High deductible health insurance plans (HDHP) are now ubiquitous, and patients have the majority of payment responsibility early on in the year and payers later in the year due to HDHPs. In fact, NextGen reported: “The amount a consumer must pay before a health plan pays any portion [of their bill] has increased by 255% since 2006.”
Various strategies can help you learn how to charge patients upfront in practice. From ensuring that there are clear policies in place to offering payment plans and relying on technology-driven estimations, you can improve the experience of charging patients upfront. When you learn how to collect payment upfront, medical care can be streamlined.
Simply put, you are not collecting the same amount of money if you wait until after rendering care.
Bills are typically mailed to the patient’s address weeks, or even months, after the visit. The patient pays the bill or doesn’t. If it’s paid, great. If it’s not paid, you’ll likely send the overdue balance to collections.
On average, health care providers send 3.3 billing statements before receiving payment, according to the MGMA.
Once a patient leaves the office, the chances of collecting their financial obligations drop significantly. Taking this step speeds up your revenue cycle by reducing the days the bill spends in accounts receivable.
Collecting copays and deductibles from patients at the time of service, or even prior to receiving care, can mean lower overall expenses, too. Sending and processing payments, as well as following up on patient statements, can be expensive. Upfront collection reduces the need for follow-up calls and multiple statements.
One of the challenges that arises when deciding how to charge patients upfront in practice is knowing how much to collect. Practice management requires educating employees, including front desk staff, on what standard practices are for collection.
Healthcare practices that don’t implement patient collections prior to or immediately after providing services can see their revenue significantly impacted. The same is true, however, if the point of service collection is not substantial enough.
According to athenahealth, practices only collect 12% of outstanding balances, on average, at the time of service and collect nothing at the time of service approximately 35% of the time.
Athenahealth also found that, on average, a practice writes off over 35% of the patient balance after a visit.
On average, providers can only expect to collect 50–70% of a balance after a patient visit, according to the Trends in Healthcare Payments Annual Report, 2015. This is due to increasing patient payment responsibilities in recent years with high deductible health plans (HDHP) increasing by 255% since 2006.
Just think about that. If you are primarily collecting payment after a service, you could be losing 30–50% of the balance.
In the early months of the year (January through March), approximately 40–60% of health care bills can be attributed to patient responsibility. Yearly, about 27% of the average health care bill comes from the patient's pocket, with insurance covering the rest.
Furthermore, if a patient’s bill exceeds 5% of their household income, the likelihood you’ll obtain payment drops quickly. From patients with high-deductible plans, providers can expect to collect about $0.18 to $0.34 on the dollar. 24% of adults in the country have past-due medical or dental bills that they’re not able to pay.
There is no question that healthcare costs have increased and coverage has become uneven, making collecting directly from patients more important than ever.
To break up the likelihood of payment, it’s said that within the first 90 days in accounts receivable, the collectability of accounts is 90%. Once accounts reach 90 days overdue, the chance of collecting drops to 50%. At 180 days, the chance of collecting falls to 20%. Account balances that are over a year old have about a 0% chance of collection.
Slow payment (payment after service) of high-deductible plan patients is the top collection challenge, according to 83% of physician practices under five practitioners, followed by the difficulties of communicating patient payment accountability (81%).
And despite the rising cost of care, the majority of patients with health insurance don’t fully understand what they owe. They may have a basic understanding of premiums and deductibles, but not of maximum out-of-pocket limits and prescription drug copays. Up to 16% of patients nationwide are not sure whether their insurance will pay for their covered care before reaching the out-of-pocket maximum.
Reed Tinsley, a CPA consultant specializing in healthcare accounting said: “Nine out of 10 patients couldn’t tell you what their copay or deductible is.”
Even if patients know what to expect when you collect copays and they understand where they’re at in meeting their deductible for the year, there are still concerns of financial hardship to consider. 67% of Americans say they are either very worried or somewhat worried about unexpected medical bills, according to the Kaiser Family Foundation.
Many patients have no clue what financial responsibility they have accrued until long after the time of service, which is surprising considering that 92% of consumers want to know their payment responsibilities up front.
In a study that was updated February 2021, 62% of patients said knowing their out-of-pocket expenses prior to service impacts the likelihood of pursuing care. Moreover, 65% of patients are more willing to make a partial payment when given a patient cost estimate at time of service.
It may seem simple, but collecting some up-front payment will always be better than none. The more you can obtain, the better off you will be. That doesn't mean you have to collect 100%, but it does mean that collecting more now is important to decrease days in your patient AR. Start by collecting a percentage of the total cost: whether it be 40%, 60%, 80% or 100%. You can set an amount that "has to be paid" and give options to pay more. That way, you'll get a certain amount before service with the possibility of more!
The following figures represent the typical ranges each specialty should aim to collect from patients prior to or at the point of care. These percentages reflect collections on the patient's cost responsibility, not the total charges for the service.
