Four steps to optimizing and streamlining healthcare payments
The stress level in physician practices is high – and not just for patients worried about their health. Office staff must balance patient scheduling and visits with office tasks and work flow, plus keep up with billing and collections. On top of that, it can seem like every task you undertake is governed by regulations, mandates, procedures and laws.
Too often physician practice employees may feel like their choices are limited, with finite options that don’t necessarily deliver the optimum, or desired, result. This can feel particularly true of payments—which are essential to a practice’s existence, but can be difficult and cumbersome to process.
There’s good news for practices spending too much time and effort on managing payments. You have options that can streamline payment and reconciliation, minimize risk and reduce costs. Perhaps surprisingly, practices should know that the best payment process may consist of several methods; you can adjust how you receive payments based on your unique practice requirements.
Optimizing payments, reducing costs
The following are four steps you can take to optimize your practice payments process and reduce costs.
- Increase efficiency
The 2016 CAQH Index shows that healthcare providers spend on average eight, and up to nearly 30, more minutes processing a manual transaction in comparison to the time required for an electronic transaction.
Many providers are adopting automated clearing house (ACH) payments, which are the most popular form of EFT. This is a great option for streamlining payments, but some practices may find that it increases their administrative burden because the remittance advice arrives separately from the payment. This requires that administrative staff manually reconcile each payment and ERA for accuracy.
Virtual cards offer an alternative means of electronic payment. While relatively new to healthcare, virtual cards are a widely accepted form of payment in all other types of business. One of their primary advantages is that the remittance advice can be included with each payment, streamlining the reconciliation process.
Practices are finding that they can “mix” their acceptance of ACH and virtual cards to optimize their workflows—electing to sign up for ACH from larger payers and accept virtual cards from smaller or out-of-network plans and payers.
- Improve cash flow
Medical practices – especially those that are small and independent – are continually challenged by the need to attain a stronger bottom line with better cash flow. Those that rely on check payments are already familiar with the “mail float,” “holds” and “partial holds” that can last up to two weeks.
Electronic payments not only decrease the time to get paid, they also eliminate the hold on funds deposited because the card network guarantees good funds are available. This acceleration of payments results in streamlined cashflow and reduced dependencies on credit facilities.
- Negotiate interchange fees
When you accept payment via a credit or debit card, there is an interchange fee for the transaction. The amount of that fee varies based upon the card brand (Visa, MasterCard, etc.), the card issuer (banks, credit unions) and the card processor (sometimes known as the Merchant Acquirer).
The payments arena has become hyper-competitive in recent years. Competition among Merchant Acquirers can provide significant discounts on interchange fees to providers. It’s worthwhile to do your homework on what you are currently paying and what’s available to find the best mix of quality, service and cost.
Negotiating your interchange fee doesn’t just apply to patient copays made by card. It will also make it more economical for you to accept virtual cards on the insured portion of a claim. Providers should negotiate lower rates with their Merchant Acquirer based on anticipated volumes of cards payments from both patients and the insurance payers.
- Reduce fraud
It’s an unfortunate story that happens too often – a temp worker in an office picks up checks, changes the information and cashes them. By the time the fraud is discovered, the temp is long gone – and so is the money.
Electronic payments reduce both temptation and opportunity for fraud. For example, a virtual card is typically a single-use payment instrument that can’t be altered and may be restricted so that it can only be settled if the right industry codes are present. It goes to a specific payee for a specific amount. Once used, the virtual “card” is deactivated – it can’t be reloaded and used for other purposes. Further, the card processors can track transactions real-time and charge back fraudulent transactions if fraud were to occur.
Custom-tailoring your payments
Physician practices receive reimbursement and payments from numerous sources – some familiar and trusted, others that may account for only a small portion of their income. It makes sense to adjust your payment methods based upon relationships and experience. For many practices, that means setting up ACH relationships with their primary payment partners while turning to virtual cards with other payers.
The good news is that you do have a choice, and with some due diligence, you can discover the payment methods and approaches that best meet your needs.