High deductible health insurance plans (HDHP) are now ubiquitous, and patients have become healthcare payers. 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.”
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.
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, 30% of the average health care bill comes from the patient's pocket.
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.
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, half of patients don’t fully understand what they owe.
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, their 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.
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 predictively model future revenue.
For more information about the tools Rivet provides, schedule a Rivet demo.
