Patient Engagement Strategies:Collect or Charity

Maximize reimbursement from those who can pay.Find financial assistance for those that can’t.

October 22, 2012

David DykeVP Revenue Cycle

RelayHealth

Kim Thompson Patient Access Manager

Basset Healthcare Network

2

Your Presenters

• Kim ThompsonPatient Access Manager at Basset Healthcare Network

• David DykeVP Revenue Cycle at RelayHealth

Agenda

Transformational TimesCollecting Early is Easy… Right?The Financially Engaged PatientPresumptive Charity ConsiderationsQ&A

3

4

PPACA and Regulatory ReformHealthcare’s Transformation Event?

• PPACA is transformational to healthcare – as with other industries

– 1996 – Telecommunications Act

– 1978 – Airline Deregulation

– 1999 – Financial Services Modernization Act

• Transition to be tumultuous

• Consumerism – new factor

5

TrendingGrowth in Patient Responsibility

• Patient OOP to exceed $460 Billion by 2019

– Hospital OOP >$35B

– Continues to outpace inflation and wage growth

$778/Person

$1404/Person

Hospital

All Other

Source: CMS National Health Expenditure

6

TrendingInsurance Premium Put Pressure on Families

62% of Employees with insurance spend $14,000 or MORE on annual premiums for family coverage

Source: Kaiser Francis Family Foundation, 2012 HEBS

7

TrendingThe steady but slowing march of HDHP

2005

2006

2007

2008

2009

2010

2011

2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0%

4%

5%

8%

8%

13%

17%

19%

Conventional HMO PPOPOS HDHP

30% Growth

62% Growth

12% Growth

Source: Kaiser Francis Family Foundation, 2012 HEBS

8

Patient Attitudes toward PaymentBalance Matters, Upside with Small Balance

PatientLiability

Willingness &Ability to Pay

Typical Collection Rate

<$500 92% 65% - 75%

>$500 54% 50% - 60%

Source: 2008 McKinsey consumer healthcare payment survey

9

Industry TrendsCost Up and Collections Down Over Time

Source: RelayHealth estimates & US Department of Commerce

Today 30Days

60Days

90Days

120Days

6Months

1Year

$1.00$0.95

$0.75

$0.60

$0.50

$0.25

$0.05

Cost

to c

olle

ct

$0.20

$0.40

$0.60

$0.80

As receivables devalue over time the cost to collect increases.

Cost to Collect

10

TrendingBroad Consumer Internet Access

Strong usage across

• ALL geographies

• ALL incomes

• ALL ages

Source: Pew Internet & American Life Project, Generations 2010, 12/2010

11

TrendingOnline Account Management

Online account management continues to growacross all demographics for all markets

18-33 34-45 45-55 55-64 65-73 74+0%

10%20%30%40%50%60%70%

Regularly Paying Bills OnlineBy Age Group

Growing 10-14% per year

Continued steady usageSource: Pew Internet & American Life Project, Generations 2010, 12/2010

12

TrendingBroad Consumer Mobile Internet Access

• 46% of Americans Own Smart Phones (11% YOY growth)

• 66% 18-29 age• 68% in $75k+

households

Agenda

Transformational TimesCollecting Early is Easy… Right?The Financially Engaged PatientPresumptive Charity ConsiderationsQ&A

13

14

Polling Question

How are you doing with meeting your monthly point-of-service cash collection goals?

(A) We don’t have a monthly cash collection goal.

(B) We often fall short

(C) We consistently exceed it

15

Primary Reasons forPatient Non-Payment

<$500 >$5000%

20%

40%

60%

80%

100%

Lack of financing options

Just received statement

Forgot or confused

Should not have to pay

Other Reasons

Addressable Factors

Source: 2008 McKinsey consumer healthcare payment survey

16

Barriers to Point-of-Service Collection

Difficulty Estimating Cost

Constraints Related to Current Technologies

Difficulty gaining INTERNAL buy in to ask for payment at time of service

Difficulty accessing data from Payers

Constraints related to staff capabilities

55%

41%

28%

26%

22%

Source: HFMA’s Healthcare Financial Pulse % indicating “4” or “5” on 5-point scale where 5 = “extreme barrier” and 1 = “no barrier”http://www.hfma.org/pulse/

17

Emerging Revenue Cycle Model

Moving from post-service Patient Accounting focus…

18

Emerging Revenue Cycle Model

…to pre-service Patient Access focus to improve overall performance

19

A Road Too Far

Not so Minnesota Nice…

20

Minnesota v. Accretive/Fairview

“A hospital emergency room is a place of medical trauma and emotional suffering for patients and their families. It should be a solemn place, not a place for a financial shakedown of patients.” Attorney General Swanson.

21

Not the kind of headlines you want…

• Mother told to pay $500 before she could return to her daughter’s bedside.

• Won’t discharge a newborn baby unless mother paid $800. Which she did and overpaid and had to fight for months to get the $800 back.

• A pregnant mother who was asked to pay money in the emergency room in the midst of miscarrying her first baby.

22

The Social Network Effect

23

Finding the Right Balance

• Tools– Most complete data– Defensible estimates

• Training– Staff– Community

• Monitoring– QA– Exceptions

24

Tools

• Complete data– Physician Order Entry– Accurate & complete eligibility benefits

• Defensible collections– Co-Pay– Percentage of Deductible Deposits– Patient Specific Estimates

25

Training

• Interpersonal Communication Skills

• Revenue Cycle 101 for Front End Stafff– What is a Copay and how do you find it?– What is Co-insurance and how is it calculated?– What is a Deductible and what does it tell you?– What is a High Deductible Plan and is it scary?

