Understanding and Transforming the Patient Billing Experience

This article was written by Jim Cagliostro.
US healthcare is the most expensive in the world and the billing and payment process is extremely complex and difficult to navigate. It is one reason why your patient billing needs a makeover.
The task of understanding and transforming the patient billing experience presents a formidable challenge, but one worth tackling.
A personal experience
During a recent pediatrician appointment, we learned that our three year old daughter would require a nebulizer to use at home, which we were provided with. Three weeks later, we received a bill in the mail for $133 to cover the cost. I was frustrated for a number of reasons.

• Firstly, we already had a nebulizer at home.
• Secondly, we had not been advised of a separate charge for the nebulizer, nor that insurance would not cover any of it.
• Lastly, the nebulizer provided was exactly the same as one I previously purchased for $49.99.

While we are very happy with our pediatrician and her office staff and will remain loyal, for some people, this relatively minor but avoidable cost could result in patients leaving a practice.
While patients have a responsibility to understand some of the complexities of insurance coverage, a few simple questions from the office staff would have helped to minimize our frustration three weeks later. For instance:
“Do you have a nebulizer at home?”
“Do you know if your insurance covers the cost of medical equipment?”
They could also have explained that any standard nebulizer would be effective and informed us of the cost. I am confident that this input would have reminded us that we are already in possession of nebulizer or to clarify our insurance cover.
Unfortunately, this scenario plays out all too often in healthcare. In what other industry is it acceptable to perform services prior to informing the responsible party of the expected cost? It is vital for healthcare providers to correct the blight of the patient billing experience.
Why Does Patient Billing Need a Makeover?
“Because we’ve been doing it this way for so long” is never an acceptable answer.
Patient billing needs a makeover because it is the right thing to do for patients and their families. Click To Tweet
Furthermore:
Unexpected healthcare costs and surprise bills can devastate a family.

Research published in the American Journal of Public Health revealed that medical problems contributed to 66.5% of all personal bankruptcies between 2013 and 2016[1]. A further study from the American Cancer Society found that over half of American adults report “medical financial hardship[2].”
Families facing high medical bills often lose their jobs due to illness or need to stop working to provide care for a loved one. It’s probably safe to say that many families are only one medical emergency away from facing a real financial crisis.
To approach the billing process with the patient at the center must become a priority because it is the right thing to do.
A positive patient billing experience can help retain and even gain new customers.
Patients have an increasing choice over where to receive care. Personally, my insurance allows me to select any hospital within one of the biggest health systems in the state. I will naturally choose the location where I have the better patient experience when I require healthcare.
A positive experience, including the billing process, means I will continue to return to the same facility and recommend it to others. A negative experience will result in me avoiding the facility in the future and advising others to do likewise.
This is human nature and it affects your organization’s bottom line.
Medicare reimbursement increasingly depends on patient satisfaction scores. Through CMS’s Hospital Value-Based Purchasing (VBP) Program, hospitals under the Inpatient Prospective Payment System (IPPS) are paid based on the quality of care they deliver.
For 2019 through 2021, 25 to 33.3% of that payment is tied to patient satisfaction (the Person and Community Engagement domain). When patients feel they are over-charged, receive surprise bills, or have unmet expectations, patient satisfaction suffers. This concept holds true across every industry, but especially when the cost, along with the stakes, are so high in healthcare.
The billing experience is often the first and last interaction that your healthcare organization has with your patients. It is an opportunity to leave a lasting impression on a patient who will be given the opportunity to rate your organization using the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS).
A poor experience with billing damages a patient’s perception of the overall quality of their experience, leading to lower patient satisfaction scores and subsequently lower reimbursement from CMS.
It can increase actual payment of bills
47% of people under age 65 with private health insurance are enrolled in a High Deductible Health Plan. It means that healthcare organizations are relying more on the patient, rather than a third-party payer, to pay the bills[3].
A further survey found that “patients who are very dissatisfied with Business Office interactions are more likely not to pay their bill.” Unpaid bills affect your organization negatively in two ways:

• Outstanding monies are not available for investment, improving patient care, etc.
• The cost of collections affect your organization’s profits. Charges from collection agencies range between 25 and 40% of all payment collected. Hiring staff to perform debt collection can be just as costly as there is no guarantee of collecting payment from bills that are past due.

