Point of Service Collection Challenges Emerge as Consumer Directed Healthcare Spreads

Consumer-directed healthcare works just as intended, according to a study published in the May issue of Health Affairs. In fact, the study found that if enrollment in consumer directed health plans (CDHPs) were to reach 50% of the insured, annual healthcare spending in the U.S. could be reduced by as much as $57 billion.

With such results providing a push, CDHPs could eventually make up the majority of employer-sponsored plans, according to the study, which was conducted by RAND Corp. and the consulting firm Towers Watson.

The expected fallout: Patients will become increasingly responsible for a larger portion of their healthcare bills – and hospitals will have to find ways to more effectively collect payments directly from patients.

However, approximately seven out of every 10 hospitals and health systems collect less than 30% of patient payments at the point of service, according to a poll distributed to 300 attendees of the 2011 Healthcare Financial Management Association’s (HFMA) Annual National Institute (ANI) conference. Not collecting upfront proves costly for hospitals. Out of the payments that are sent to back-end recovery for collections, 80% of the 300 respondents said their hospitals recover less than 60% of payments. Approximately 73% of respondents said between 1% and 7% of their hospitals’ net revenue in 2010 were lost to bad debt, according to the poll, which was conducted by TransUnion, Chicago [link to: http://www.transunion.com].

Collecting from patients at the point of service presents many challenges, though. For example, when Tomball (Texas) Regional Medical Center began collecting at the point of service, staff members relied on spreadsheets to let patients know how much a procedure costs. But all kinds of problems ensued. Information was not accessed in real time; front-line staff performed manual collections and different prices were quoted when patients called. The subsequent fear of over-estimating resulted in lower collections. In addition, registrars were unable to accurately validate a patient’s identity and financial position. Not having this information available cost the hospital thousands of dollars in returned mail and write-offs for patients who had the ability to pay.

To improve the situation, the hospital replaced the spread sheets with TransUnion ClearQuote, a web-based solution that aggregates patient information from multiple sources and calculates patient out-of pocket responsibility at the point of service. The tool enables staff to ensure accurate registration and determine the patient’s ability to meet their financial obligations. Implementation of the system resulted in an immediate 10% increase in POS collections for the medical center.

“Our staff is confident with what we’re generating on the front end – and patients are receptive to the information we’re giving them. Now that this trust has been established, collecting payments up front is much easier today than before the automated system was put into place,” says Gina Stinson, director of patient access and managed care services at Tomball.