Accelerating Cashflow Through Up-front Collection

As deductibles continue to rise and more financial responsibility is placed upon the patient, the urgency to improve patient collection timelines becomes more crucial. In fact, one of our customers at Rivet recently commented, “For the first time in my experience managing a practice, our patient A/R is greater than our insurance A/R!” 

Rising out-of-pocket costs lead to increased patient A/R, and as this shift becomes the norm, now is the time to set up systems that will accelerate cash flow through up-front collections. 

Patients Have Become the Payer

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Note: Average general annual deductibles are among all covered workers. Workers in plans without a general annual deductible for in-network services are assigned a value of zero. 

Source: KFF and KFF/HRET Employer Health Benefits Surveys. Consumer Price Index, U.S. City Average of Annual Inflation (April to April); Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April)

Since 2008, general annual deductibles for covered workers have increased eight times as fast as wages. Deductibles have skyrocketed as a result of a different dynamic in health insurance plans, and in the case of high-dollar visits, we are seeing the meat of the residual balance falling on the patient. These types of balances can be stressful for both the patient and the physician, and 67% of Americans say they are either very worried or somewhat worried about unexpected medical bills. 

Since patient collections are becoming a more relevant problem as the out-of-pocket costs increase every year, now is the time to work to increase your patient’s propensity to pay through an improved payment experience. This begins with: 

  • Simplifying the patient’s understanding of bills by exhibiting greater transparency. 
  • Standardizing payment options and rates so they are consistent with each patient. 
  • Making it easy for patients to pay, including utilizing modern payment methods. 

Adjusting to New Processes: “The New Norm”

One major side effect of the rise of high-deductible health plans is the shift to patients becoming consumers. Communication with patients in the modern (and Covid) era should look different than it has before. As a result, your practice must work to leverage the comfortable platforms that patients use, such as their phones and computers. 

In order to embrace new technology and more effectively reach patients, it might be time to employ the following tools: 

  1. Text/SMS messages: Studies have shown that the majority of patients are more receptive to this form of communication, especially younger patients.
  2. Online Portals: Most practice management systems come with a built-in online portal, creating a seamless experience for registration, payment, etc. 
  3. Touchless Check-In: All documentation is digitized and completed online for easy at-home completion. 
  4. Kiosks/Self-Serve Options: These stations can be spaced out in waiting rooms so that patients can complete digital documents. 

Steps for Delivering an Up-front Patient Collections Experience

Working to create an up-front patient collections experience will enable your practice to collect more efficiently, be more transparent, and improve patient satisfaction. 

1. Create an Estimate

  • To create an estimate, consult either your actual contracted rates or analytics from remittance data (payment data). If you don’t have easy access to these, you can also use fee schedules or historical claims data. 
  • Pair the patient’s scheduled services with benefits and eligibility to give the patient their liability benchmarks (i.e. copay, expected residual balance due, etc).
  • Ensure that the patient receives this information in a clear way, utilizing modern delivery where applicable. 

2. Communicate Balances Early 

  • Prior to service, ensure that the patient is given the cost estimate for the service.
  • Ensure that payment policies are communicated to the patient (payment in full, payment plan, etc).
  • Keep in mind that if a patient is concerned about the cost pre-service, that would not change post service. Transparency should always be the goal. 

3. Make Paying Easy

It’s likely that in your office you have spent time developing systems for clinical care optimization and creating an effective patient workflow. However, when it comes time to collect payment there is often high friction around alleviating bills. This is likely because of the complexity surrounding patient billing.

One way to remedy this is to incorporate modern payment methods to make it easy to pay such as mobile pay, web pay, flexible cards (HSA/FSA, debit, credit), and card-on file auto payments. Providers should also provide multiple avenues for a patient to pay such as over the phone, through a patient portal/website, or at the point of service. 

4. Standardize Your Patient Messaging 

We suspect that in your practice you have some kind of payment plan policy. However, too often a great deal of discretion goes into its actual application, which can result in issues. A couple of ways we recommend remedying this scenario are: 

  • If you are using payment plans, standardize the timeline and minimum payments. The more exceptions you make, the more complexity there will be. 
  • If you are providing financial assistance programs, standardize the assistance amounts so you have a defensible policy. 
  • When you are asking for up-front payment, standardize what you are asking for. Do you require full payment, minimum down payment, etc.? Have a clear, documented process. 

5. Identify At-Risk Accounts

Knowing what to look for in terms of at-risk accounts can help you to act quickly to employ policies and procedures that will allow you to avoid missing out on payments. Some at-risk red flags include: 

  • Low Risk: Balances over 60 days with no payments made. While this isn’t cause for alarm quite yet, it could be an early indicator of the patient’s behavior. 
  • Medium Risk: Balances over 90 days with no payments made. Generally, these patients have now gone a few statement cycles without paying. This may mean that they may have no intent or ability to pay. 
  • High Risk: Balances over 120 days with no payments made. These patients may have gotten a collections notification and the likelihood of being paid is very low. 
  • Other Transaction Flags: Other indicators of an at-risk account might be a card that has expired or declined and has not been updated by the patient. In addition, an account with more than 2 balances sitting in collections and/or a minimum auto payment that is much lower than the targeted minimum is also a sign that some attention should be given to the account. 

Working to create an up-front patient cost experience that accelerates your cash flow earlier in the revenue cycle might seem overwhelming at first, but by working to incorporate policies and procedures that will increase transparency and reduce friction within the collections process, you will begin to see positive changes in your collection practices. 

This is an excerpt from the webinar "Accelerating Cashflow Through Up-front Collection". Watch the full webinar here. 

Read also:
Deploying Collection Initiatives for Up-front Cashflow 

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