While the Affordable Care Act was successful in reducing the number of uninsured patients in the US, any financial gains providers might have seen from the increase in coverage has been offset by the rise of patient accounts’ receivable, now about 10 percent of most providers’ total AR according to Jeff Goldsmith, PhD, in the HFMA article “Self-Pay Patient Financial Liability: A Hospital’s Biggest Post-Election Challenge.”
The problem? According to research by McKinsey & Company, “the fastest-growing portion of bad debt stems from what insured patients fail to pay after insurers have paid their portion of medical bills." And that was back in 2010, when one multi-facility hospital system’s “balance after insurance” for insured patients was growing at 30 percent a year. In 2016, more than 1 in every 3 workers with employer-sponsored health insurance were enrolled in high deductible health plans, up from 1 in 20 a decade earlier. And the average amount of those deductibles for employer-sponsored health plans rose 12 percent to $1,478, according to a Kaiser Family Foundation (KFF) report.
Attempts to Collect Patient Payments
Many providers are attempting to address the problem of growing self-pay balances by collecting payments at time of service. But based on research from Athena Insight, practices collect only 12 percent of outstanding balances at the time of service and collect nothing 67 percent of the time. Those who do collect have most success with balances of $35 or less, collecting 40 percent of those outstanding balances at the time of service. Collection efforts plummet to 6 percent for balances over $200, which is significant because those accounts make up 73 percent of all outstanding dollars.
And to further complicate the problem, healthcare providers are most successful at collecting payments from commercial and government insurance companies, but when it comes to collecting payments from patients, providers have work to do.
For one, point of service collections often mean talking with patients when they are in the middle of a crisis. Staff may feel uncomfortable being both the healthcare provider and the debt collector. Also, providers often don’t have the staff or budget to make follow up phone calls to patients or send more than a couple of statements and a collection letter. Providers also may not have the technology or the experience to offer payment plans, online payment options, or other consumer-friendly resources that healthcare consumers have come to expect from their experiences in other industries.
“Collecting from patients versus insurers will always be a greater challenge,” writes Jeff Byers in the Healthcare Dive article, “4 strategies for providers to collect on outstanding patient balances. “In addition, as time moves on from the originating point of service, personnel and administrative costs to collect outstanding balances add up over time.”
Early Out Recovery Programs
An increasingly popular solution for providers is to engage with a third-party early out recovery program.
These early out programs, like GLA Collection Company’s Kamp Medical Billing, specialize in customer-oriented approaches to collecting balances from patients, because that’s all they do. Also, through high-volume efficiencies from working with several different providers, early out programs are able to focus on patient collections at a much lower cost than a single provider’s office, which would have to hire additional staff and pay for statement and postage costs, credit card fees, additional computers and phones, employee benefits, and more. And with Kamp particularly, providers pay a percentage of collections when payments are received. So early out partners don’t get paid unless you do.
First-Party or Third-Party?
Also, early out collection programs can serve either as first- or third-party partners. Each option has its advantages … and disadvantages. Official correspondence from a third party sometimes gets noticed when a statement doesn’t, according to Robert C. Scroggins, in his 2014 Modern Medicine article “Collecting patient bills: When to use a collections agency.” Likewise, correspondence from someone other than the physician might help deflect some negativity away from the patient-provider relationship.
On the other hand, patients often do not distinguish between providers and collection representatives, even if they are third-party partners. "Never forget that those folks represent your hospital. If they do a poor job, it tarnishes the reputation of your organization," says Greg Meyers, vice president-revenue integrity at INTEGRIS, a 14-hospital system in Oklahoma.
Allowing early out collectors to serve as first-party partners, however, especially with vendors you trust to be patient-friendly, can create another positive interaction with your practice or facility. That’s important since a 2016 study by Connance found that patients who were satisfied with their healthcare provider’s billing process were more likely to pay their medical bills in full (74 percent) than patients who were not satisfied (33 percent). Also, first-party early out collectors can provide a sense of continuity to the healthcare experience, offering patients a seamless process from scheduling, to care, to paying their bill.
Multiple Payment Options
Early out recovery programs also can offer more payment options to patients. According to a 2009 McKinsey Quarterly survey, the majority of insured consumers (74 percent) say they are able and willing to pay their out-of-pocket medical expenses up to $1,000 per year, and as many as 90 percent would pay for medical expenses up to $500 per year. But many don’t because of “a lack of options for payment plans, poor timing of bills, and difficulties coping with confusing statements or policies.”
With Kamp’s early out program, the provider approves all statement verbiage, and we begin contacting patients with statements and follow-up calls earlier than most of our clients were able to do in-house. Also, patients have options to begin a payment plan, pay through our web-based payment center by credit card or direct withdrawal, pay with check by phone, or sign up for an automatic monthly debit. Payments received are posted to patient accounts, and Kamp provides a monthly reconciliation report of all accounts.
Patient Friendly Billing
Perhaps the most compelling aspect of an early out recovery option is that the best programs fit well within the Healthcare Financial Management Association’s (HFMA) Patient Friendly Billing® Project. The guidelines of patient friendly billing include clear, concise, correct, and patient friendly communication, and particularly for early out programs, HFMA recommends that they be “an extension of the business office, accountable to provider’s policies and procedures related to self-pay accounts. Accounts in early out should not be considered delinquent, but are in the process of resolution actions that occur before delinquency.”
Struggling to collect growing self-pay balances from your patients? Consider partnering with an early out program vendor like Kamp Medical Billing.