Take these steps to reduce bad debt
Dramatic changes in healthcare are a "call to action" for patient access, warns Katherine H. Murphy, CHAM, vice president of revenue cycle consulting in the Oakbrook Terrace, IL, office of Passport, part of Experian, a provider of technology for hospitals and healthcare providers.
"You cannot expect to operate the same way and hope for different outcomes," Murphy says.
Patient access departments can take these steps to prevent bad debt:
• Have a comprehensive process to clear patients financially prior to scheduled services.
If patient access doesn’t have this in place, says Murphy, "they need to develop one immediately or move to outsourcing the management of this process."
• Implement automated solutions to streamline eligibility verification, patient identity verification, financial screening, and charity application processes.
"Optimize financial stratification of accounts at the earliest point in the process," advises Murphy. "Don’t let the account become a bad debt in the first place."
• Prioritize which accounts should receive the most attention and what kind of attention (letter, bill, or phone call) they should receive and at what intervals.
"Minimize the bad debt opportunity, and work with the patient for best payment outcomes," says Murphy. "Doing this at the pre-service point or point of service — or prior to discharge, if an inpatient — is most effective."
• Offer user-friendly solutions such as web-based patient portals.
"Meet consumer expectations with online bill payment, communication, and financial assistance application processes," says Murphy. "This will add another protective layer for the bad debt potential."
Empower registrars
As much as 30% to 50% of bad debt likely could have been prevented through front-end denials prevention prior to service, estimates Paul Shorrosh, CHAM, founder and CEO of AccuReg Front-End Revenue Cycle Solutions in Mobile, AL.
According to Shorrosh, another 20% to 30% could have been diverted to charity, Medicaid, exchanges, disability, third-party coverage, prompt-pay discounts, self-pay discounts, or extended payment arrangements or charged to available credit balances, paid through non-recourse loans, or handled through other financial options.
"For both patient experience and the revenue cycle, patient access teams at every hospital in the country must change from collection reluctance’ to a collections culture,’" says Shorrosh.
This change requires top-down support, training, and scripting, he says, as well as automated systems for estimation, collections, and financial assistance.
"Systems have to be simple enough so that every registrar —and more importantly, pre-registrar — can divert bad debt before service is provided," Shorrosh says. She says patient access systems should have these capabilities:
• Systems that automatically check all self-pay patients for undisclosed coverage from top payers.
"This alerts your registration or pre-registration employee to flip the plan code from self-pay to a payer code when coverage has been found," says Shorrosh. "We find that 5% to 15% of self-pays already have insurance."
• Systems that alert registrars of the amount patients can pay on a payment plan.
If an uninsured or under-insured patient scheduled for outpatient surgery cannot afford to pay the estimated $5,000 liability, but can afford to pay $1,000 in 10 monthly payments based on their credit and income scores, says Shorrosh, "the likelihood of payment versus nonpayment is much greater."
"There is a tipping point’ where patients are likely to pay nothing when faced with a sum that is completely out of their reach, as opposed to paying what they can afford," says Shorrosh.
Hospitals would much prefer to receive $1,000 over time than nothing, with the added cost to collect ending in a bad debt write-off, he says. "This bad debt diversion and increased point-of-service collection can both be accomplished during registration or pre-registration," he says.
• Systems that automatically alert registrars that prior authorization is required for a procedure, prior to the patient’s arrival, or that the patient’s eligibility, identity, or address is in question.
Some alerts tell pre-registrars that there is no eligibility with the insurance carrier for the date of service, that there is hidden coverage with a different payer, or that the patient’s benefits are limited or exhausted. The system tells the registrar what options to offer the patient, based on their financial status.
"Now you’re empowering a registrar to reduce bad debt prior to service, and at no additional back-end cost to the health system," says Shorrosh. "It’s happening already, and new innovations are coming to market."
