The time has come for hospitals to move to value-based health care, where a great patient experience can make or break a health system’s bottom line. Many hospitals are taking the right steps to ensure they improve patient collections and stay fiscally sound. Hospitals are trying to keep nurse staffing levels high to provide quality care to all patients, adopting the latest technology and targeting every area of the hospital experience to encourage higher patient payments. Yet there’s one strategy certain hospital executives are taking that might not be the best option for the hospital: paying patients’ insurance premiums.
Not all hospitals – or even the majority – take it upon themselves to help patients pay their out-of-pocket costs. In fact, paying patients’ premiums is a rare practice, but there might be a growing number of hospitals that may resort to covering patient payments. During a September webinar, Rich Unbdenstock of Health Leaders Media and president American Hospital Association asked Many Cohen, senior advisor to the Centers for Medicare and Medicaid Services administrator, about hospitals’ practice of covering patient payments. The response?
“Can the hospital buy the plan on their behalf?” Cohen said. “You know, I don’t know the answer to that question … It’s a good question. I’d like to say yes. But let me check with people like lawyers.”
According to Forbes, the practice of picking up the tab for certain patients has been around for years. While the strategy might help patients pay their health expenses, going forward hospitals may see more patients be unable to pay their premiums. Many health plans in the federal and state insurance marketplaces have high deductibles, and some newly insured patients may be unable to pay their out-of-pocket costs. Is the approach of paying for patients’ premiums really going to be worth it for hospitals from now on? Or are there better ways to improve patient collections? Hospitals don’t have to resort to covering the costs of treatments, tests and procedures for patients, because there is another available option to boost patient payments.
Keeping the process simple
Forbes reported that while there is currently no research regarding the number of hospitals that have taken it upon themselves to cover the costs of care, some have recently helped unemployed patients with large bills. According to Health Leaders Media, the practice of paying out-of-pocket costs has fiscal benefits for hospitals because covering premiums. However, the strategy can violate federal kickback statutes and get out of control. Although the practice of paying patients’ premiums helps to prevent charity care, it can lead to legal issues and fiscal challenges for hospitals, the article noted.
“Hospitals and drug companies pay patients’ premiums and cost-sharing in order to increase utilization of treatments and prescription drugs that benefit them financially,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, according to Forbes. “This practice undermines efforts to reward high-quality, cost-efficient care and drives up health care costs for consumers, employers and taxpayers.”
So, what’s the solution? Either hospitals increase the number of patients whose out-of-pocket-costs they cover when the individual provision comes into effect or health systems see their patient payments drop. If a hospital can’t pay someone’s out of pocket costs, what can they do to ensure the financial side of health care for the consumer is as straightforward and hassle-free as possible? Hospitals can invest in a patient collections system that provides collection at the point-of-service, bill clarity and patient payment convenience.
Getting to the root of the problem early can help hospitals avoid having to allocate more resources to the payment of patients’ premiums. When patients have an immediate understanding of what they will be expected to pay in the long run, they can budget and be informed about their care costs moving forward. Too many patients are unaware of what their treatments or tests are going to cost when they enter the health system, leading to more patients receiving expensive care that they can’t pay for. When patients see how much they will owe the health system out-of-pocket, they will be able to make informed decisions. In fact, POS collections and bill clarity can reassure hospitals that patients will be within their financial means to pay for services, creating peace of mind for hospital executives and patients alike.