It’s a sobering situation: As the number of Americans with high deductible health plans continues to grow, more and more families across the country strain under the burden of medical debt. This is placing an unprecedented and growing burden on healthcare providers as bad debt and patient collection costs skyrocket. Add in the declining patient case rate acceptance, and to survive and thrive in the years to come, providers must embrace a “retail” payments mentality to get paid for healthcare.
What’s driving the challenge? Several things. Studies show that one-quarter of adults report they or a family member had problems paying medical bills in 2015 and medical expenses remain the leading cause of bankruptcy in the US. Additionally, 69% of patients cite the lack of financing as the reason they delay or decline care, while at the same time, many patients are being declined by third-party financing companies such as CareCredit.1 When asked, 37% of patients who did not pay their bills cited their provider’s lack of financing as the reason. And yet, healthcare providers’ reluctance to provide financing is well-founded.2 Medical offices often struggle to collect from patients, spending valuable time and resources and exposing themselves to regulatory risk when acting as a “bank” instead of healthcare providers. These rules and regulations include the Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, Equal Credit Opportunity Act, Graham-Leach Bliley Act, Driver’s Privacy Protection Act, etc.
There is hope in sight. ClearGage provides a suite of patient communication tools, payments technology, and financial services, all designed to help providers and patients conduct the business of healthcare.
Predictive Analytics drives consumer payments
It all starts with data and predictive analytics. In healthcare, one size does not fit all. “As a healthcare provider, you are trained to treat each patient’s care individually, taking the time to evaluate each patient’s signs and symptoms before you recommend a treatment plan. We think financial staff members should apply the same principles to consumer finance and patient payments,” says Chip Hunziker, Founder and CEO of ClearGage. “You would never think of treating every patient the same, so why would you treat every patient’s financial situation the same?” ClearGage healthcare and consumer finance data analytics allows providers, in most instances before treatment is rendered, to customize and enter a payment agreement with their patient.
Today, patients are fully aware that they must pay for a significant portion of their healthcare bill and are demanding price transparency when it comes to healthcare. ClearGage’s healthcare data analytics platform calculates the patient’s out-of-pocket costs and answers the question of “how much is this going to cost?” ClearCalc™, ClearGage’s patient treatment estimator, is a batch or real-time benefits eligibility verification and patient responsibility calculation system, confirming a patient's benefits and estimating what the patient owes prior to the delivery of service or at the time of care.
Once the payment amount is estimated, ClearGage conducts a “soft” credit inquiry analyzing the patient’s credit history and propensity to pay. This soft credit inquiry will not impact the patient’s credit rating and looks much deeper into the patient’s financial history and propensity to pay than a traditional FICO-based credit score. ClearGage algorithms rely on over 200 data elements made up of such things as address stability, home ownership, liens, judgements, criminal history, phone and utilities payment history, job stability, education, income estimation and a host of other variables. “With over 53 million or 22% of the US population considered credit invisible and with over 109 million or 44% of the U.S. population with a subprime FICO score, we feel relying on these alternative sources of data gives our clients much more insight into their patient’s propensity to pay,” opines Hunziker.
Individualized and targeted payment plans drive behavior
Based on a patient’s expected balance and their credit ranking, the patient is offered payment plans targeted to fit within their budget which enables them to receive (and importantly pay for) their care. These targeted payment plans are all facility pre-approved and meet the provider’s preference for credit, risk and impact on cash flow. One thing to point out is that all plans are available to all patients and that the system does not discriminate.
Patients are offered incentives and rewarded for paying off their balance as soon as possible. Payment arrangements can include: pre-pay or prompt pay discounts; no interest short-term payment plans; and longer term plans with various degrees of interest. Patients are given options and choices that align their interests with those of their provider. For example, patients who choose to prepay or pay within 48 hours of statement presentment might receive a 10% discount while patients who require 12 months to pay might be charged 10% (or up to the state legal limit) interest.
Here is how it works: two patients, one has a B credit ranking and the other has a D ranking. Both have an estimated balance of $1,000. Both would be offered the same 10% discount for pre-paying and both would be offered a payment plan of 3 months, interest free. However, the D person might also be shown extended payment plans with low interest including terms up to 6 and 9 months.
Patients can accept the tailored payment plan or propose an alternative one. When patients propose an alternative payment arrangement, the system reviews it to see if it meets the provider’s risk and underwriting guidelines, automatically approving those that do. If the plan is outside the guidelines, the plan would be pended for review by either a ClearGage or provider staff member. In either instance the practice approves the individualized plan before rendering services.
Cash Flow Enhancement – Receivable Factoring
While patients are demanding payment plans, many providers struggle with the impact that these in- house payment plans have on their administrative costs and their cash flow. For providers interested in outsourcing their patient payment plan administration, ClearGage offers a real-time and/or batch receivable factoring program that turns patient receivables into cash. At the provider’s discretion, patient receivables and patient payment plans can be transferred to ClearGage on a non-recourse, recourse and/or partial recourse basis. This enables healthcare providers to effectively collect payments from all patients within 10 business days. “Providers can sell an individual patient payment plan or sell a batch of plans,” says Hunziker. “Providers love this feature as they have the ability to sell a 12-month patient payment plan, receiving in 10 days what they normally would hope to collect in 10 months.” In addition to receiving the cash up front, this optional service removes the provider’s cost of administering the account as ClearGage services the patient. In determining the purchase price for this receivable stream, the system uses a proprietary algorithm that looks at payments to date, the current balance, the patient’s alternative credit score and their estimated payment plan.
Patient Engagement and Custom Communication Campaigns
To combat the rising trends in patient responsibility, some providers are hiring additional staff to follow up with patient balances. Others are sending outstanding bills to collections agencies and many providers have given up altogether and do not even bill patients with small balances because it is just too costly. “None of these strategies are desirable or sustainable,” says Hunziker. “Providers must embrace technology and leverage patient engagement to effectively collect on the patient balance.” ClearGage automates the communication and collection functions leveraging email, text messaging and IVR payments in lieu of relying solely on costly paper statements and live agent support.
Today’s healthcare “consumer” expects clear and transparent communications delivered over their preferred communication method. ClearGage’s patient-friendly automated messaging system is configured to deliver messaging utilizing the most cost effective delivery method first. Patient communication journeys are configured in the system and then automated requiring little to no staff intervention. Providers can choose from one of ClearGage’s pre-defined patient communication journeys or customize their own campaigns. Additionally, the system leverages machine learning and is always adjusting its messaging and targeted payment offers based on consumer response and adoption.
“Sending paper statements to GenY (21 – 36 year olds) is a waste of time and money. They are not going to even open it let alone pay,” says Hunziker. For this group ClearGage leverages text and email. "Our system looks at a patient’s demographics including age and gender, their balance and their propensity to pay to determine how to communicate with them in the timeliest and cost effective manner. A 27-year-old male who owes $22.00 would be communicated with and messaged differently than a 71-year-old woman who owes $800.00."
Manage Patient Care, Not Collections
The bottom line: Navigating the world of patient treatment, financing and collections is no cakewalk. Fortunately, solutions like Clearage can streamline the entire process while reducing the risk and compliance headaches associated with patient financing. It’s a sophisticated yet user-friendly way to help healthcare practitioners to get back to what they do best: treating patients.
1. Center for Studying Healthsystem Change 2007
2. McKinsey & Company, Revisiting Healthcare Payments, 2010
This article is sponsored by ClearGage.