By David Shelton
Healthcare costs have skyrocketed in the last few years, with Investopedia saying the average family has nearly $20,000 annually in healthcare premiums; after employers’ contributions, individuals are left with almost 30 percent of that amount to pay out-of-pocket. Premiums aren’t the only problem. A 2019 GoodRx study shows drug prices have gone up 32 percent since 2014, and the proliferation of high-deductible health plans has pushed patients’ out-of-pocket expenses higher than ever.
As troubling as these numbers are, another healthcare trend worries Americans even more: surprise medical bills. In a Kaiser Family Foundation Health Tracking Poll in late summer 2018, two-thirds of respondents said they were more worried about affording an unexpected medical bill than health insurance premiums, deductibles or drug costs. They have reason to be concerned. A 2018 study by NORC at the University of Chicago showed 57 percent of adults had received a bill for medical services they mistakenly thought were covered by their health insurance.
A Disturbing Trend
Patients’ growing angst over surprise billing is well-founded. A study published in 2019 in JAMA Internal Medicine showed the ratio of emergency department visits resulting in an out-of-network bill rose from 32 percent in 2010, to almost 43 percent in 2016. The mean amount patients were potentially responsible for went up from $220 to $628 in the same timeframe. Similarly, the ratio of inpatient admissions with an out-of-network bill increased from 26 percent to 42 percent, with patients’ mean liability increasing from $804 to $2,040.
All these facts point to financial challenges not just for patients, but for healthcare providers as well. A July 2019 report by the Center for Retirement Research at Boston College confirms the much-quoted statistic that about 40 percent of American households would have trouble paying an unexpected $400 expense. When patients can’t or won’t pay surprise medical bills, providers must either spend valuable resources trying to collect or write off the outstanding balances as bad debt.
Action Plan 2020
Fortunately, providers can help save themselves and their patients from these financial entanglements by preventing surprise medical bills. Three essential actions should be at the top of the priority list in 2020.
1. Change patients’ confidence
Surprise bills are one of the reasons public trust in the healthcare industry has declined. To prevent surprises and regain patients’ confidence, providers must give them what they expect as consumers, including transparent, consistent prices; easy-to-understand bills and ways to pay that fit their financial circumstances.
Ideally, registration staff should contact patients before their appointments and have access to their insurance plan eligibility, deductibles and co-pays. Using this information, along with accurate bill estimates, staff can let patients know what their financial obligation will be before care is delivered.
Tools are available to assess patients’ ability to pay, which can help staff suggest the most appropriate payment options and generate customized financial plans. Healthcare providers with a high share of uninsured and/or self-pay patients should consider offering free advocacy services to find public and third-party assistance programs to help patients get the care they need.
2. Change the conversation
Registration and business office staff are often uncomfortable talking to patients about what their care will cost and how the money will be collected. Typically, they have the same vague conversation with every patient regardless of their financial situation, which can lead to anxiety for patients and low point-of-service (POS) collections for providers.
A better approach is to provide staff with training and tools that guide them to personalize the conversation based on each patient’s care needs, financial circumstances and level of understanding. Clear communication and compassion can help prevent surprises and difficulty collecting down the road.
3. Change the culture
Eliminating surprise billing is largely a matter of having the right tools and processes in place, but there is another important, often overlooked factor. Providers must ensure their organization’s culture will support a shift in the patient financial experience. According to Forbes, patients account for 35 percent of provider revenue; thus, they should be treated as the valuable consumers they are. In the 2019 Consumerization of Healthcare Study by Econsultancy and Adobe, 75 percent of consumers said they want their healthcare experience to be the same as they get in other industries. Specifically, they want personalized, simple experiences where they feel in charge and empowered. Taking steps to eliminate surprise bills is a key component.
The Benefits of Change
The patient financial experience, which includes streamlined registration, accurate bill estimates, multiple payment options and no surprises, can strongly impact provider revenue. Healthcare organizations that delay implementing patient-centered financial processes and tools could potentially put even more revenue at risk in the future. More than two-thirds of finance executives who participate in The Health Management Academy predict the share of revenue coming from patients will increase by up to 10 percent in the next five years. Another third believes the patient portion will go up more than 10 percent. Taking steps to prevent surprise medical bills in 2020 can increase front-end cash collections, reduce bad debt write-offs and secure patient loyalty for years to come.
David Shelton is Chief Executive Officer at PatientMatters.