Card Industry Data Security Standards will save the organization operational costs and the headache of dealing with a data breach.
Both the aggressive collections path and the path of collaborative payment support stand to increase collections for squeezed provider organizations. Only one of them, however, sets the patient-provider relationship on the road toward affordability and improved health—and that relationship is more important now than ever.
About the author: John Talaga is the executive vice president for Healthcare at Flywire.