HFMA Philadelphia Chapter Newsletter

In the past years, patients have seen their healthcare deductibles increasing. Patients are feeling more financial strain to meet their commitments, and hospitals are often challenged on how to best collect on their accounts. This problem becomes even more severe if the patient’s care is a result of an unplanned diagnosis or trauma.

Consumer healthcare costs for insurance premiums are also increasing, even when employers are absorbing some of its impact. In response, hundreds of thousands of individuals are signing up for a Healthcare Savings Account (HSA).

The HSA offers the advantage of stock-piling tax-free funds to cover out-of-pocket medical expenses until age 65, and they are teamed with insurance policies with high deductibles. The rationale is that when/if these individuals need medical care their portion of the bill will be much greater, often $10K or more, and a savings plan that allows funds to rollover each year will encourage fiscal responsibility and consumer choice.

Experts agree that the HSA is the most dramatic revenue cycle change to hit hospitals in more than 40 years.

Hospitals must face this new reality by changing their Point-of-Service (POS) processes and increasing the patient’s understanding of their financial commitment before services are rendered.

The bottom line for hospitals is ‘Know Thy Patient, Not Just Their Insurance.’

Reversing Today’s POS Processes
The registration process has been designed to efficiently retrieve patient information for clinical and billing needs. Co-pays are usually the only collections performed at the POS, leaving most of the consumer’s responsibility until after the insurance claim has been fully processed.

The flow of today’s billing processes is to accumulate a patient’s healthcare costs during their visit, submit the claim to their insurance company, receive insurance adjustments and payment, and bill the patient for any outstanding responsibility.

Today’s higher deductibles make the consumer’s portion of the bill much greater. Large receivables remain unpaid until the final stage of the current process; often weeks after the services are performed. This delay increases a hospital’s accounts receivable and strains its cash flow.

What if the process was overhauled and the patient paid their bill (or a significant portion of it) upfront with their HSA or other funds?

A hospital’s collections could be avoided, or at least minimized, cash flows would be more stable, and patients would be aware of the costs of their healthcare choices prior to receiving service, when adjustments could be made if needed.

The good news is that as HSAs mature and become more prevalent, patients will be better equipped to pay their portion of healthcare costs at the point of service (POS), even in emergency situations. Unfortunately, this will take time for account balances to grow.