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A New Approach to Patient Self-Pay, a Responsive Payment Program

by OnPlan Health

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The rise of high-deductible health plans (HDHPs), and the commensurate rise of patient self-pay, has hospital finance executives racing to adjust to this new payment mix. As they have discovered, it’s a very different ballgame from negotiating with large insurance companies well versed in the intricacies of hospital finance.

Hospitals and health systems are looking at other sectors of the economy that work to help consumers finance their purchases, and have begun adopting responsive payment program models to make health care bills simple and manageable for patients. These models try to balance the threat of reduced collections with the equally challenging threat of failing to meet quality metrics tied to pay-for-performance. Why? Research from the Federal Reserve indicates that 54 percent[1] of American adults lack the funds for unbudgeted expenses. They often can’t pay the high out-of-pocket costs associated with their healthcare, so they put off physician visits and even care, and risk getting sick or worsening an already existing condition.

Responsive payment models help hospitals and health systems fulfill their twin mission to protect patients and preserve their own sustainability. But adopting these new models isn’t an overnight fix. Before setting up a responsive payment program for patient collections, here are a few guidelines to follow:

Strike the right balance between in-house capacity and external assistance. As a hospital finance department pivots from “billing” to “payments,” it will require new skills and technologies from external partners. Leadership must forge an effective relationship between the outside expertise and the institutional knowledge and capabilities of the skilled players already on their finance team.

Offer flexible options for payment plan duration and amounts. Investing in analytics-based segmentation, based on ability and propensity to pay, should be thoroughly analyzed in terms of which ranges produce the highest yields for which balances. Installment amounts produce the highest yields.

Provide multi-modal methods of activating the plan. Make sure any payment plan can be self-activated in the mode they choose. Whether it’s via paper check, online or via mobile phone, the method of activation should be seamless and easy to use for every patient.

Roll-up new balances. The ability to combine new balances with existing ones is critical—especially for ongoing care and balances of other family members. It also helps to streamline the overall payment process for the patient.

Protect credit card data. Healthcare data breaches have steadily increased since 2015, and most were due to hacking.[2] Half of patients still pay by check, but the rise of patient pay will likely transition many to make payments via credit card. A responsive payment program must have the security to protect that data. Validation by the Payment Card Industry Council[3] signals the credit card security is as robust as possible.

Build in analytics—and use it! A responsive payment program will generate a lot of data to help hospitals discern valuable insights for future adjustments and system refinements. Make sure the data generated is in an easy-to-access format—one that a technical or non-technical person can use. If you and your staff can’t access it, you won’t use it.

The rise of patient self-pay has initiated a new relationship with patients. Launching a responsive payment program requires financial executives to think less like a bill collector and more like financial support partners for patients. It is both good medicine and sound financial stewardship for today’s hospitals and health systems.


[1] “Report on the Economic Well-Being of U.S. Households in 2016.” Board of Governors of the Federal Reserve. May 2017. See p. 23.

https://www.federalreserve.gov/publications/files/2016-report-economic-well-being-us-households-201705.pdf.

[2] https://www.hipaajournal.com/largest-healthcare-data-breaches-2017/

[3] https://www.pcisecuritystandards.org


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