Upfront Patient Payment: Best Practices to Drive Patient Collections

Written by
Shruti Mehrotra
Published on
March 1, 2024

“Lots of healthcare workers who are non-clinical seem to think that the most important thing we can do with AI in its current form is fine-tune and improve on clinical decision-making, but the real opportunity …is at the front use AI to improve our processes to the point where we can increase information access,”
Scott Cullen, MD (MGMA Stat Report).

At a Glance:

  • The era of passive reliance on insurer reimbursements is slowly being replaced by the burden on responsibility falling more and more on the shoulders of practice owners to collect service costs directly from the patient.
  • Provider revenue takes a sizeable hit as patient A/R continues to rise due to higher deductibles, coinsurances and an influx of self-pay patients.
  • To mitigate the above challenges, setting up a reliable, upfront collections process, in addition to regular collections, has become a necessity in 2024.  

The healthcare profitability landscape is shifting and gone are the days of passively relying on insurer reimbursements. Recent reports paint a stark picture of the challenges facing healthcare providers in the age of patient responsibility. A 2023 study by the American Medical Association found that patient out-of-pocket spending has doubled in the past decade, reaching an average of $4,897 per person annually. This trend shows no signs of slowing down, driven by factors like high-deductible health plans and the increasing popularity of direct primary care models.

In this context, Crowe's 2023 report, "Hospital Collection Rates for Self-Pay Patient Accounts." highlights the growing burden of bad debt associated with self-pay and insured patients with high deductibles, emphasizing the need for proactive measures like accurate patient pay estimates and flexible payment options.

The rise of patient financial responsibility has naturally led to increased focus on upfront collections. A 2024 survey by MGMA revealed that 72% of healthcare practices now employ patient pay estimate workflows, a significant jump from 58% just two years ago. Crowe's data too, aligns perfectly with the above trend towards the use of automated estimation tools and transparent cost communication needs at healthcare practices. This rapid adoption highlights the growing recognition of upfront collections as a critical strategy for securing financial stability.

Should you collect patient payments upfront?

Should you demand cash upfront from patients? In today's healthcare maze, the answer is rarely a simple yes. Upfront payments, while tempting for practices battling ballooning costs and shifting insurance criteria, can be a double-edged sword. Sleep centers, for instance, may see instant relief from upfront cash for pricey sleep studies. However, not all practices are equipped with the right tools to produce the right billing numbers to the patients immediately and patients often prefer to be communicated benefits level information, not just rough estimation of what they owe.

The key? Nuanced solutions. Open discussions of estimated costs, offering flexible options like installment plans, and approaching the topic with empathy works best for patients. This delicate dance balances financial responsibility with patient trust, ultimately ensuring both a healthy cash flow for the practice and patients that are able to adhere to their treatment. Remember, in healthcare, transparency and a touch of understanding are worth their weight in gold.

Upfront payments significantly reduce the risk of unpaid bills, a growing concern in specialties like sleep centers and neurology centers where procedures can be costly. This improved cash flow translates to better financial stability and reinvestment in patient care. Furthermore, openly discussing costs and offering payment options like installment plans fosters trust and transparency. This is particularly crucial in telehealth businesses where physical interaction is limited. Informed patients feel valued and engaged, leading to higher patient satisfaction and treatment adherence.

Additionally, pre-payment simplifies billing and collections, freeing up valuable staff time and resources. Sleep centers, for example, can focus on providing quality sleep studies instead of chasing overdue payments. This translates to improved efficiency and better patient experiences. Knowing incoming revenue allows for better budgeting and resource allocation. In the case of neurology centers with their expensive diagnostic equipment, can plan investments and optimize resource utilization with confidence, ultimately benefiting both patients and the practice.

Tackle Barriers to Collecting Upfront Payments

Despite the advantages, several frictional aspects of operations that can hinder the implementation of effective upfront payment processes:

  • Lack of accurate cost estimates: Predicting final charges can be challenging due to varying insurance coverage and procedure complexities.
  • Patient resistance: Some patients may be hesitant to pay upfront, especially for high-cost procedures like in-lab sleep studies.
  • Technology limitations: Outdated software or inefficient workflows can hamper smooth estimation and payment processes.
  • Staff apprehension: Training and motivating staff on new procedures and communication strategies can be time-consuming.