5 Steps to improve the patient billing experience
As healthcare costs skyrocket and as Medicare and third-party payers shift towards a value-based care model, here are some strategies to improve the patient billing experience.
1. Gather and analyze the data
Since 1999, VIE Healthcare Consulting has identified cost-savings for hospitals by gathering and analyzing accurate data. Analyzing accurate data around the patient billing experience is challenging due to both the quantitative and qualitative nature of the data.
Quantitative data can be gathered by collecting information such as:

• Methods of communicating your bill.
• Payment options available to the patient.
• Methods of payment used by the patient.
• Amount Owed.
• Services Rendered.
• Due Date.
• Prompt Payment.
• Delayed Payment.
• Failure to Pay.
• Multiple Bills/Statement Sent.

Much qualitative data can be gathered from HCAHPS but reviewing these surveys does not provide a complete picture. We recommend:

• Evaluating frequently asked questions and complaints to improve understanding of frustration points for patients in the billing process.
• Asking patients and family members for direct feedback about what they like and dislike about the process.

Patient input will empower your organization to address their pain points, improve patient satisfaction, and even increase patient payment.
2.  Communicate
Medical bills are notorious for being complicated and difficult to navigate.
Some patients enter a doctor’s office or hospital with little to no comprehension of what the final cost will be, or what their insurance will cover – or exclude. While patients have a responsibility to understand their health insurance, it can be extremely challenging, especially for elderly patients or individuals experiencing a health crisis.
Educating your patients about their financial responsibilities must be prioritized before any bills are incurred. Click To Tweet
We recommend the following:

• Train your staff to have respectful and knowledgeable bill-focused conversations with patients. Oftentimes, patients are overwhelmed and forget to inquire about costs. Patients may also fail to ask appropriate questions out of fear of sounding ignorant or receiving a rude reply from staff.
• Post notices, provide literature and ask your patients if they have any financial concerns surrounding their care to encourage conversations about the billing process.
• Provide written information that deals with estimates, deductibles, and out-of-pocket expenses. Verbal communication is the most direct and effective, but written information enables patients to learn more in their own time when dealing with complex medical bills.
• Provide payment options. Communication is typically limited to a bill being repeatedly sent to a patient’s home until it is paid. These bills often provide the total amount due and the due date along with a phone number to call for telephone payments. Frequently, however, there are no options for payment plans. Include a number to call that will connect the patient with a real person who can politely and professionally explain the bill and offer payment options. This avoids patient frustration.
• Lastly, ensure that once a bill is paid no further bills are issued. It is unacceptable to continue to send bills to your patients for months after the account has been settled.
• If bills remain unpaid, coordinate with all parties involved to confirm that only one party is pursuing the resolution, rather than multiple.
• Similarly, advise credit bureaus when an account is resolved. Receiving multiple calls and notices about unpaid bills, not only affects patient satisfaction surrounding the billing experience, but can also impact a patient’s health.

