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HSA collection strategies: Learning how
to ask for payment
As more patients enroll in health savings accounts, physicians might find
that they need to adjust their practices to the new business realities of
consumer-driven health care.
By Jonathan G. Bethely, AMNews staff. May 15, 2006.
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Family physician Donald L. Copeland, MD, of Cornelius, N.C., is spending a
lot of time these days talking to younger doctors about how things used to
be, like how doctors collected from their patients before the patients
left the office. Now that those days appear to be coming back, thanks to
the rapid growth of health savings accounts, he's finding some very
willing listeners as physicians try to figure out how to adjust to life in
a consumer-driven health care environment.
The younger physicians don't have much experience with in-office
collection, which is what Dr. Copeland had to do when he started practice
in 1965. Of course, they didn't call it "consumer-driven health care" back
then. In 1960, a few years before Dr. Copeland started practice, 60% of
health care costs were paid directly by patients, out of pocket. Forty
years later, with managed care limiting in-office patient payments mostly
to co-payments, that number was down to 15%, said Greg Scandlen, director
of the Center for Consumer Driven Health Care, part of the pro-market
Galen Institute of Alexandria, Va.
Soon enough, Dr. Copeland believes, that percentage will be going up.
"Most of their patients will be paying cash," the 72-year-old Dr. Copeland
said of his younger colleagues. "They're not near anywhere ready. ... They
don't even know what they're charging patients. They don't know what's
going on in the business office."
Dr. Copeland does have more than charity in mind when he's talking to
doctors. He also wants to start up a network of HSA-accepting physicians
called HSA Healthcare Inc. But his belief that now is the time for
physicians to get their business practices ready for HSAs is being sounded
by different voices throughout health care.
Why now? Because although the number of patients moving to HSAs is growing
quickly, it's still a tiny percentage of most medical practices -- so
there's time to work out the kinks of how to adjust your business
procedures.
"The wise thing to do is get out in front of this as quickly as possible,"
said Anthony Cirillo, a Hunterville, N.C.-based consultant to physicians
and hospitals.
The good news for physicians concerned about adjusting their business
practices for consumer-driven health care is that many have the technical
tools -- credit card readers, computers -- necessary to check on how much
their patient owes, and to collect it. The bad news is that most practices
don't have the policies and strategies in place to use those tools
effectively.
Getting technical
Experts say physicians need to adjust their policies and strategies
because in a consumer-driven environment, eventually it will be patient
payments, not insurer reimbursement, that will determine a practice's cash
flow. So failing to collect the correct amount in a timely manner can put
a big crimp in practice operations.
The first thing experts say practices must do is to make sure they have
equipment in place to determine payment. Not many practices need to buy
and install a credit-card reader, necessary to get payment from patients'
HSA-linked cards; various surveys show more than 90% of practices have
them. But even those practices already well-computerized need to find a
way to connect to health plans' systems to find out as quickly as possible
how much the insurer is paying for the procedure and how much money is
left in the patient's deductible and HSA.
Only 15% of health care costs were paid directly by patients in 2000.
As of yet, few plans do real-time claims adjudication, in which the
process is started when a patient walks in and finished before a patient
walks out. But there still are ways to get the information. Karen Smith,
MD, a solo family physician in Raeford, N.C., has her staff run a check on
a patient's insurance 48 hours ahead of the appointment to confirm the
deductible level, or any other payments a patient might owe.
Dr. Smith said that hasn't "mastered solving [the] problem" of patient
collections -- for HSAs or other plans. But she said her practice has been
able to "lay the basis" for handling patient bills in an HSA environment.
She also said any initial investment in a new computer system, which she
pegged at between $30,000 and $60,000 for a solo physician, can be paid
off quickly thanks to better collections. For that reason, she said, her
system was paid off in 18 months.
Getting information on a patient's insurance coverage and bill as quickly
as possible is generally considered a good idea in any practice
environment, but it's even more key for HSAs, experts say. Physicians'
"biggest fear is that [HSAs] will inflate their accounts receivable," said
JoAnn Laing, president of Information Strategies, a company serving as a
consultant to physicians and hospitals on consumer-driven health business
issues. "If they don't manage [HSAs] well, they will have accounting
problems."
Adjusting your collecting
But experts say no amount of technology will help if a practice doesn't
get into the habit of collecting up front from patients -- and letting
them know as soon as possible what they're expected to pay.