Several strategies can help healthcare businesses overcome these barriers and ensure successful implementation of patient pay estimate workflows:

  • Invest in technology solutions: Modern practice management systems offer robust patient estimation tools that integrate with insurance data and automate calculations.
  • Implement transparent pricing models: Clearly communicate procedure costs and potential out-of-pocket expenses upfront.
  • Train staff in effective communication/ Cross-train: Equip your team with the skills to discuss costs sensitively and answer patient questions confidently.
  • Offer flexible payment options: Provide patients with diverse payment methods and installment plans to make upfront collections more manageable.

Patient Pay Estimate Sheets: Transparency in Action

These are detailed breakdowns of potential costs, provided before procedures. Imagine a scenario in a neurology lab: before an expensive EEG test, the patient receives a sheet outlining the test cost, potential insurance coverage, patient's out-of-pocket estimate and available payment options. This transparency lets the patient understand their financial responsibility, choose preferred payment installments, and avoid surprise bills later. It reduces friction and fosters trust, making upfront payments less daunting and leading to smoother experiences for both the patient and the neurology lab.

For healthcare providers, the benefits are equally tangible. Clear communication translates to reduced bad debt and a more predictable cash flow. This financial stability allows practices to reinvest in patient care, from improving technology to expanding service offerings. Ultimately, the patient payment estimate sheet becomes a bridge of understanding, ensuring both parties are on the same page financially. This mutual trust creates an environment where healthcare can focus on its true purpose – transparency-- providing patients with the highest quality care, unburdened by financial uncertainties.

Healthcare managers are facing a wave of new technology, and navigating the world of AI and automation can feel like trying to decipher a foreign language. And that is why understanding the nuances between the types of automations and AI technology is a must-have skill as a practice manager.

It's important to remember that AI isn't a one-size-fits-all magic bullet. Different types of AI excel in different areas. Just like you wouldn't use a hammer to fix a watch, choosing the right tool for the job is crucial. For example, some AI solutions are built for extracting data from insurance websites, some are built to identify and analyze clinical trends to predict patient risks, while others are built to automate tasks like coding diagnoses, generating reports, and even summarizing patient notes, saving your staff valuable time.

By understanding the strengths and weaknesses of different AI solutions, you can make informed decisions about which ones can truly transform your healthcare practice. Don't be afraid to ask questions, explore options, and find the perfect fit for your specific needs. Remember, the future of healthcare is brimming with innovative solutions - and with a little knowledge, you can harness their power to create a flourishing healthcare practice.

The End of Surprise Bills: Automating Benefits-Level Patient Pay Estimation

We understand that navigating costs for patients may often feel like a blindfolded uphill trek. Aarogram's SmartVerify provides automated benefits-level patient pay estimation and is powered by AI. This revolutionary technology instantaneously analyzes a patient's insurance coverage and other relevant info and generates accurate estimates of their out-of-pocket expenses, empowering both patients and healthcare providers.

But how does it work? AI algorithms process mountains of insurance data, factoring in the individual's plan details, procedure codes, and even historical claims. Within seconds, a detailed financial roadmap emerges, outlining anticipated charges, covered amounts, and even potential payment options.

At the forefront of this AI revolution stands SmartVerify, pioneering automated benefits-level patient pay estimation in a leading Neurology Center. Patients now receive instant, personalized cost estimates before appointments, empowering them to make informed decisions about their care and navigate their financial responsibility with confidence. No more surprise bills, no more last-minute scrambles – just clarity and control. This transparency has directly impacted the Neurology Center's bottom line, reducing bad debt and increasing revenue predictability. In a field where financial anxieties can often overshadow well-being, Aarogram's technology has paved the way for a smoother, more positive experience for everyone involved. The message is clear: in the ever-evolving healthcare landscape, accessing the right automation holds the key to unlocking empowered managers and efficient practices.