As hospitals cope with an influx of self-pay patients, eligibility determination and upfront payments are the order of the day. As the insurance landscape changed over the past decade, traditional plans gave way to PPOs and HMOs. Employees paid a small co-pay upfront, and insurance paid for the rest.

But to combat the still-spiraling cost of healthcare, many workers have been forced to accept high-deductible health plans, which shift the initial burden of paying for doctor and hospital visits to the insured, usually coupling the high-deductible plan with some sort of health savings account (HSA).

This seismic change in how healthcare is paid for has brought new urgency to physicians’ offices and the accounts receivable departments of hospitals to collect payments up front. Patients are reluctant to part with their money until an insurance determination has been made, but once the patient leaves the facility, collecting can be a frustrating, tedious, and often futile effort.

A study from Connance, a patient collections application vendor, demonstrates the importance of the issue in the minds of hospital administrators. The survey of 173 senior-level finance and operations decisionmakers in healthcare organizations revealed that 43% felt that patient revenue growth will outstrip their ability to respond effectively.

To combat this problem, 47% of respondents said they plan to purchase new technology, 32% plan to restructure or consolidate collections operations, 30% will pursue modeling tools developed for the self-pay patient, and 24% plan to increase staffing levels.

“The patient is most willing to pay at the time services are rendered, but no one wants to pay until he or she knows exactly what is owed,” said Frank Marshall, COO of Irving, Texas-based MedSynergies. “Paying upfront is the ideal solution, but it doesn’t always happen.”

Privately held MedSynergies provides revenue cycle and practice management solutions, consulting services, business process analysis, and software integration that improve the daily operations of healthcare organizations.

Common sense

The key to an effective self-pay strategy is to get the patient involved as early as possible in the cycle. Answering insurance questions over the phone later or attempting to collect through letters can be an expensive and largely fruitless endeavor.

Marshall said that patients can be lumped into three groups: those who are willing to pay, those who are willing to pay but for whom paying is not a priority, and those who never will pay.

“The self-pay portion of the revenue cycle is the most expensive part of the process,” Marshall said. “There’s a high amount of human intervention, which is not scalable. Even if it only takes two or three minutes to explain a bill, often the patient doesn’t understand and is not happy about it.”

That’s why it’s vital to determine benefits as services are rendered, giving the patient no reason not to pay at that time. Marshall advises hospitals to track receivables closely, tabulating such items as billable starts by week and month, total payments before and after statements, letters and phone calls, call answer percentage, and monthly payment totals.

Determining the optimal type and frequency of contact will increase chances of collection, as will a call center staffed with knowledgeable people who can help patients understand their bills. “Although it seems like a common sense tip, call centers tend to slip as a priority when costs become a factor,” Marshall said. “However, your patients’ payments will slip as well.”

Finally, once the billing cycle is complete (after generally no more than 100 days), refer the account to collections.

Last resort

The collections process should be a last resort, said Michael Shea, president of Firstsource Healthcare Advantage, Inc., a wholly owned subsidiary of MedAssist, Inc., where Shea is CEO.

With 47 million Americans having no insurance whatsoever, hospitals must quickly identify these people and help them apply for government assistance or the hospital’s own charity program, perhaps reduce the bill on a sliding scale based on the patient’s ability to pay, or see whether the patient qualifies for a low-interest extended-pay plan.

“Hospitals are acutely aware of their image in the marketplace, treating patients with dignity, compassion, and respect,” Shea said. “If there are three hospitals to choose from and one has a credit card solution to offer, that facility may be viewed as more customer-service friendly.”

A 42-bed Southeastern Kentucky hospital hopes to improve its collections at the point of service by qualifying patients on the spot for alternative programs. Knox County Hospital in Barbourville, Ky. has been working with Brick Mountain Billing on the program, which started in October. 

The hospital has a social worker/credit counselor on staff to determine eligibility. While patients are, of course, seen for emergencies, non-acute patients are referred to outpatient facilities if they don’t have insurance.

“Small hospitals can’t afford programs that determine eligibility on the spot and don’t have the manpower,” said Kris Partin, CEO at Brick Mountain.

Before adding a counselor, the hospital treated patients and hoped for some sort of reimbursement on the back end, sending delinquent account to collections after 90 days. By working with patients up front, the hospital believes it can qualify patients for Medicaid and other assistance programs before costly elective procedures are performed.

“We can do our own Medicaid applications, and if they don’t qualify, they can apply for a credit card,” Partin said. “If it becomes a hospital charity case, we can look at a payment plan. And if the visit is elective, we can deny service at that point.”

If the pilot works as anticipated, the next step will be to add counselors beyond the day shift in outpatient admissions. Any program aimed at self-pay and uninsured patients needs to impact the statement process and the collections cycle, Partin said. 

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