3. Provide clear patient statements

The format and layout of medical bills are historically difficult to interpret.
Some bills do not indicate whether the proper insurance was billed prior to issue. Others do not provide a sufficient description of services for which the patient is being charged. Even if patients understand the statement, they may be unsure as to why the insurance covered one service and not another or why patient balances differ for what appear to be similar services.
A call to the insurance company can address some of these concerns, but clear, easy to understand statement means that patients have a much easier time accepting their bills and paying them promptly.
Research suggests there are certain layouts and designs that “motivate prompt payment and enhance patient satisfaction.” Furthermore a 2016 survey found that over 60% of consumers find their healthcare bills confusing.[4]
Over 60% of consumers find healthcare bills confusing. This should concern every healthcare organization as it leads to delayed payment. Click To Tweet
By simplifying the patient bill, your organization can increase prompt and full payment while simultaneously improving patient satisfaction.
Another challenge faced in the patient billing experience is that one healthcare encounter can result in multiple bills from different departments. For example, a post-operative patient may receive separate bills from the surgeon, the anesthesiologist, the hospital, the laboratory, and radiology if X-rays were performed. Simplifying and unifying bills will minimize surprise bills and all the frustration and stress that come along with them.
The value of research-based billing cannot be overlooked. Significant variation between organizations and their billing processes put patients at a disadvantage when trying to interpret and pay their medical bills. Gathering input from patients on what they want to see in a statement can lead to a billing experience that not only increases the speed and likelihood of payment, but also enhances the overall patient experience.
Your patient statement is n opportunity to strengthen the relationship that you have with your patients.
4. Payment
Historically, medical bills were paid either in person or through mailings. Today, patients can pay by telephone, online, through a patient portal or even via an app on their smartphone.
Preferences for payment may vary greatly for your patients. Providing multiple methods of payment for your patients may come at a price, but significantly increases the likelihood of bill payment.
The high total of medical bills can often overwhelm patients who may already be facing financial hardship. As mentioned above, allowing patients the option of paying over an extended period of time ensures you receive some payment rather than no payment – but payment plans must be promoted and explained to patients who may not be able to pay a bill in full.
The simple communication of letting a patient know that you want to help and work with them can help to improve the potential for bill payment.
A further approach that has proven successful is to offer discounts for prompt payment. Offering discounts is mutually beneficial situation as the patient is able to save money while you minimize expensive and repeated efforts to collect payment. As an organization, you can choose how much of a discount to offer as well as what ‘prompt payment’ looks like to your organization.
Regardless of the variety of payment options offered by your hospital, there will inevitably have patients who do not pay their bills. Evaluate whether you are willing to commit internal resources to follow-up with these patients or whether to outsource this responsibility. Whatever route you choose, be sure that only one party is pursuing collection. Receiving multiple calls from different parties regarding the same bill may overwhelm and discourage your patient from paying.
Once a bill is paid, communicate promptly with all who need to know the account has been settled.
5. Empowerment

Empowering patients to take control of their healthcare can lead to a transformed patient experience for the following reasons:

• When dealing with medical bills, ignorance is not bliss. Knowledge is power and the more your patients understand regarding their bill, the more positive an experience it can be. Encourage them to become informed consumers by asking questions as they navigate their own healthcare.
• Provide literature and offer classes to address the confusion and frustration patients experience with the billing process. Be willing to answer any questions your patients have.
• As a healthcare organization, you have little to no control over how the insurance companies operate, but you can encourage patients to speak with their health insurance company prior to and after receiving care to gain a more complete understanding of how their coverage works. This should be an ongoing conversation to avoid surprise bills as much as possible.

Becoming an advocate for your patients and holding their hand through the complicated process can help them feel like they have a partner in the expensive world of healthcare rather than just another entity waiting to collect payment.
Closing
In closing, I will share a final personal example of the impact and importance of the patient billing experience.
It was my second visit to a world-renowned facility that consistently ranks nationally as a top-5 hospital in multiple specialties. My entire experience from the very beginning was excellent.
On this visit, the doctor had ordered a CT Scan to be carried out prior to my appointment. Due to a change in my insurance, a billing department representative explained to me that I would be required to pay $1800 out-of-pocket until insurance issues were resolved, at which point I would be fully reimbursed.
We had driven over 15 hours and the ordering physician wanted to see the CT Scan that day, so I agreed to pay the out-of-pocket cost to have the scan performed. This was in May of 2018.
After countless unreturned phone calls, multiple conversations with people who told me they could not help and over 30 cumulative hours of phone conversations, I was finally reimbursed the $1800, eight months later in January of 2019.
A healthcare organization that I had grown to trust and put full confidence in had severely damaged the relationship because of a negative billing experience.
The patient billing experience should not be an afterthought. It is part of the patient experience and can have a significant impact on patient satisfaction. Click To Tweet
Last impressions really can affect how a patient views their entire experience.
Late American author and motivational speaker, Zig Ziglar once said, “Difficult roads often lead to beautiful destinations.”
The effort to transform the billing experience for patients is no exception. It is not an easy road to travel, but the return on investment is worthwhile:

• It will help retain and gain new customers.
• It will increase patient satisfaction scores and Medicare reimbursement.
• It increases actual payment of bills.

Above all, improving the patient billing experience is the right thing to do.
[1] https://medicalxpress.com/news/2019-02-medical-bankruptcy-two-thirds-filers-cite.html
[2] https://www.healthcarefinancenews.com/news/medical-costs-create-hardships-more-half-americans
[3] https://www.cdc.gov/nchs/data/nhis/earlyrelease/Insur201808.pdf
[4] https://static1.squarespace.com/static/5715100cf8baf3c79d443859/t/5730e1c4f699bbe627603424/1462821330491/DesignChallenge_ResearchReport.pdf