Adopt a 'Retailish' Approach to Self-Pay Collections

The Doctor's Office, July 16, 2009

"Retailish" is the word Red Gillen, senior analyst at Celent, a New York–based consulting firm, uses to describe the change that is occurring in physician practices' attitude toward self-pay collections.

"There are some major shifts in the healthcare marketplace that are the drivers behind the need to become more, as we call it, retailish," Gillen says. "Part of that shift is happening because healthcare costs are being gradually shifted away from being paid by insurers to being paid by consumers."

The most important step in adopting a retail approach to self-pay collections is to set accurate expectations for patients. "What providers need to do is move the payment collection earlier in the process," Gillen says.

There are three options that practices can put in place to set patient expectations:

1. Supply a highly accurate estimate, then discount it. Some practices have begun using software that calculates a close estimate for patients based on historical claims data, Gillen says. Some practices have staff members inform patients of this estimate during their visit and tell them they will receive a small discount for paying up front, he explains.

"Depending on their ability to glean data from payers regarding eligibility and benefit coverage verification, providers are trying to estimate patients' financial responsibility," Gillen writes. "Whereas relatively advanced providers offer cost estimates at the point of patient registration, cutting-edge providers will provide estimates to the patient prior to an office visit."

Estimates can sometimes be made without using software programs, adds Penny Noyes, president and CEO of Health Business Navigators in Bowling Green, KY. "Practices have to get in touch with the payer and say they have patients coming in for this [who] want to know if they've met their deductible and what their insurance will cover," she says. "Sometimes, the payer will give a practice the approximate amount due, but usually the practice has to calculate it."

Gillen says he doesn't think this solution will work well in the long term. "The problem with discounts is you're starting to set expectations that you'll always get a discount," he says. "It can get really complicated to maintain and rationalize after a while."

2. Employ right-time adjudication. Gillen compares right-time adjudication to a common payment policy used at hotels: The front desk holds guests' credit card information for a time past their checkout date in case they incur any delayed charges, such as room service or any damages. This is a practice physicians can use also—charging patients for their estimated costs and keeping their payment information in case it winds up costing more than expected, with a promise not to charge over a certain amount without consent.

"In that it leverages account card on file processes, 'right time' adjudication is not at all a new concept," Gillen writes. "For many years, providers have asked their patients to preauthorize the use of a selected payment method (e.g., a credit card) for future, post-claim adjudication payments. Newer, 'right time' adjudication functionalities only serve to automate an existing process."

3. Employ real-time adjudication. Real-time adjudication is the most high-tech option and the most difficult to use today, Gillen says. In theory, a physician practice would tabulate the claim, send it electronically to the patient's insurance company, and receive the deductible amount back electronically—all while the patient is getting dressed into his or her street clothes.

"Although these solutions are offered to healthcare providers today and they work, the issue is many of the insurance companies don't have the real-time claims systems to support an incoming message," Gillen says. "They can take the message, but they can't process it in real time."

But it's not just the insurance companies that are slowing real-time adjudication down, he says. Most healthcare providers can't submit a claim quickly because many practices still rely on paper records.

Although there are several options for physician practices to take a step in the retail environment, Gillen notes that the healthcare industry is not quite there yet.

"It's starting to feel like a retail environment," he says. "I won't go as far as saying there is a retail environment, because you do have the third party in there—the insurance company—paying for a part of it. It's not completely retail, but it's retailish."

This article was adapted from one that originally ran in the July 2009 issue of The Doctor's Office, a HealthLeaders Media publication.
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