Patient Debt: Create a Plan Your Practice Can Tolerate
It’s not a surprise to many—practice owners, patients, and providers—that the cost of healthcare has increased drastically in the past several years. While the actual rates for specific services billed might not have changed significantly, the out of pocket cost to patients (deductibles and after-insurance responsibility) has increased by over 30% since 2015.
According to a Black BookTM RCM study in 2018, less than 5% of families had a deductible of $500 or less in 2015, while greater than 50% of families now have deductibles in excess of $3000-5000, and over 30% have deductibles higher than $7500. Healthcare premiums are outpacing the growth of inflation at FOUR-TIMES the rate. Yet, even with the availability of Health Savings Accounts and the expansion of the Affordable Care Act in 2014, a staggering 41% of the adult population (ages 21-49) state they have healthcare-related debt or are having trouble paying their medical-related bills. Many of these same respondents also stated this debt has adversely affected their credit score and caused other problems with their personal finances and/or ability to purchase homes, cars, or other big-ticket items.
What effect is this having on healthcare providers? Statistically, it has been reported over 65% of patients state they have been unable to pay their portion of the bill in full, or even make adequate payment arrangements. This trend has steadily increased since 2016, up over 50% from 2014, another 50+% in 2015, and is expected to climb even more by 2020 at a whopping 95%. The impact to your organization’s receivables will undoubtedly occur as patients’ make the inevitable choice between seeking/receiving care and paying the resulting invoice in addition to their usual monthly household bills.
So, what can you do to assist the patients who come to your organization and receive care while not taking the brunt of uncollected debt? The obvious hardline choice is to refuse to continue providing care to those with large outstanding debt present with non-life-threatening complaints. After all, as a for-profit business, there is an arguable standard as to whether you have an obligation to provide services. Of course, the trade-off will be the reputation and marketing repercussions that will come from turning away patients (especially children) should you decide to do so based on ability to pay.
Clearly, having a plan of action prior to the patient arriving at the clinic is in your best interest. Further, communicating (aka “training”) your team members on how to effectively and consistently convey your payment/treatment policy will also help reduce miscommunication, and later irritation, from the patient.
Things to consider when developing your payment/treatment policy :
- Is there a maximum amount of patient debt you want to allow on any account?
- Will this amount take into consideration multiple members of a family/household?
- Will you let the debt runoff over time? For instance, if a patient owed you a significant amount from 2-3 years ago that was never paid but has not utilized services since that time, will you allow treatment now?
- Will you permit partial payments for today’s service?
- Will you allow for the implementation of a payment plan?
- What if the patient does not adhere to the payment plan?
- At what point is a patient’s debt amount (or time for owing the debt) considered problematic?
- This should be coordinated with your RCM team.
- Are there any mitigating factors, such as complexity of injury or illness (i.e fractures, repeat visits for care of the same condition, non-covered services)?
Once you have considered these items and have worked out a policy for your organization, the next step is communicating your policy to both team members and patients – clearly, concisely, and repeatedly. With your team members, the best practice is to create a training plan that emphasizes their roles in helping to reduce any miscommunication with a patient and/or the guarantor regarding their insurance coverage, the cost of services, and the need to remit payment at the time of services (co-pays or other patient responsibilities). This can be achieved, and you will reduce front desk anxiety or confusion. Frequent re-training and refresher sessions will also provide front-line team members with “scripted” responses or conversation starters and will also assist them with managing sensitive topics, such as patient payments.
Next, be sure to communicate to your patients in all methods available, which must include direct communication by the provider – especially if your practice is smaller and the provider is in a position of ownership/administration. While these conversations should not replace care, taking a vested interest in your patient’s ability to afford good healthcare, both preventative and episodic, is as important as monitoring their diet or immunization status.
It is wise to always post any changes to your payment or charge policies on your website as well as any social media venues you utilize. Likewise, posting this same information prominently inside your waiting room or making it available in brochure form in your exam rooms can help reduce future surprises for your customers. This includes posting charges for self-pay programs. When surveyed, over 90% of prospective patients stated they felt it was important to know what they were going to be responsible for upfront.
Finally, if possible, be flexible. Create a payment plan or a cash pay plan that allows a patient to receive care at your facility while providing reasonable cost and generating a fair profit for your business. Many healthcare providers will assess their average reimbursement based on their typical visit (for urgent care, this might be something like a URI or strep throat) and then try to determine what is reasonable to receive from a person with no/high-deductible plan paying out of pocket.
Regardless of how you address the issue of patient balances and debt, the fact remains that those who practice medicine will continue to see an increase in large patient account balances as we move into 2020. Monitoring your accounts receivable on a regular basis and watching for trends will help you identify potential problems before they have a detrimental impact on your P&L. Being strategic and planning along with your RCM team can also help you prepare to manage accounts before the large debt is uncollectable.
The best practice may be to have a plan of action that talks frankly and openly with your patients to manage their care – and the cost- before it becomes a financial issue for both parties.