Dermatology: 30–50%
Orthopedics: 25–45%
Gastroenterology: 30–40%
Cardiology: 20–40%
ENT/Otolaryngology: 30–50%
Ophthalmology: 30–55%
OB/GYN: 35–60%
Pain Management: 25-45%
Urology: 30–50%
Physical Therapy: 40–60%
These ranges highlight the diverse financial dynamics across different medical fields. Specialties like OB/GYN and physical therapy often see higher up-front collection rates, potentially due to factors like elective procedures, predictable costs, or patient-initiated care. Conversely, specialties with more acute or unpredictable needs, such as cardiology, may face challenges in pre-collecting a larger percentage of patient responsibility.
First of all, you’ll need a software that can do the heavy lifting in benefits eligibility verification and patient cost estimates. You can do a lot without software assistance, but a good software like Rivet can streamline your workflow and increase cash flow.
It’s important to note: You’ll want to make sure your office staff is doing everything in their power to show transparency. That means you should try to avoid jargon in the billing process as much as possible, and offer ongoing staff training so any customer-facing employee can help patients understand pricing. All patients should know what they are paying for and why.
“If you want to collect the money that’s owed to you, you have to be willing to invest some time in making sure staff are trained to help, as a way of showing patients you care about them,” said Ken Hertz, FACMPE, a principal consultant with MGMA.
Collecting deductibles at time of service requires some clear strategies. You will need to:
But what does this look like in practice?
One of the most essential steps in how to charge patients upfront in practice is to ensure you have a clear payment policy.
To avoid sticker shock, generate estimates by relying on automated tools. This can help patients understand what their deductibles, copays, and out-of-pocket costs will be. Price transparency from the start can improve your chances of collecting.
You will need to train staff how to transition from being a “welcomer” to a “financial facilitator.” Front desk staff must know how to confidently begin collection conversations and handle all questions and issues professionally. Staff must have access to patient balances and the authority to offer payment plans.
By using technology like secure card-on-file options, you can make the payment process smoother and faster. You can send payment links 24 to 48 hours before the visit, making it easier for patients to pay right from their phones. Mobile check-in options are helpful, too.
Patients need to have many payment options available. Offer payments via credit cards, debit cards, digital wallets, and bank transfers.
For expensive procedures, including those that trigger high deductibles, offer interest-free, short-term payment plans.
Rivet's innovative solutions are designed to significantly improve these collection rates, empowering healthcare providers to accurately estimate patient costs and efficiently collect payments. The follow data demonstrates the tangible benefits our customers experience:
Create a high volume of accurate estimates. On average, Rivet customers generate 15,170 patient cost estimates per year. This high volume indicates a proactive approach to financial transparency and patient engagement, allowing for a greater opportunity to capture payments early.
Gain a substantial amount per estimate. Each estimate, on average, represents $262. This highlights the significant financial impact of each patient's responsibility and the potential for substantial collections when estimates are accurately provided and collected upon.
Collect more from patients annually. Annually, the average Rivet customer collects an impressive $646,139 in patient responsibility prior to service. This figure is a testament to the effectiveness of our platform in facilitating pre-service and at-service collections, directly contributing to the financial health of healthcare practices.
By leveraging Rivet's comprehensive patient pricing solutions, healthcare providers can move beyond industry averages and achieve superior up-front collection rates, fostering financial stability and a more transparent patient experience.
“With changing coverages, deductibles, and eligibility, it can be hard to produce truly accurate estimates at scale. However, with Rivet, running eligibility and estimates is a quick, one-stop shop.”
— Kellie Ickowski, Audubon Women’s Medical Associates
Rivet is a modern revenue cycle product suite that gives you payer superpowers to unlock more revenue from patients and payers. Besides offering accurate patient cost estimates with prepayment via text and email, practices use Rivet to manage payer contracts and fee schedules, prepare for contract negotiations, procure payment from denials and underpayments, prevent denials, and manage revenue analytics and predictably model future revenue.
For more information about the tools Rivet provides, schedule a Rivet demo.
One of the ways to avoid hurting the patient experience is to ensure that patients know how much they’re expected to pay. Provide estimates as early as possible while offering a variety of options.
Ensuring that your front desk staff is trained in the best ways of approaching this conversation is one way of managing this. It’s also helpful to use online portals or payment links to encourage patients to pay via their phones. Flexible financing can address expensive procedures, making it more likely that patients will end up paying their share.
Establishing clear policies is the first step. It’s necessary to train staff to pursue collection at the point of service, as well. Additionally, letting patients know what they will be responsible for can eliminate surprise bills.
Collecting upfront payments improves cash flow by providing immediate liquidity for all of your operational expenses.
Adhere to federal and state regulations to avoid penalties. For Medicaid patients, it’s generally not appropriate to ask for upfront payments, though it may be possible to obtain some small, nominal copayments.
For Medicare, if a treatment is not covered, there must be a signed Advanced Beneficiary Notice on file before collecting payment.
