The healthcare industry is responsible for hundreds of billions of dollars of financial transactions each year. For healthcare providers, the majority of operating revenue comes from a group of large payers, comprised of the government (Medicare/Medicaid) and private insurance companies. In a given episode of care, a healthcare provider first files a claim with the patient’s insurance company, the insurance company accepts or rejects the claim and, if ultimately accepted, the claim is paid to the provider who logs the transaction data and determines the patient’s financial responsibility for the remainder of charges for care.
To complete the complex web of transactions mentioned above, providers, until recently used paper forms and paper checks. Today, nearly every provider uses some form of a clearinghouse technology platform that integrates with their EHR/PM system. These platforms handle claims, denials, remittances, appeals, and other payer/provider transactions, automatically whenever possible. Vendors of these platforms claim to save providers millions of dollars in operating costs as well as accounts receivable days.
Historically, the remaining patient financial responsibility was an insignificant percentage of the total bill, not enough to focus a large amount of resources on collecting. Most bills, if paid, were paid by mailing a check or paying a copay at the point of service. This made reconciliation and posting patient payments relatively easy.
Over the past 10 years, the payer mix has shifted towards the patient, in the form of high deductible health plans. As a result of having these plans, patients face higher out-of-pocket costs and providers must collect, process, and deposit significantly more patient revenue than in the past. With more dollars at stake, patients are starting to shop around for the best value and patient experience they can find.
What happens when patients demand a consumer-friendly payment experience? Providers have responded by offering multiple payment options such as online portals, payment plans, IVR phone lines along with traditional payment channels like cash and credit card at the point-of-service. As a result, the patient portion for a single patient could come from 2-3 different payment channels. All of these payment channels must be consolidated and reconciled before depositing and posting the total payment amount back to the patient’s account.
Additional Payment Processing and Reconciliation Challenges
In addition to consolidating multiple payment channels, payments made by credit card are often split into separate disbursements by the card associations on a daily basis. This creates multiple streams out of each channel that accepts credit card payments. For a health system with multiple locations and several payment options, this can result in thousands of small disbursements per month.
If you think of each patient/guarantor as an individual third party payer, which is technically true, you end up with a daunting reconciliation process, one that most providers still handle manually due to lack of technology. Multiple deposits must be broken down and matched up with individual patient transactions, the results of which must be posted back to those patients’ accounts. This creates many costly inefficiencies and opportunities for human error.
The Solution: An Automated Clearinghouse Platform for Patient Payments
An automated clearinghouse platform similar to the ones that manage claims, denials, and remittances, but that is specifically tailored for patient payments can bring the patient payment process back into order. The platform consolidates all patient revenue while maintaining the data of each individual patient transaction, reconciles the payments, and deposits the revenue in a single daily disbursement.