Discovering Effective Strategies for Determining and Communicating Patient Payment Responsibility

Real world perspectives on Patient Payment Responsibility
The following is an important excerpt from the recent HFMA Roundtable titled Patient Payment Responsibility: Real-world Perspectives

As patients continue to shoulder greater financial responsibility for their healthcare, the desire for meaningful pricing information is increasing. Although transparency of a hospital’s charges can be useful, it also frequently fails to reflect what is top of mind for the patient out-of-pocket expense. In this HFMA Executive Roundtable, financial executives share their thoughts on effective strategies for determining and communicating patient payment responsibility prior to service, with particular focus on practical challenges as well as opportunities.

What are some of the benefits associated with providing estimates of payment responsibility prior to service?

Philip Hardin:
Growing numbers of uninsured or underinsured and trends toward high deductibles mean consumers are more concerned these days regarding cost burdens associated with their health care. Providers are facing increased requests from patients to understand their fee structures, particularly as self-pay patients seek the best value among competitors. Given this retail environment, it becomes important for providers to not only communicate potential financial responsibility prior to service but also ensure this communication is consistent.

Setting payment expectations from the outset with patients is increasingly necessary to improve collections. If you look at most hospitals, typically the self-pay component may be only 5 percent to 6 percent of total net revenue, but it’s driving 16 percent to 17 percent of the outstanding accounts receivable, resulting in self-pay having a disproportional impact on the cash flows and financial performance of the facility.

Patrick O’Connor: From a customer service standpoint, reducing the element of surprise in billing and collecting is important. When we present an estimate to a patient, there is an opportunity for discussion of financial need and our charity care program. We have a very liberal charity care process: if your income meets certain guidelines, then the hospital will waive the balance up to the total charge. All we require is completion of an application and attestation of financial need.

In the past, patients might not have found out about these services or been aware of their eligibility for them until months after treatment. With up-front discussions, patients’ concerns are eased from the outset that they won’t be facing a bill beyond their means to pay. Also, they won’t be as likely to postpone care when they know they have a financial resource to help them. Since moving this discussion to the front end of patient interactions, we’ve seen the adoption rate for our financial assistance program quintuple over the past two years. This shift also helps the hospital, as accounts eligible for charity care are less likely to end up being mistaken for bad debt.

Rodney McCoy: Ensuring completeness and accuracy of the patient’s billing information is eased for the provider when financial communications occur prior to service. A lot of issues that impede cash flow coming out of patient access are due to bad data, such as inaccurate mailing addresses or incomplete eligibility or financial assistance information. If you can get this information up front, then you have time to make sure everything is correct prior to the patient receiving service. When you are not able to receive this information until the day of the procedure, you are far less likely to identify a need to obtain or verify information—much less collect payment—while the patient is still on site. And after service is provided, it is far more difficult to locate patients and have these communications.

What advice would you offer other providers looking to provide patients with advanced estimates of financial responsibility?

Tony Morrison: Knowing your contracted rates is key. Your charges really don’t tell the whole story, the contracted rate does. Patients aren’t concerned with what is being charged for the procedure so much as the expected out-of-pocket portion that they will be responsible for based on the contracted rate. Having the necessary contract information current and easily accessible for staff is important.

Philip Hardin: The patient financial management team must work closely with IT so they can agree on what the objectives are and what data need to be accessed. Regarding advanced estimates, in order for up-front collection strategies to work, there is a need to integrate information with the patient accounting system. Retail payment capabilities, such as online payment, require highly integrated data. Therefore, it’s important that various teams work together.

Penny Nydegger: It’s important to recognize that providing estimates requires both a change in culture and processes. We’ve worked hard to educate everyone that assisting patients so they reach financial clearance is not only part of our mission but also key to financing our future. In terms of addressing processes, our approach has been gradual and has been aided considerably with adopting appropriate technology. We have improved point-of-service collections by 40 percent since we started providing estimates two years ago.

Participants in this HFMA Roundtable:

Philip Hardin
Executive Vice President of Provider Services, Emdeon

Suzanne Lestina, CHFP, CPC
Manager of PFS/Revenue Cycle, Healthcare Financial Management Association

Rodney McCoy, CPA
Director of Patient Access Services, St. Dominic's Hospital

Tony Morrison
Director of Patient Financial Services, Sanford Health

Penny Nydegger
Director of Patient Access, BroMenn Healthcare System

Patrick O'Connor, MBA, RN
Executive Director of Revenue Cycle, Lake Forest Hospital

To find out more about Patient Payment Responsibility: Real-world Perspectives, read this report in its entirety.