So much has changed over the past two decades with high-deductible health plans, pay-for-performance, increasing payer denials, and a shift toward patient responsibility and consumerism. Yet, the revenue cycle is still stuck squarely in the 20th Century. Processes that were designed around payer reimbursement aren’t effective in our new consumer-driven healthcare ecosystem.
Now add COVID-19, and the need for a major revenue cycle overhaul is even more apparent. More than two million people had medical debt that went into collections during the pandemic, and that medical debt reached $47 billion between January 2020 and March 2021. Self-pay collection practices that weren’t working that well prior to the pandemic will certainly not work now.
But the challenge goes even deeper than just trying to collect. Since patients now owe more of their own healthcare costs, they’re demanding more: more control, more value, more information on costs, and more payment options. In short, they’re demanding a better financial experience—one that resembles a retail experience, including digital options, payment plans, and great customer service.
The road to financial recovery from the pandemic will not be easy, and hospitals will need every dollar they’re owed. Partnering with revenue cycle outsourcers can help. But not all vendors are created equal. Hospitals should look for partners that leverage innovation and technology to create a seamless revenue cycle designed around the patient experience. Following are four key elements to look for when choosing an RCM partner for the 21st Century.
Leverage patient data
Using a one-size-fits-all collections model is ineffective as not all patients have the same ability to pay. Providers should look for vendors that leverage propensity-to-pay analytics, as well as eligibility verification technology to get an accurate picture of each patient’s unique financial situation and needs.
This insight can then inform a more effective patient financial conversation. For example, if a patient lost a job and insurance coverage during the pandemic, they may be unable to pay for any portion of their healthcare bill. In this case, sending multiple collection letters or turning the patient over to bad debt too soon can damage the patient-provider relationship, lower patient satisfaction scores, and harm the hospital’s brand reputation. It may also result in patients putting off needed care, which can impact outcomes and payer reimbursement. Even beyond these reasons, aggressive collection tactics rarely return payment in full.
Instead, the hospital should use patient data to identify financial assistance or opportunities for charity care for this patient upfront to avoid a negative patient experience altogether.
Provide pricing transparency
The benefit of posting a list of service costs to the public can be debated. After all, the final amount a patient pays is rarely the original cost of the service. Some contend that providing prices upfront creates even more confusion for the patient. A better option is to use technology that uses a patient’s eligibility information to generate an estimate of patient responsibility. These solutions are readily available to hospitals and revenue cycle vendors, and they’re designed to work seamlessly within and between each entity’s existing systems. Having this level of transparency and interoperability ensures a consistent patient financial experience. Patient access personnel can use estimates on the front end to educate patients about the cost of the service, what their insurance plan covers, and what their final responsibility will be. Likewise, collections personnel can use these solutions on the back end to help identify the best payment options for the patient.
Make it easier for patients to pay
A survey of more than 2,000 patients found that 90% of patients want to pay their medical bills in full, and they want a payment plan option to help them do so. In the aftermath of COVID-19, it’s likely patients who could have paid their bills in the past will need a payment plan to do so now. Hospitals should choose a vendor that has the ability to offer payment plans that can be customized to the patient’s unique financial situation. These plans should include the ability to add future bills to the same plan—including those of the patient’s family members. Managing a single bill is much easier than trying to stay on top of multiple bills for multiple episodes for multiple people.
Besides payment plans, providers should choose vendors that offer a variety of convenient payment options. For instance, a 2017 poll by Black Book found 95% of consumers want the ability to pay their healthcare bills online. Offering self-service payment portals, digital payments, automated phone payments, and traditional payment methods helps increase the likelihood the hospital will be paid on time and in full.
Focus on compliance and collection best practices
In order to ensure the best patient financial experience, it is essential that collection vendors abide by industry best practices, including service level agreements and regulatory requirements. An in-depth analysis by Healthfuse found that 21% of accounts placed with outsourcers were aged beyond 120 days. The same analysis found vendor non-compliance rates of more than 50% for early-out self-pay accounts.
To mitigate this risk, hospitals need the ability to audit and monitor 100% of the vendor’s revenue cycle processes, from reconciliation to payment integrity. As part of compliance, vendors should leverage collections best practices and include KPIs that include patient satisfaction scores, as well as aged accounts receivable and net collection rates.
Creating a better revenue cycle
It’s a fact that times of crisis tend to highlight weaknesses in existing systems. This is clearly the case for hospitals and health systems in light of the COVID-19 pandemic. We’re now at a crossroads where we can decide to return to the pre-pandemic “old normal” or embrace the idea that the “new normal” can be better. This is especially true for the revenue cycle. It’s time to let go of old payer-centric processes and accept the fact that the patient experience has a direct and significant impact on the bottom line. In fact, research shows there is a direct correlation between the patient experience and a hospital’s brand reputation and “ability to capitalize on market share.” Working with a revenue cycle outsourcer that employs a patient-centric revenue cycle can improve patient satisfaction, reduce collection costs, lower days in A/R, and optimize the bottom line.