• How does my role fit into the big picture…

26

Community Education

• Community Outreach example:

Newman Regional Hospital, Emporia,

KS

• Principals

• Policy

• Practiceshttp://www.emporiagazette.com/news/2012/aug/31/because-you-asked-nrh-charity-care/

27

Monitoring

• The Registration Quality Assurance Renaissance• Disparate systems (Bolt On)

– Three to Four Primary Vendors– Some acquisitions, but most are independent

• Qualities to look for – Rules Based, Measure Quality & Collection– Real Time & Batch Integration– Proactive Staff Reminders– Individual Report Cards

Agenda

Transformational TimesCollecting Early is Easy… Right?The Financially Engaged PatientPresumptive Charity ConsiderationsQ&A

28

29

What Is a Financially Engaged Patient?

• Understands their treatment• Understands their

responsibilities• Is not surprised• More likely to pay their bills• Engages in ongoing, online

communication with provider

30

We’ve been doing this…

Traditional “patient checklists” focus is being clinically ready for an encounter…

31

We also need to be doing…

New patient checklists help bring focus to thefinancial readiness and help create the Financially Engaged Patient…

32

Together = “Engaged Patient”

When combined the Financially Engaged Patient is more likely to:• Understand their

treatment• Understand their

responsibilities• Not be surprised• Meet their financial

obligations

32

Verify Every Patient“Verify” = more than just eligibility

33

Stratify and Verify Every Patient

PreService

34

35

Polling Question

Do you provide pre-service out-of-pocket estimates today?

(A) We do not create any pre-service estimates for patient.(B) We do estimates for select services, but don’t try to

collect.(C) We do estimates for select services, and use the estimate

to determine how much we collect.(D) Estimates and collections are standard operating

practice for us.

36

Maximize collections fromthose that can pay…

Precise calculation of patient financial obligation– Contract driven– Patient driven

Location, Provider and Patient Specific– Physician Preference– Variable Length of Stay– Location specific

Benefits:– Create credible estimates– Move beyond “flat rate deposits”– Make payment easier and more feasible– Increase Patient Engagement and patient satisfaction

37

Improve collections fromthose that can pay…

Use Patient-Friendly Communication– All language should be relevant, clear and targeted

– Use best practice design to ensure print statements are easy to read

Provide financial payment plans– Offer recurring payment plans

– Utilize pay-in-full or early pay discounts

Offer Online Payment Options– Leverage consumer preferences

– Help patients engage clinically and financially

– Strengthen relationships with patients to facilitate sense of obligation and urgency to pay

Stratify and Verify Every Patient

PreService38

Collecting Critical Information

Empower staff to:

– Start or complete screening and enrollment process

– Obtain completed and signed charity application at registration

– Go Mobile

Improving:

– Self-pay / Charity classification

– Reducing escalations to Financial Aid Counselor

– Improve patient experience39

Self-pay bad debt written off that meets standard charity-eligibility guidelines.

Add mobility to improve collection of time sensitive data

Up To

31%

Agenda

Transformational TimesCollecting Early is Easy… Right?The Financially Engaged PatientPresumptive Charity ConsiderationsQ&A

40

41

Polling Question

Do you today use a “Presumptive Charity” process to assign charity status to patient accounts?

(A)I’m not really sure what “presumptive charity” is.(B)We are familiar with it, but don’t use it.(C)Yes – we use patient’s FICO score.(D)Yes – we use a vendor’s product/process.

42

Charity Drivers

• IRS 990 – Schedule H

• Community Benefit and Charity Care Valuation

• Must separate charity from bad-debt

43

More Headlines…that no one wants

Some Illinois Hospitals Losing Tax-exempt Status

• Insufficient Community Benefit• $1.2M Property Tax Assessment

Presumptive CharityKey Considerations

Timing (i.e., when to assign charity status)

“Process” Options– Traditional Credit Score– Income Predictors– Manual Review– Custom Charity Criteria

44

45

Too Early? To Late?

Charity too early, and you can’t collect from a patient or third-party (Medicaid) down stream…

Charity too late and you’ve adding expenses that may have a low rate of return….

AND forego collections/recover revenue…

46

Presumptive CharityProgressively Better Data

Traditional Credit Score• Should never be used• Measures character not ability to pay• Millionaire late on Tiffany’s bill – low score

Income Predictors• Directional, not absolute• Problem with “no hits”• Black box (i.e., vendor proprietary process)

Manual Review of Credit File• Intuitively correct• Labor intensive – not scalable • Problem with “no hits”• Subjective

Custom Charity Care Criteria• Automate the manual review• Easily understood (hospital specific) • Objective and defensible• 100% coverage Best

Approach

LimitedApproach

Presumptive CharityHow to make the right choice?

• There is no substitute for verified information.• Timing is key decision – culture and cost.• Important vendor considerations -

– Does their process intuitively make sense?– Is process open or proprietary?– Is process objective or subjective?– Is it defensible?– Can you describe it to your boss?

47

Agenda

Transformational TimesWe Have Seen The Enemy – and it is usWhat Is a Financially Engaged Patient?Presumptive Charity ConsiderationsQ&A

48

49

Thank You!

Kim Thompson

607-547-3506

Kim.Thompson@Bassett.org

www.bassett.org

@BassettNetwork on Twitter

David Dyke

918.481.4291

David.Dyke@RelayHealth.com

www.relayhealth.com

@RelayHealth on Twitter