While other industries enable customers to receive and pay bills online, in person or by mobile app, the healthcare industry has lagged behind – too often relying on a number of limited payment channels that are not only slow, but expensive and heavily paper intensive for healthcare payers and insurance providers.
Significant changes within the industry are creating a number of billing and payment challenges for payers and insurance providers. More consumers have access to healthcare and will be paying more out-of-pocket expenses. Insurance providers will be challenged to process consumer payments more efficiently and cost effectively to keep up with growing payment volumes. While they should consider digital channels for bill payment to speed up transaction time and lower costs, they must also be mindful of the members who do not have bank relationships or do not use traditional payment methods.
While telcos lead other industries in e-bill adoption among consumers, the healthcare industry lags behind due to the complex nature of its bills. How can healthcare payers and insurance providers offer integrated billing and payment touch points to consumers of the same value as other service providers?
The first step is to understand consumer habits when it comes to making bill payments. Today’s consumers are bill pay omnivores, meaning that they use an average of three different bill payment methods per month and 70 percent use three or more methods to pay bills monthly.
It’s not surprising, then, that 67 percent of U.S. online households say it’s important for service providers to offer multiple, payment options no matter the amount or type of bill.
Clearly, the healthcare industry will be challenged to process consumer payments more efficiently and cost effectively to keep up with growing payment volumes as more people entering the healthcare system as a result of the Affordable Care Act. Billing and payment in the healthcare industry is very paper intensive and electronification is one way to achieve this goal. According to recent research from Fiserv, 48 percent of all bill payments are paid online compared to 23 percent for healthcare bill payments. And just 10 percent of medical bills are presented electronically compared to 24 percent of all other bills sent.
The second step is to consider the change in the healthcare payment ecosystem after the Affordable Care Act expanded the population of those with access to healthcare. The result is that healthcare consumers are becoming more diverse including underserved and offline individuals who may be participating in healthcare plans for the first time. A growing number of participants in the healthcare marketplace are underserved, do not have bank relationships and do not use traditional payment methods such as checks, credit cards and debit cards. In fact, 28 percent of Americans are either unbanked or under banked, according to the Federal Deposit Insurance Corp.(FDIC).
What are the key components for a comprehensive omnichannel billing and payment strategy that will reach each of these unique consumer audiences?
The growing diversity of patients means healthcare organizations should start with a “point of preference” paradigm that identifies the needs of different consumer segments and aligns their billing and payment channels with those needs.
The following payment channels should be considered:
- In-person payments at retail locations (national and regional grocery stores, convenience stores, neighborhood markets): The in-person payment option is particularly beneficial for those consumers who don’t have a relationship with a financial institution or who prefer to pay bills in cash.
- Telephone payments (interactive voice recognition / (IVR), customer service representative / (CSR): While paying bills by phone is a preference for some, others use it specifically to meet a payment deadline. Making a payment via phone also allows customers to pay with a credit or debit card.
- Online payments: A significant segment of consumers prefer to receive and pay their bills online using a biller’s or bank’s website.
- Mobile payments: Tech-savvy smartphone users are rapidly being drawn to mobile billing and payment options through optimized web browsers that allow them to pay their bills on the go. Bill due alerts and reminders can help speed collection times and increase customer satisfaction.
- Mail-in payments: There will always be a segment of customers who rely on paper and will continue to make check or money order payments by mail. This represents an opportunity to provide targeted messaging and content to members.
The advantages for consumers to have these options are clear. What benefits does adopting an omnichannel strategy have for the insurance providers and payers?
Reducing costs and write-offs may be one of the biggest incentives for offering more consumer-friendly bill presentment and payment options. According to McKinsey research, each year healthcare insurance providers and payers write off $65 billion for unpaid healthcare. This excessive amount is only expected to grow as more consumers become part of the healthcare system with the implementation of Obamacare. Insurers face the additional, growing cost of reinstating policyholder insurance plans after they have expired due to non-payment or late payments.
Besides the acceleration of payment windows, providers and payers will find a reduction in operational costs when offering its members multiple billing and payment channels.
Additionally, research supports an uptick in customer satisfaction and correlates with the availability of multiple options, resulting in a happier, more engaged consumer open to further customer education and enhanced opportunities for cross-selling other products and services.
Rolling out an omnichannel strategy ensures points of access for each consumer and their individual needs. For some, the walk in channel, for example, matches a cash-only lifestyle; while, for others, it satisfies the need to make a last minute payment. Research shows that consumers today value and take advantage of the ability to mix and match offline and online channels for bill payments. Presenting more options for consumers to make healthcare payments is integral to alleviating the number of late or unpaid bills insurers have to offset.