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White Paper
Changing Reimbursement Models Affect How Providers Get Paid
Summary
The patient is becoming a more integral part of the payment picture
Many providers who have relied on a proven method of getting paid – see the patient, code the visit, submit a claim, and receive payment from the insurance company for services provided – are reconsidering their approach.
Traditional payment models are being replaced as the patient becomes a more integral part of the payment picture due to the advent of high-deductible health plans (HDHPs), increasing copays, and an overall shift to greater patient responsibility. The days when a health insurance payment covered the majority of the patient’s bill are fading, replaced by a blended reimbursement model in which the patient is responsible for paying a larger portion of charges.
While some practices have begun laying the groundwork for a blended model, others have not started to address the growing importance of patient payment. A Change Healthcare provider poll revealed that only 23 percent of practices participating in the poll currently require payment beyond co-pays at the time of service. On the other hand, 19 percent don’t currently have a process in place to take patient payments, and 34 percent are not sure of the impact of increased patient responsibility.1
The Evolving Reimbursement Dialogue
Discussions about the increasing cost of healthcare have grown louder, creating a national awareness about the cost of care. Fueled by the fact that national health expenditures accounted for 17.2 percent of the Gross Domestic Product (GDP) in 2012 and are projected to grow to 19.9 percent by 20222, this new consciousness is driving changes in payment methodologies that help lower the cost while also improving care quality.
Quality-based payments that incentivize providers to both control costs and improve quality are becoming a more regular part of total reimbursement.
In addition, there is an increasing prevalence of health savings accounts and HDHPs – where patients pay a lower premium yet bear a larger portion of the healthcare bill. An estimated 15.5 million people are covered under these plans, which have experienced an annual growth rate of approximately 15 percent over the last several years.3 The accelerated growth indicates that employers are attracted to this model as a way to stem their rising costs and push a degree of responsibility back to the employee.
Emerging Reimbursement Models
As healthcare continues to evolve, reimbursement models are changing. The traditional fee-for-service has been around for years. In this model, there is little financial incentive for the provider to monitor care quality, outcomes or overall cost; instead, the practice is financially incentivized to focus on the number of patients moving through and charges for services provided.
Contrary to the traditional approach, value-based reimbursement models reward clinical outcomes as driven by treatment efficacy and efficiency. In these models, providers still may be paid fee-forservice for some portion of the payment and are incented with bonus payments tied to reduced costs and enhanced quality outcomes. It often includes bundled payments, where payers replace separate payments to each provider with a bundled payment based on quality of care. The provider organization then has the burden of “unbundling” the payment to distribute it accordingly to those involved in care delivery.
A third model gaining traction encompasses a blend of payments from the payer and the patient. This is creating a new reality in which providers have to manage billing and payment collection from both payer and patient.
The inevitable transition to a blended model is smoother with the right technology, people, and processes to drive patient payment. These five best practices help providers sharpen their focus on patient responsibility and, ultimately, improve financial performance.
Best Practices For Boosting Patient Payment
The inevitable transition to a blended model is smoother with the right technology, people, and processes to drive patient payment. The following best practices help providers sharpen their focus on patient responsibility and, ultimately, improve financial performance.
1. Verify Eligibility and Benefits.
To maximize the payer portion of the payment, practices should consistently verify eligibility for all patients during scheduling and just prior to their visit. This establishes a revenue safety net, ensuring the practice capitalizes on payer payments as part of the overall reimbursement equation. While eligibility verification can be done manually, an automated verification tool can not only improve the efficiency of the process but also accuracy, making certain that patients are properly cleared before coming onsite to the practice.
The inevitable transition to a blended model is smoother with the right technology, people, and processes to drive patient payment. These five best practices help providers sharpen their focus on patient responsibility and, ultimately, improve financial performance.
2. Estimate Patient Responsibility.
Shifting patient payment conversations to earlier in the patient encounter can increase the likelihood of payment and improve patient satisfaction. A key component of these conversations is the patient estimate. By using real-time technology to establish the patient’s co-payment and co-insurance amounts, as well as any unmet deductibles, organizations can create a clear estimate about the patient’s expected payment based on what the payer has paid historically. This creates transparency with patients for a better financial experience, increasing the likelihood that those patients will pay their bill.
3. Communicate Your Financial Policy.
Define the financial information that should be presented to the patient during the visit, how that information should be communicated, and the types of payment plans available. Practices should train those who work directly with patients to be sure they understand the increasing burden patients face and are comfortable counseling patients on their financial options. This policy also identifies internal processes that may need to be reworked to support estimations and payment plans.
4. Collect Payments at Point of Service.
Have the tools in place to collect from patients when they are ready and able to pay, ideally at the point of service. Practices should offer more consumer-friendly methods such as online billing and payment tools, telephone payment options, and effective print statements for those that prefer them.
5. Have a Plan For Delinquent Payments.
This may involve reaching out to the patient and offering a payment plan or helping the patient transition into charity care. Practices should also develop a protocol for improving collections on delinquent patient accounts. Practices may want to consider employing automated tools that can create, manage, and monitor work queues. Many practices find that routing delinquent accounts into a work queue helps staff focus on those that are likely to transition into payment versus bad debt.
Practice Profitability is Achievable
HDHPs are changing consumers’ thoughts about when to see a physician as patients experience higher out-of-pocket payments, with the average in-network deductible nearly doubling in the last five years, rising to $1,230 in 2013.4
As patients have more financial stake in their care, they are seeking out organizations that offer a more consumer-focused experience. For the revenue cycle, this translates into the need for greater transparency in the form of upfront estimates, payment plans and direct communication with staff about payment responsibilities. The opportunity lies in preparing now for the move to greater patient responsibility, coupled with the increasing demand for a more transparent process. Targeted efforts focused on increasing communication with patients can better support a revenue cycle that relies more on payment at the time of service in order to maintain fiscal health.
1 Change Healthcare "Revenue Opportunity: Creating Success for Your Practice" May 2014.
2 Centers for Medicare & Medicaid Services, "NHE Fact Sheet," http://www.cms.gov/Research-Statistics- Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet.html.
3 Americas Health Insurance Plans, January 2013 Census Report, http://www.ahip.org/HSA2013/.
4 McKinsey & Co. Overhauling the US health care payment system, June 2007; The Advisory Board Company, Financial Leadership Council. 2007. Cultivating the Self-Pay Discipline.
