The lack of price transparency in the American healthcare system is arguably the single biggest issue plaguing the patient financial experience. Across care settings, patients receive treatment with little sense of what their health plan covers and what will become an out-of-pocket cost. And when they do receive bills, they’re often difficult to understand and unpredictably timed.
Surprise billing on the rise
This lack of financial clarity can lead to surprise medical bills (common after planned and unplanned hospital visits), emergency care, outside lab work and other care episodes—particularly with out-of-network services. According to a 2019 Stanford University study, these surprise out-of-network bills are only getting more common and more expensive.
In a recent patient survey, nearly half of respondents said they or someone in their family have received a surprise medical bill from an out-of-network provider. More than 75% of those respondents were billed for at least $500—no small sum for most households in the US. Waystar CEO Matt Hawkins has spoken out about surprise bills and the challenges they present. As he recently told Healthcare Finance, “more and more of the patient’s bill, or the total cost of care, is being borne by patients as high deductible plans kick in.” Hawkins says the unanticipated bills are “an indication that the system doesn’t have a true handle of its own cost structure.”
The burden of confusing pricing isn’t just felt by patients. As we shift toward value-based care models and high-deductible plans, and patients take on increased responsibility for their healthcare costs, providers are looking to overhaul their self-pay revenue strategies. Because a much larger percentage of their bottom line now depends on patient revenue, it’s in providers’ best interest to make sure patients receive a clear, convenient consumer experience.
What does that look like? For starters, an end to surprise bills. But also clear price estimates ahead of care, timely billing cycles and flexible, digital-friendly payment options—the list goes on.
How to tackle price transparency
Fixing the surprise billing problem is a mission that’s received widespread bipartisan support. In 2019, multiple proposals were brought before congress. While new legislation is crucial to remedying this problem, better revenue cycle management technology is also critical.
Providers of all kinds need reliable tools to give patients a better sense of out-of-pocket expenses—solutions that bring clarity and speed to payment processes so patients can take a more proactive, informed role in their care. With the help of innovative IT that leverages AI, machine learning and other emerging technologies, providers across the care spectrum are taking steps to make pricing a more consumer-centric experience.
One such tool is Georgia-based University Health Care System’s online price estimation tool, developed and implemented by Recondo Technology (recently acquired by Waystar). Embedded within University’s website, the easy-to-use estimator allows patients to “self-generate accurate out-of-pocket expense estimates whether [they] are insured or uninsured” in a matter of minutes through a simple, user-friendly interface. The user need only select the facility where they’d like to receive care, the type of procedure they need and some basic information about their health plan(s).
By refining payment processes and helping patients take a more active role in their care, University is setting the bar in “patient-friendly price transparency.”
The financial impact for providers
University found that patients are more willing to pay at the point of service when they have a clear sense of what they owe out-of-pocket, and thus have seen a steady increase in upfront payments. In fact, they have seen upfront payments improve by 50%, or $1.5M, in just a few years. With their online price estimation tool, University’s billing office saves tons of valuable time. The days of “sift[ing] through books of payer codes and their associated payments” are over. Revenue cycle tools can also give providers and billing offices a better sense of how much patient-pay revenue they can count on. For non-profit facilities that need to meet certain charity-care requirements, tools like this can help identify which care episodes should be reclassified to reduce bad debt.
Despite the fact that today’s patients are responsible for a much larger portion of care costs, they remain in the dark on what those costs are. This lack of transparency prevents them from making fully informed financial decisions and, at worst, cause crippling unforeseen medical bills.
The good news is AI and robotic process automation (RPA) are already being used by provider organizations to streamline prior authorizations, generate accurate out-of-pocket cost estimates and create a more effective financial screening process.
But, innovative tech solutions are just one piece of the price transparency puzzle. EMR and RCM vendors and payers must strive for better data interoperability. Policymakers must set clear pricing and billing rules viable for both patients and providers. Above all, providers must keep pace with the rapid consumerization of healthcare and deliver the same level of clarity and convenience patients have come to expect from other consumer-facing businesses.
Want to learn more about how patients are changing the way they manage their financial situation? Check out our Consumer Attitudes and Behavior white paper for a look at how perceptions around medical expenses and payment preferences are changing.