The rise of high-deductible health plans (HDHPs) has been something of a shock to the healthcare payment system. Patients struggle to meet their responsibility for paying premiums and co-pays. While patient balances below $1,200 exhibit a payment rate of 40 percent, the average self-pay payment rate is 10.9 percent across all inpatient accounts receivable. True self-pay patients pay about 6 percent on the dollar, while those who owed out-of-pocket costs under their insurance plan paid 15.51 percent. As the JPMorgan Chase Institute has documented, roughly one in six families makes an extraordinary medical payment in any given year.
With self-pay on the rise, hospitals and health systems are focused on redesigning their workflows to collecting payment from individual patients. As they have discovered, it’s a very different ballgame from negotiating with large insurance companies well versed in the intricacies of hospital finance.
A second, but no less significant burden on hospitals is evidence of a reduction in patient volume. As stated in a recent HFM online article, “Seeking to avoid out-of-pocket costs they simply can’t pay, patients are putting off necessary physician visits and even care. This behavior puts the patient’s own health at risk…but also constitutes a financial threat to hospitals,” in part due to the increasingly rigorous “quality” metrics tied to pay-for-performance models. 
To confront this new reality, many hospitals and health systems are looking at other sectors of the economy that work well to help consumers finance their purchases. Hospitals are adopting responsive payment program models to make health care bills simple and manageable for patients.
But before diving into this new approach to patient collections and improving their financial experience, hospitals should do their homework. Here are the four components of an effective responsive payment program incorporating the same self-activation strategy that consumers have come to expect:
A flexible approach to account prioritization.Collecting from individual patients requires greater flexibility, and should be based not just on the patient’s ability to pay, but also their propensity to pay. Engaging patients with offers of tailored payment amounts and multi-modal, self-service activation is something consumers have come to expect in other aspects of their lives. Hospitals should respond accordingly. Further, payment plans should be thoroughly analyzed to determine which ranges produce the highest yield for which balances.
Automated account management.Responsive payment program should automate the response for each new episode of care, and give patients the ability to add family members and new balances to existing payment plans or pay them in full.
Act as an extension of the hospital’s brand and mission.Responsive payment models should enhance a hospital’s reputation by helping to initiate a relationship with patients based on cooperation, flexibility and partnership.
Improved credit card data security.Similarly, the rise of patient Accounts Receivable likely means a rise in credit card payments. Hospitals must take the extra security step of using PCI-validated point-to-point encryption of credit card data to prevent data breaches.
 Crowe Horwath, “Revenue Recognition and High-Deductible Plans,” Crowe Revenue-Recognition-and-High-Deductible-Plans-HC-17512-005A.pdf.
 Paying out of Pocket: The Healthcare Spending of 2 Million Families, from the JP Morgan Chase & Co Institute.
 “Responsive Payment Support: Finding the Right Balance for High Deductible Patients,” https://www.hfma.org/Content.aspx?id=57413