Experts say physicians -- who are pretty much used to being told by
insurance companies what they're going to charge -- need to start thinking
about what they would charge for common procedures and services to cash
patients. Although most practices have fees that they charge uninsured or
cash patients, consumer-health advocates say practices need to go one step
further and actually post those fees. That way, patients in
high-deductible plans know right away what they will pay.
90% of practices have machines that read credit cards, which are needed
for HSA debit cards.
Of course, some HSAs are linked to PPOs or other plans that do not permit
doctors to set their own charges unilaterally -- one of the reasons
real-time claims adjudication is being rolled out.
In any case, experts recommend that practices work with all of their
patients to educate them that payment is to be expected at the time of
service -- whether it's a co-payment or real-time claim. If your practice
doesn't have this policy already, they say, it will take some time for
patients to get used to it.
Experts recommend mailings, electronic and otherwise; signs around the
office; and discussion between staff and patients to let them know of your
policy. "The key is to have a well-trained, patient and understanding
staff," Laing said.
Given that in many cases neither the patient nor the practice might know
the exact charges, Laing recommends that practices ask patients for the
authority to deduct charges from their HSA debit cards, thus saving the
hassle and higher cost of mailing bills.
And if a patient happens to have a high outstanding balance that isn't
covered by the debit card, the practice can work with the patient on how
to deliver future payments, experts say. In all of this discussion,
consultants say the key is to work with patients in a firm but
understanding tone, and to be ready to answer questions about billing.
"There's going to be more communication" over billing in an HSA
environment, Laing said.
Dr. Copeland, 72, now semi-retired and working part-time in a public
health clinic, is spreading this message of preparation to any colleague
willing to listen. Like the AMA and other supporters of consumer-driven
health care, he believes that HSAs can usher in an age of greater
patient-physician communication and greater transparency over who is being
charged for what.
"The HSAs can only work if there's education" of physicians and patients,
he said. "There's a big education gap. What I do when I talk to
[physicians] about what is an HSA. ... Patients need to understand how to
use an HSA."
ADDITIONAL INFORMATION:
Collection tips
As the number of patients who carry high-deductible health plans with HSAs
increases, physicians and their administrative staffs need to be educated
about the payment collection process. Following these tips can help
improve your practice's collection rate from patients with high-deductible
health plans.
Set payment policy. Set a billing standard and stick with it, except in
hardship cases. Set limits on patients who have significant overdue
accounts or do not pay at time of service.
Get insurance and payment information at the time the appointment is made.
Verify benefits and any financial obligations before the visit. Know the
contractual rules on collections. Some preventive services could be the
health plan's obligation even before the patient's deductible has been
satisfied.
When the patient checks in, verify insurance and payment information. Make
a copy of the insurance card and issue an informed consent statement so
that a patient can sign an agreement form guaranteeing payment. Establish
what the patient's method of payment will be. If a debit card or a credit
card is being used, ask for the patient's HSA number so that it can be
used for the patient's financial obligation.
Provide the patient with details of the service rendered and associated
charges immediately after medical service. While face to face and when the
information is still fresh, get it down on paper and have them agree to
it.
Collect the deductible and/or coinsurance at the time of service.
Encourage patients to authorize automatic debiting in case those levels
aren't known at the time of the patient's visit.
File electronic claims within 24 hours. This will decrease the possibility
of an increase in accounts receivable. Plus, the day of the transaction
will coincide or approximate the day the service was provided.
Collect past-due amounts in the office. If a patient has an outstanding
balance, be sure to collect it from the patient as soon as he or she
enters the office for another appointment.
Source: JoAnn Laing, president, Information Strategies Inc.
HSA growth
Experts advise practices now to start adjusting to health savings accounts
while relatively few patients still have them. More than 15 million
patients are projected to be enrolled in HSAs by 2010. A snapshot of
current enrollment:
50% of consumers are aware of HSAs.
3.2 million consumers are in HSA-eligible, high-deductible health plans.
60,000 patients are enrolling on average each month in HSAs
60% of employers who plan to offer consumer-directed health plans in the
next two years.
Sources: Synergistics Research, America's Health Insurance Plans, the
Heartland Institute, Diamond Cluster/Goldman Sachs report; Diamond Cluster
International
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