Transparency and flexible payment options keep care within reach

In recent years of economic unpredictability — fluctuating job markets, rising inflation and uneven economic recovery from the pandemic — nearly four in 10 insured Americans admitted to skipping a healthcare visit due to financial constraints, according to a recent report from PayZen.

A strain on consumers' pocketbooks from elevated interest rates and everyday expenses, after a 19.6% rise in consumer price index (CPI) from January 2020 to January 2024, continues to pose issues for many healthcare revenue cycle professionals.

A May 7, 2024, MGMA Stat poll found than more than four in 10 (41%) medical groups updated patient payment plans or options in the past year, while 54% said "no" and another 5% were unsure. The poll had 333 applicable responses.

A post-pandemic shift

A similar 2021 MGMA Stat poll found that only 27% of medical leaders made changes to their payment plans in the previous year, suggesting that recent economic pressures have increasingly compelled healthcare leaders to tighten payment terms to enhance their organizations' financial health.

Respondents of this year’s poll noted that many changes aimed to enhance the efficiency and reliability of collections. These included:

• Reduced payment plan durations
• Mandatory upfront payments
• Passing along credit card transaction surcharges to patients
• Widespread adoption of technology for automated payments to increase efficiency.

One respondent, whose organization tightened repayment schedules from 24 months to 12, emphasized that “cash flow is essential to remaining independent.”

Medical leaders who focused on patient financial flexibility noted their commitment to maintaining care accessibility. One medical leader observed that high out-of-pocket costs have deterred their patients from seeking necessary care, noting, “Budgets are tight for families, and when they have to pay for insurance and the office visit, they think twice.” Another said, “Inflation is hitting a lot of people hard, [and] routine eye care or elective SX can be put off.”

This group of respondents’ updated payment options included:

• Sliding fee schedules: Adjustments based on federal poverty levels to assist financially vulnerable patients.
• Expanded payment options: Introduction of diverse methods such as online, text message and mobile app payments, enhancing convenience for patients.
• Flexible payment plans: More adaptable terms, allowing patients to customize payments to better fit their financial situations.

Existing payment plan options were seen as adequate or effective for the 54% of respondents who reported no changes; however, a few unique reasons for maintaining the status quo materialized:

• Organizational constraints: Challenges due to fixed policies in larger hospital systems or resistance from senior leadership to new technologies and changes.
• Technical limitations: Barriers related to outdated or inflexible EHR systems that hinder the adoption of updated payment options.
• Existing comprehensive options: Organizations with recently updated, extensive payment options such as mandatory credit card on file, medical credit cards and negotiated terms for specialty clinics felt no need for further changes.

The poll results reveal that while some groups have implemented more flexible payment options, the majority have focused on enhancing revenue cycle efficiencies that could potentially put the squeeze on patients. This approach might compromise patient care by making it financially out of reach for some, suggesting the need for healthcare providers to strike a balance between their bottom line and more patient-friendly payment options.

Trends in billing and collections

Time-of-service (TOS) collection of copayments and patient-due balances can be a useful measure of a medical group’s revenue cycle health. Recent single-specialty aggregate benchmarking data — a combination of primary care, nonsurgical and surgical single specialty practice data — from the MGMA DataDive Practice Operations survey report found that:

• The percentage of copayments collected at TOS in 2022 (56%) was below pre-pandemic levels measured in 2019 (89.9%).
• The percentage of patient due balances collected at TOS in 2022 (39%) had surged past the levels reported in 2019 (14.76%).

Depending on specialty type, copayment collection is an area in which MGMA Better Performer groups distinguish themselves:

• Better Performers in primary care practices have a 21-percentage-point advantage over the median for all practices in TOS copayment collection.
• Nonsurgical specialty Better Performers’ advantage is 36.5 percentage points.
• Better Performers in surgical specialty practices have a 16-percentage-point advantage over the median for all practices.

Perhaps more important among these benchmarks is the role of accounts receivable (A/R). In the past four years, MGMA Better Performer practices reported collecting more A/R in the first 30 days compared to all practices. Likewise, Better Performers report less outstanding A/R in the 120+ days bucket.

Despite the success of Better Performers in managing accounts receivable more efficiently in 2022, an MGMA Stat poll in August of that year revealed that many practices still faced challenges. The majority (56%) said days in A/R had increased, while 31% said they had stayed the same, and 14% reported a decrease in days in A/R.

When preventive care is priced out

The PayZen report also reveals the large extent to which Americans forgo essential healthcare services due to cost, noting that the average American can only afford up to $97 a month for out-of-pocket expenses. Further, some patients are taking desperate measures to afford care — 91% of respondents said they were willing to cancel vacations and 75% were considering additional part-time work — and “stories of people trading their retirement savings to undergo life-saving treatments aren’t uncommon.”

This sentiment is echoed in the rising costs documented over the past decade. Since 2013, family health care premiums have increased by 47%, and deductibles have risen by 10%, as reported by KFF.

Integrating patient repayment discussions into care

Practice leaders play a crucial role in facilitating patient repayment and reducing payment stress. Claude Royster's insights from the MGMA article, "Engaging with Patients to Reduce Payment Stress," emphasize the importance of integrating patient expectations into business strategies to alleviate financial pressure.

One of the primary methods to enhance patient repayment experiences is ensuring transparency about the costs associated with treatment. By informing patients upfront about potential costs, healthcare providers can prevent surprises and create a less stressful financial experience. Royster emphasizes, "if providers want to see new patients choose their practice, they should consider prioritizing financial conversations as part of care discussions."

• Educating patients about the long-term costs of their care encourages them to consider healthcare as an ongoing financial commitment, much like their other major life expenses. By introducing various payment solutions, such as state and federal assistance programs, HSAs/FSAs, and financing options like CareCredit, providers can offer patients ways to manage their expenses more comfortably.

Additional resources

• “Redefining Healthcare Payments: Accelerate Revenue and Increase Price Transparency with An Up-Front Collections Process” (MGMA Sponsored Solution)
• “Ask MGMA: Credit card surcharges for medical practice payments” (podcast)

Some hospitals have also introduced interest-free installment plans, though patients should be aware of the hidden costs. Others are partnering with fintech startups to offer personalized payment options based on real-time financial assessment, and some provide flexible payment options, such as deferred payments or online transactions.

Equipping staff with the right training and tools to discuss financial matters confidently is also crucial. Royster recommends, "Making sure staff are trained to improve education around patient resources so that they can navigate patients directly to the information they need before, during or after their care is a sure way to get ahead of any billing surprises down the line."

Healthcare affordability is as much a systemic issue as it is a personal crisis for many. By implementing flexible payment solutions, organizations can help ensure that financial barriers do not translate into unmet health needs.

Additional resource

• “A Case Study: Stored Card Technology Boosts Convenience and Reimbursements for Pediatrics Group” (MGMA Sponsored Solution)

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