In a world before high-deductible health plans, the annual deductible reset period came and went with barely a notice. That’s no longer the case. Today, the reset period creates confusion, frustration, and financial hardship for consumers. Understanding patient deductibles, premiums, co-insurance and co-pays are hard enough, but when annual adjustments are made to patient responsibility, things get even more complicated. And when paying gets complicated for patients, it can make collecting copays and deductibles from patients a bit trickier, and this ultimately reflects on a hospital’s bottom line.
Relying on typical collections practices during any time of year, but especially after the first of the year, is problematic for a number of reasons. First, aggressive collection tactics in an attempt to collect patient deductibles doesn’t work in most cases. Sending statement after statement and then passing the account off to an early-out vendor usually results in the hospital collecting only a portion of the total amount due. When this happens, hospitals turn over the entire patient financial experience to the vendor. And when it comes to collecting copays and deductibles from patients, will a vendor treat patients the way the provider would? There’s no way to know and that presents another problem: Surveys have found that even a single negative financial encounter can cause patients to put off needed care.
The annual reset period comes at the same time consumers begin receiving post-holiday credit card bills. When trying to stretch the budget to cover these increased responsibilities, hospital bills are rarely at the top of the list. When patients have trouble paying their medical bills, they’re more likely to put off needed care, skip getting their prescriptions refilled, or even reduce their medication doses to make them go farther. When this happens, a patient’s conditions can quickly deteriorate, leading to costly readmissions or visits to the ER. Besides the danger to the patient, hospitals take a hit to their value-based care reimbursements and patient satisfaction scores.
Become an advocate, not an adversary.
Collecting patient deductibles during the first part of the year is much more effective if hospitals work with patients to make it easier for them to pay. Offering flexible payment plans is one of the best ways to help reduce the financial burden on patients during the annual deductible reset, while also ensuring more effective collections of copays and deductibles from patients year-round.
In a consumer survey conducted in 2018, participants said they would be more likely to pay their full financial responsibility—and pay it earlier—if their provider offered a flexible payment plan option. In another survey, more than half said they would like the plan offered before or at the time of service and more than a third wanted a plan offered with their first bill. However, a recent survey by Eliciting Insights found that only one in four hospitals actually offer a payment plan at all.
SPAI (self-pay after insurance) patient balances below $1,200 have a payment rate of just 40.1% . The rate drops dramatically as balances increase; for accounts between $5,001 and $7,500 the rate is just 10.2%.
The most effective plans are those that allow future balances and balances from multiple family members to be rolled up into the same plan. This means patients have just one bill per month, which is much easier to manage than trying to keep track of multiple medical bills for multiple people. Having just one bill also makes budgeting easier, helps consumers better plan for their healthcare needs, and keeps them in better control of their insurance deductible.
Choosing the best payment program for you and your patients
Managing programs internally is resource-intensive. For hospitals with less than 30 days cash on hand, adding an in-house payment plan program could actually have a negative impact on cash flow. The bottom line is that hospitals aren’t banks and they shouldn’t have to spend their resources trying to manage multi-million-dollar consumer debt portfolios.
There are two other ways to approach patient financing and collecting copays and deductibles from patients, in addition to in-house payment plans: recourse lending and non-recourse lending. But which patient financing strategy is right for your hospital and your patients? Check out this infographic to explore the pros and cons of these programs and to learn more.
Offering flexible payment plans means hospitals start getting paid right away rather than waiting months and only collecting a portion of the total amount due.
Meeting the annual deductible reset period head on
Forty percent of Americans surveyed said they would be unable to cover a $400 emergency with cash, savings, or credit. The annual deductible reset, especially for those with high-deductible plans, makes the scenario even more dire. Offering flexible payment plans through a non-recourse lender can help ease the burden on the patients while ensuring hospitals get paid every dollar they’re owed. The result is a better patient financial experience, improved outcomes, and a stronger bottom line for the hospital.
Contact iVitaFi today to discuss non-recourse financing options for your patient population. Our program provides a no-interest line of credit for patients of all credit profiles, helping our partner hospitals throughout the U.S. improve cash flow, more easily collect copays and deductibles from patients, and ultimately reduce patient bad debt. We help patients pay for their out-of-pocket costs, keeping them on the path toward complete physical and financial wellness.