Payment for healthcare services can be the responsibility of providers, insurance payors, the government, or the patient. Increased patient responsibility has caused a rise in financial stress for healthcare organizations. Some aspects of patient responsibility that affect the reimbursement for providers include what the patients do not know about receiving care, higher deductibles, and the increase in healthcare costs over the years.
Patients and The Unknown
There are many factors of receiving care that patients are unaware about. A survey by West of 230 providers and 1,000 adults reveals that 36% of providers never discuss the patients’ ability to pay prior to receiving care. It also reports that 75% of patients do not know the cost of care until a bill is received.
A report by MedData states that 49% of patients claim that having clear information on what is expected of them to pay out-of-pocket before receiving treatment impacts their decision to use a healthcare provider. Similarly, 62% of patients claim that knowing their out-of-pocket expenses prior to receiving care impacts the likelihood of pursuing care.
The survey by West highlights that the top reason 42% of patients leave medical bills unpaid is “unexpectedly high deductibles.”
High Deductibles
High deductible health plans (HDHP) have become increasingly popular in the healthcare insurance marketplace. The IRS defines an HDHP as “any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,900 for an individual or $13,800 for a family. (This limit doesn’t apply to out-of-network services.)”
A Kaiser Family Foundation report shows 31% of employees enrolled in their firm’s HDHP plan in 2020. This is second only to the preferred provider organization (PPO) plan, which 47% of employees enrolled in.
Higher deductibles mean more out-of-pocket costs for the patients. When patients do not have the ability to cover the entire deductible, the bill is left sitting in accounts receivable.
Increasing Healthcare Costs
Healthcare costs have risen quicker than the average American wage. The Peter G. Peterson Foundation stated that the price of medical care has increased, on average, by 3.5% per year over the past 20 years.
A Kaiser Family Foundation analysis cites a 22% total premium increase from 2015 to 2020. There was an average increase of 4% for both single and family premiums in the past year. Employees, on average, spend $1,243 for single coverage and $5,588 for family coverage.
The increase in healthcare costs can be attributed to many factors including, but not limited to, an aging population, a rise in chronic illness and obesity, and an increase in pharmaceutical costs.
What This Means for Providers
3 in 5 Americans claim to not pay their medical bills on time, if at all. This causes healthcare organizations to see an increase in their accounts receivable balance. With 30% of hospital revenue attributed to patient payments, healthcare organizations must address the patient responsibility increase immediately.
Providers can offer better price transparency. 75% of patients research the cost of medical procedures prior to receiving care. Making pricing visible on healthcare organizations’ websites will give patients the opportunity to seek care with a clear understanding of the cost.
Providers can offer patients an estimate of the cost breakdown of the service. This can include a clear explanation of what the patient may be responsible for. Training staff to discuss cost and payment options prior to receiving care will result in fewer outstanding patient bills, thus increased revenue. The explanation of payment responsibility will remove the “unknown” factor when a patient receives a bill.
Lastly, 36% of patients have trouble remembering to pay their bills on time. Having a system to remind patients of outstanding bills can increase reimbursement. Offering solutions for patients to receive their bills, set up reminders, and make payments online will increase the likelihood of receiving payment.
For more information on ways to optimize a healthcare organization’s revenue cycle, read more on Data-Core Healthcare’s blog.
