Reinventing the medical bill through a transformed patient billing process
Let’s face it: Today’s healthcare billing system is confusing and complicated for patients. And there is a big opportunity for improvement. The billing process is lengthy and confusing, which can make it emotional and highly stressful. Patients are often unable to understand the deluge of ambiguous information mailed to their homes up to two months after they’ve received medical services. Patients receive paper statements from multiple providers, Explanation of Benefits (EOBs) from payors, and bills littered with complex medical and insurance terminology and codes, without clear direction for who to contact with questions.
These challenges will be amplified as more healthcare consumers enter into High Deductible Health Plans (HDHPs), thereby increasing the amount that patients will be responsible for paying providers. The solutions to these challenges, however, will not come through the silver-bullet of a redesigned medical bill alone. Consumers also need access to simple, straightforward and reasonably thorough information so they can make educated decisions about their medical care. This can set a foundation of trust and confidence in the system upon receiving a newly reinvented medical bill.
Improving trust and confidence in the system can be achieved by helping consumers:
- Navigate the medical billing ecosystem
- Understand their patient responsibility
- Pay their medical bills
While the following proposed solutions are relevant for all stakeholders in the patient billing process, payors have the strongest ability to implement them by increasing patient education and leveraging customer experience and design principles. Providers can also improve the current patient billing approach, helping them reduce their own AR and self-pay bad debt write-offs.
Helping consumers navigate the medical billing ecosystem
The United States healthcare system, and the medical billing process in particular, are extremely confusing to understand and navigate. According to a recent study, 54 percent of Americans are confused by their medical bills, and 62% of patients are confused by out-of-pocket medical costs. For patients to make informed decisions about their care, they first need to understand how the system works. Increasing patient knowledge through transparency and education will help to diminish confusion and enable consumers to make smarter, informed decisions.
Patients have little insight today into the unique workflow of healthcare billing. Laying out the process in plain terms can help reduce confusion. Table 1.1 provides a high-level proposed overview of activities throughout the patient journey – from selecting a provider through receiving a final bill – that can be used to educate the patient on a newly transformed billing process.
Table 1.1 – High-level proposed overview of a transformed healthcare billing process
The ACA’s health insurance marketplace has yielded increased enrollment in HDHPs; a large portion of healthcare costs have shifted to consumers. The most popular insurance plans are those that offer the lowest premiums, but have the highest out-of-pocket expenses for care. Health Affairs states, as of March 2015, 90 percent of HDHP enrollees were in Silver and Bronze insurance plans with a deductible greater than $2,500.
Many patients don’t fully understand their insurance plan when they sign up because they lack a concrete understanding of insurance terms, such as premium and deductible. This confusion can lead to delayed payments or no payment at all, according to an InstaMed white paper. Patients would significantly benefit from a directory of commonly used insurance terms that are utilized on EOBs and insurance forms to help bridge this gap.
Additionally, patients don’t always understand the cost differential of using a provider that’s in-network vs. out-of-network. An analysis of 2013-2014 claims data shows that out-of-network providers charged patients on average 300% more than the Medicare rate for certain procedures. Patients should be given information through interactive online provider selection tools on secure patient portals. From there, users would be able to enter their insurance information, the type of service they need, and zip code to search for nearby providers that are in-network vs. out-of-network. Moreover, payors and employers can use this aggregated information to provide incentives for visiting in-network providers. The end result is that patients make an informed choice that impacts their medical experience and can contribute to lowering overall system cost of care.
Patients are not always aware that a member of their care team is not in network. A common example is when a patient undergoes surgery and the anesthesiologist is out-of-network. A recent Health Data Management article noted that higher rates of out-of-pocket expenses may cause providers to suffer from increasing bad debt write-offs if they’re unable to collect payments more efficiently. Enabling patients to easily access information about their health insurance plan and perform cost research before care is rendered will prepare them to make informed decisions and not be surprised when receiving out-of-network charges two months after surgery.
Many other aspects of the process cause confusion. Providing access to a patient billing advocate who is available via phone or live chat can help patients have access to a single resource beyond printed information available via online portals. This advocate can help patients eliminate confusion prior to and after receiving surgery, and even help answer any billing-related questions in real time.
Helping consumers understand their patient responsibility
Most patients experience a standard journey when they require medical care. From the time an incident occurs until care is received and paid for, patients are faced with a variety of emotions: anxiety, doubt, fear, confusion, mistrust, aggravation, and anger. There are a number of ways to ease these feelings and increase confidence in the system.
A key driver in patient anxiety is the cost of care. Before a procedure takes place, patients generally have no insight into the cost of their medical services. Providing patients with an estimated cost before they receive care would allow consumers to anticipate their financial responsibility based on the service they require in conjunction with their health plan and corresponding deductibles and co-pays. According to a recent study, 7 in 10 Americans said receiving estimated costs before a procedure would help them budget for payments.
Here’s an example of what this solution might look like in the form of a secure login portal accessible from an insurer’s website:
- Upon a referral by a Primary Care Physician (PCP) or Specialist for a service or procedure, the patient would be able to access an estimate of general costs associated with a service through a qualified cost estimator tool.
- The tool would take into account a range of hospital charges, provider charges, and other ancillary charges that may be associated with a procedure.
- Estimation ranges would account for complications that may lead to any additional expenses via a standard percentage that would be applied to all estimates.
- Patients would also be able to estimate their final out-of-pocket costs by comparing the estimated ranges against their remaining deductible.
When patients receive their medical bills, they often don’t understand 1) the specific service or procedure they are being billed for, or 2) the amount they’re being billed. They receive multiple paper statements; EOBs (which are not bills), and multiple bills for one episode of care. Patients should only be presented with the most pertinent information in an easily-digestible manner.
Bills should be consolidated to one page, with content written in plain language and organized into tables, using charts and graphs when possible to make data easier to comprehend. Simplifying the medical bill and providing patients with the clear, concise data they need to understand the services they were charged for, how to pay, and who to contact with questions is key. Bills should focus on a single episode of care without describing the procedure in complicated medical terms, ICD-10 codes, or reference IDs. Patients should be able to view a summarized display of any outstanding bills from past procedures with a URL to a secure portal they can visit to access additional detail. Finally, patients need to be able to distinguish between how much their insurance company has paid and their financial responsibility, so the amount they’re expected to pay is clear.
Making it easier for consumers to pay their medical bills
Many Americans are burdened with medical debt due to unexpected and unbudgeted healthcare costs combined with confusing medical bills. A 2014 Consumer Protection Financial Bureau report indicated that patients are so confused by their medical bills that they’re often not paid on time or at all, which negatively affects their overall credit. Payors can help patients better understand their bills by continuing to leverage their secure portals to share high-level information about insurance and insurance terminology, cost estimates, EOBs, and previous medical bills.
Once patients understand the information, it’s critical for them to be able to easily make a payment. The payment screen on the portal will link to a provider-specific payment site with instructions for the patient to pay their bill online, by phone or by mail. Ideally, providers can offer the opportunity for patients to connect with billing advocates to further understand the detail behind their bill.
A new patient billing experience for consumers
Payors are in the most suitable position to demystify the billing process for patients and help them make informed financial decisions about their care through patient education and cost estimator tools. By providing valuable billing information in a secure online portal and redesigning the medical bill to be easier to comprehend, patients can have more confidence in what they owe for their medical care.