Adapting to new patient payment trends: Five best practices

When the patient’s financial responsibility is anything less than $500, patients are likely to pay. But when their responsibility is anything more than that, there’s a high probability your medical practice is going to end up writing that dollar amount off as bad debt. That’s according to a recent revenue cycle benchmarking report from Kodiak RCA. The report is based on an analysis of nearly three million fully resolved claims from commercially insured patients who received services from providers in 2022 and 2023. 

These results come against the backdrop of changes that several of the biggest credit-reporting firms made recently. As we reported in April 2022, Equifax, Experian, and TransUnion began to remove most types of paid medical debt from consumers’ credit reports beginning in July that same year. These firms also gave consumers a full year before including new unpaid medical debt on their credit reports. In April 2023, they removed unpaid medical debt of $500 or less from their consumer credit reports as well. 

You might be asking this question: How much of an impact could a $500 write-off realistically have on medical practice’s net revenue? 

Here’s the answer: A lot. That’s because these seemingly small unpaid medical bills start to add up over time. 

Here’s another surprise. Patient nonpayment of medical bills isn’t always associated with self-pay patients. In fact, 53% percent of the time, providers write off bad debt for patients with some form of health insurance, according to the Kodiak RCA report. 

How medical practices can adapt to patient payment trends

The takeaway? Medical practices can’t ignore these new patient payment trends. Instead, they must adapt to them using these five strategies to address patient collection challenges:

1. Promote point-of-service collections. Focus on patients with high deductible health plans and those who are self-pay. Not sure how much to collect up front? Leverage historical financial data to create an internal fee schedule that includes average amounts patients owe for each of your most commonly offered services. Then decide whether you’ll collect that entire amount or a percentage of it. Creating point-of-service scripts can also be helpful as you educate patients about your policy and process.
   
   
2. Provide price estimations. Using your internal fee schedule, provide patients with transparent prices as soon as possible and ideally when you collect demographic and insurance information at the time of scheduling. However, be sure to let them know that these prices are truly estimates and that the final amount they owe may vary, depending on their health plan and the services their physician ultimately performs. Price transparency helps patients plan and budget for medical bills. When there are no surprises, this increases the likelihood you’ll get paid even when amounts owed exceed $500.
   
   
3. Provide payment plans to patients with higher-dollar balances. According to the Kodiak RCA report, when patients owe between $501 and $1,000, providers collect that amount about half (49%) of the time. Not great, but the patient collection rate could be (and is often) worse. For example, when patients owe between $1,001 and $5,000, the collection rate drops to 41%. When patients owe $5,000 or more providers collect the patient responsibility only 29% of the time.
   
   In contrast, when patients owe between $101 and $500, providers collect that amount 60% of the time. When patients owe $100 or less, the patient collection rate increases to 69%.
   
   This suggests the need to routinely provide patients with financing options (e.g., payment plans, charity care, or third-party financing through national companies or local banks and lenders). However, you’ll need to decide the specific parameters you’ll use when offering these options automatically. Then you’ll need to incorporate this information into your patient financial policy and ensure all billing staff are aware of the new requirements in your medical practice.
   
   For example, will you offer financing options to all patients regardless of the dollar amount you anticipate they’ll owe? Only to those patients with high deductible health plans or who are self-pay? Or only when you anticipate the patient’s financial responsibility will exceed $500 regardless of their health insurance (or lack thereof)? 
   
   
4. Hire, train empathic billing specialists. Billing with empathy is about responding with compassion and sensitivity during difficult financial conversations. Empathic billing specialists understand that every patient’s financial situation is different. For example, conversations about a $100 medical bill may be extremely difficult for some patients. For others, not so much. Empathic billing specialists are those who know how to build rapport, listen actively, and respond respectfully.
   
   
5. Pair empathy with technology to collect more, faster. Leverage patient engagement technology to provides personalized patient billing experiences that increase the likelihood patients will pay all balances owed and especially those that are more than $500. This technology helps patients understand their bills and makes it easy to pay them, allowing providers and staff to focus on practice management and patient care rather than chasing patient payments.

Conclusion

As medical practices continue to adapt to new and emerging patient payment trends, practices must approach patient collections mindfully and with sincere care and empathy. Choosing any other method will undoubtedly backfire, especially when balances owed are more than $500. Learn how Inbox Health can help.

Lisa A. Eramo, MA is a freelance healthcare writer who specializes in healthcare reimbursement, health information management, value-based care, and patient engagement. She contributes bylined articles to various healthcare trade publications and also assists clients with healthcare content marketing. You can reach her at lisa@lisaeramo.com or by visiting www.lisaeramo.com.