The uncertain state of the current economy and the continued effects of the pandemic have brought concern over medical costs to the forefront of many people's minds. Although many families have recovered somewhat from the pandemic-induced recession, three in ten people still report significant concerns over healthcare costs.
The fear of being hit with an unexpectedly high medical bill can cast a pall over a patient's entire healthcare experience. You can help ease your patients' fears by providing transparent prices with an upfront cost estimate. Knowing what to expect and what their options are can alleviate their concerns and improve their patient experience.
We’re Now in a World of Healthcare Consumerism
People are now shopping around for their healthcare providers just like they do for a new sofa. In a survey conducted by Press Ganey, over half of patients reported using information from the internet to choose their primary care provider. They were more likely to trust the internet than a doctor's referral when choosing a primary care provider.
Reviews factor heavily into people's decisions when it comes to evaluating healthcare providers, with 84% of respondents saying they probably wouldn't see a provider with an average of fewer than four stars even if another provider referred them.
Providing patients with upfront cost estimates eliminates surprises that can sour their experience with you and tarnish your reputation. There's no doubt many medical procedures and treatments can be expensive, and disgruntled patients don't hesitate to take to the internet with their complaints. When you take the time to provide your patients with an estimate of these costs in advance, they can make an informed decision and are less likely to be unhappy with your service.
Upfront Cost Estimation Is Now Required by Law for Some Patients
The No Surprises Act (NoSA) went into effect this year, and it mandates that hospitals and healthcare providers give self-pay or uninsured patients an upfront good faith estimate for services and items they provide.
The Centers for Medicaid and Medicare Services (CMS) regulation requiring price transparency for hospitals was enacted in January 2021. Federal law requires hospitals in the US to provide clear, accessible pricing information about their services and products online. Unfortunately, only 16% of hospitals comply with the NoSA's price transparency requirement.
Hospitals must provide this information in a machine-readable file that lists all items and services. Their prices also must be in a display of shoppable services and in a consumer-friendly format.
Since you're obligated to provide upfront cost estimation in some cases and price lists in others, you'll have to implement the systems and processes to do so. Without much extra effort, providing estimates to all of your patients can easily fit into your workflow. It can also act as a differentiator that sets your practice apart from others.
Providing Cost Estimates Upfront Empowers Patients to Pay upfront
When patients are provided an itemized list of costs ahead of time, they're more willing to pay upfront because they know exactly what services and products they're paying for. While it may not seem like providing advanced estimates would make a difference, hospitals that have implemented this practice have seen dramatic results.
The Health First hospital system includes four hospitals, 15 diagnostic centers, and over 300 physicians. Health First took a proactive approach to upfront collections and started providing all of their patients with estimates in advance. They increased their upfront collections by 27% and experienced 2.7% net revenue in point-of-service collections. The industry benchmark is 0.7%, so their gains have been remarkable.
Shortly after shifting to a "100% estimate, 100% ask," Health First has managed to secure over $2 million in upfront collections. In their first month, they collected their highest percentage of upfront revenue ever. This simple shift improved both their collection rate and their customer satisfaction.
Benefits of Combining Pricing Estimates with Upfront Collection
Communicating with patients about estimates can be challenging because the final bill may vary. However, the benefits of combining pricing estimates with upfront collection are worth the effort. This combination can:
Provide Your Billing Department with Accurate Information
Patient benefits change on a regular basis, and payers are constantly updating their processes. Running an estimate for every patient, every time will help you avoid surprises as well. Individual insurance benefit structures also add complexity to the billing process. A patient who has insurance with one particular company may pay a completely different price for the same service than another patient who's covered by the same insurance company.
Reduce Days in Accounts Receivable
When you collect payment upfront, you'll reduce the amount of revenue that is tied up and needs to be recovered after services are provided. Recovering accounts after you provide services is more labor- and resource-intensive. Providing an estimate increases the likelihood that patients will pay upfront, eliminating the need to chase down accounts receivable.
Decrease Bad Debt and Write-Offs
Bringing transparency to the healthcare process ensures patients know ahead of time how much services will cost. If they know they can't afford a service, they're more likely to opt out than proceed with services out of their price range. When you start from the first customer interaction by setting the expectation that you'll collect the amount due, you drastically reduce the chances a patient won't pay their bill.
Due to the opaque nature of healthcare costs, consumers are often in the dark about prices until they receive an unexpectedly high bill. People aren't accustomed to hidden costs of this sort. In every other industry, consumers are provided with a clear breakdown of costs before they receive a product or service. This lack of transparency harms patients and providers. Patients can't shop for the best value in healthcare, and providers aren't able to make cost-conscious decisions.
It's impossible for the healthcare industry to function as a free market without clarity and transparency. If consumers can't compare prices before buying services and products to determine the value of those services, they can't participate in a functional free market.
Improve Patient Satisfaction
Patients are more willing to make payments before they receive services if they understand the charges. They're happy to have an accurate idea of how much services will cost before they receive them. Upfront estimates allow consumers to budget for healthcare services and conveniently pay at the time of services. This eliminates billing headaches and surprise bills for your patients.
The pressure to offer pricing and quality data is increasing from all sectors of society. Giving your patients this information beforehand, along with information about financing options you may have available, will reduce the stress associated with their experience.
Many consumers are disgruntled and have lost faith in the healthcare system because of scandals such as the EpiPen price gouging litigation. To patients, charges can seem arbitrary if they don't have clear information about what's driving them and what to expect. They feel discouraged in the face of an opaque system that is often literally their only lifeline. Knowing that a hospital or doctor's pricing has little to do with what an insured patient will pay because of hidden negotiations can be a bitter pill to swallow.
While many insurance companies provide price estimator tools and many providers will distribute pricing information when asked, it's a difficult and complicated system to navigate. Asking patients to do their own research about price and quality and make educated decisions based on that research when they're often in the midst of a health crisis is placing an unfair burden on them. Giving every patient an estimate simplifies the process and allows patients to make informed decisions about their treatment.
Providing upfront estimates also increases patient satisfaction when you're able to tell them that their insurance plan will pay 100%. People like knowing they won't owe anything. Additionally, it sets the expectation that they'll receive an estimate regardless of whether they owe anything or not. All patients benefit from the transparency of upfront estimates, whether they're self-pay or insured.
Moving Forward with Transparency
Although it's uncertain if bringing transparency to pricing before services are rendered will help contain rapidly escalating healthcare costs on a broad basis, implementing a policy of providing estimates and upfront payment to every patient every time will benefit your practice and your patients. You won't have to scramble to comply with the No Surprises Act for patients who are covered under it because you'll already have systems in place. You'll also increase your revenue by reducing the amount of time accounts spend in accounts receivable and reducing the number of unpaid accounts.
Your patients will have a better experience with your practice when they know what to expect and aren't surprised by high bills they can't afford. You'll build trust with your patients by being upfront about the costs associated with your services and products. When your patients trust you, they're not only more likely to give you good reviews and recommend you to their friends and family, but they're also more likely to put their faith in your treatment — resulting in a better outcome for everyone.