A growing body of research on healthcare payment trends is underscoring a painful fact: that consumers are footing a steadily growing share of their medical bills, and sometimes failing to pay. In response, providers are upgrading their revenue cycle management systems and tightening up their collections processes.
A new analysis by payment services vendor InstaMed has concluded that consumer spending on healthcare services should grow to $608 billion by 2019. This is a fairly substantial number even given the high volume of U.S. healthcare spending, which hit $3.4 trillion in 2016.
The growth in patient spending has been fueled by the emergence of high-deductible health plans, which are saddling consumers with increasingly large financial obligations. According to CMS figures cited in the report, the average deductible for covered workers with single coverage has doubled over the past several years, from $735 in 2010 to $1.487 in 2016.
But despite the increasing importance of consumers as healthcare payers, providers don’t seem to be doing enough to inform them about costs. More than 90% of consumers would like to know what the payment responsibility is prior to a provider visit, but they often don’t find out what they owe until they get a bill. What makes things worse is that very few consumers (7%) even know what a deductible, co-insurance and out-of-pocket maximum are, so they’re ill-prepared to understand bills when they receive them, studies have found.
Providers are waiting longer to collect what they are owed by patients, with three-quarters waiting a month or longer to collect outstanding balances from patients. And problems with collecting patient accounts are getting worse over time. In fact, a new study from TransUnion Healthcare found that about 68% of patients with bills of $500 or less didn’t pay off the full balance during 2016, up from 49% in 2014.
Meanwhile, patient financial responsibility for care has risen from 10% to 30% of costs over the last few years, with more increases likely. This has led to expanding levels of consumer bad debt for medical expenses.
In attempt to cope with these issues, providers are buying new revenue cycle management systems. A survey released last year by Black Book Research, which included 5,000 management and user-level RCM clients, found that many healthcare organizations are rethinking RCM technology and demanding better performance.
Forty-eight percent of responding CFOs told Black Book that they weren’t sure they had the budget they needed to upgrade to an end-to-end RCM system this year. Nonetheless, 93% of CFOs said they planned to eliminate RCM vendors, financial and coding technology firms, that are not producing a return on investment, up from 79% with similar plans in Q4 2015.
In addition to investing in newer RCM technology, providers are making it easier for patients to pay via whatever medium they choose. Not only are providers issuing bill reminders via text, and accepting payments online and by phone, they’re also adding new channels like PayPal payments, bank transfers and mobile payments.