Calculating Your Patient’s Out-of-Pocket Expenses Accurately

Patients are increasingly worried about healthcare costs. Receiving a large healthcare bill is one of the largest worries expressed by Americans. One survey found that two-thirds of people are either “very worried” or “somewhat worried” about their ability to afford unexpected medical bills for themselves or family members. Over half of respondents (53%) reported they are concerned about the affordability of health insurance deductibles. 

Adding to this challenge is the fact that over half of people (57%) have received an unexpected healthcare bill they thought would be covered by health insurance. The most common cases of these surprise bills were physician services and lab tests. Practices can help ease patient stress by helping them understand out-of-pocket expenses with greater accuracy. A patient who understands their portion of the cost and patient responsibility upfront can better anticipate those expenses and create a plan to pay them, which in turn increases patient collections. 

Breaking Down Patient Out-of-Pocket Expenses

Helping patients understand out-of-pocket expenses starts with having that conversation sooner than in the past. Medical practices can start having that discussion at the time of service. But to make this possible, practices need the right elements to estimate exactly what a patient will owe out of pocket for their care. Patient expenses are typically influenced by the following. 

Eligibility information. The most basic element of determining what a patient will pay is in the patient’s insurance plan’s eligibility details. A practice can typically submit details to the insurance provider to determine whether the person has coverage. This process also provides critical information that affects out-of-pocket expenses such as copayments, coinsurance and any remaining deductible amounts. 

Current health plan fee schedule. A current health plan fee schedule lets you know how much the insurance company will pay for various services. If you’re attempting to use management software to automate patient estimation at your practice, ensure that you have the most recent fee scheduled loaded into the software in order to deliver accurate details to the patient. 

Copayments. Many health insurance plans have copayments, which are due at the time of service. Having current copayment details will ensure that you charge the patient the right amount during the visit and won’t need to bill them any additional balances after the service. 

Coinsurance. The coinsurance is based on the coverage that the insurance provider offers. For example, insurance coverage might cover 90% of office visits. In this case, the patient is responsible for 10% of the visit. However, it’s important to remember that coinsurance calculations are based on the contracted fee schedule, and not the retail rate of the practice. For example, let’s say the health insurer’s contracted rate is $150 and the coinsurance is 10%. In this case, the patient would owe $15. 

Health insurance deductible. The health insurance deductible is a large reason why patients get unexpected bills. For example, let’s say that the insurance plan covers 90% of office visits after the patient meets the plan’s deductible. However, the patient hasn’t met the deductible, so the patient owes the entire visit amount. Take the example of a health insurer contracted at a rate of $74. The patient has a $150 deductible amount left to meet. In this case, the patient would owe the entire balance of $74. Alternatively, let’s say that the patient has a remaining deductible of $25 and the cost of the visit is $74. The patient would pay the $25 and the insurance company would pay the rest of the medical expenses. 

Most practices understand the various elements that go into what the patient owes for care. But getting a more accurate picture of each of these elements and calculating them with greater accuracy are what allow for more accurate out-of-pocket expense calculations. 

Understanding Calculation Options 

Practices have a wide variety of tools that help determine out-of-pocket expenses at the time of services—everything from automated systems to traditional pen-and-paper calculations. Understanding all available options can help with selecting the right one for your practice and giving your patients more accurate payment details. 

Manual calculation. Manually calculating copays, coinsurance and deductibles was common in the past. The downfall of manual calculations, however, is the risk for human error, so it’s worth considering more advanced options for greater accuracy. 

Health plan estimation tools. Many health plan providers offer estimation tools on their websites that allow practices to quickly add up a patient’s out-of-pocket expenses. Service details are entered, and the tool provides an estimate of potential coverage and out-of-pocket expenses to the patient. Some tools even provide the ability to personalize details specific to the patient account, including a better understanding of real-time remaining deductibles. When using these tools, it’s important to know that they aren’t guaranteed, and patients should be made to understand it’s an estimate that could change.

The Benefits of Estimation Software

Estimation software is a tool that allows you to communicate your patient’s healthcare billing responsibility so they quickly understand their financial responsibility at or before the point of service. For example, this tool might model provider contracts with payers, load details about charge information and then input personalized patient benefit information to determine the total amount owed. The tool is helpful in providing the following: 

Estimation software is a helpful tool to connect with patients about out-of-pocket expenses, but also to reduce receivables and bad debt. Starting the conversation early using this type of tool opens an opportunity to discuss resources if a patient can’t afford the expenses. Because not all patient estimation software is created the same, it is important to research your options. 

A comprehensive solution might also provide a payment plan, which gives people flexible options to spread payments out over a longer period and make medical care bills more affordable. 

When Patients Cannot Pay For Services Upfront 

Telling patients an accurate figure regarding out-of-pocket expenses allows them to quickly see what they owe at the time of service. But for some patients, this amount will feel overwhelming. For example, perhaps they have an unmet deductible and therefore must pay the entire medical bill out of pocket. If patients can’t afford to pay the balance, they might need payment options. 

Working with a partner that provides patient financing allows people the flexibility to customize payment options to fit their needs. Look for a partner that has a 100% patient approval rate, which means that all patients can get access to financing options. 

Partners that provide payment plans may also offer receivables funding, which doesn’t require your practice to wait to get paid. Instead, upfront payments can be made, even if your patients are still paying off the balance of what they owe. A program that accepts a wide variety of payments, including mobile pay, is also important because it streamlines the patient experience and allows people to pay using the tools they already know and enjoy. 

Moving Into The Future 

Patient expectations are fast changing. They now expect the same convenience and ease they receive in other sectors of business, such as retail, in the healthcare environment. Building more transparency into your processes by providing accurate and easy upfront estimates about medical care costs allows people to better understand their financial responsibility and create a plan to pay those balances. As a result, you can build stronger relationships with patients and improve the success of your medical practice in the future. 

Three Ways to Improve the Patient Journey

What is the Patient Journey?

Most patients feel uncomfortable.

To varying degrees, patients are usually in your office because they’re experiencing some kind of pain and discomfort. This is compounded by any negative emotions instigated by their illness, and perhaps even the environment in which they are seeking care and their concerns with how they are going to pay their medical bill after their visit.

The patient journey refers to the quality of a patient’s experience with a practice and includes every touchpoint a patient has with your practice.

The patient journey begins when an individual identifies a health issue and decides to seek treatment. The patient journey also includes the moment they hear about your practice, their visit and treatment and any and all communication between practice and patient that happens before, during or after.

It might end when they share an online review and rating, or it might continue indefinitely – for as long as they remain a patient of your practice.

Why the Patient Journey is Critical.

The growing number of healthcare compliance standards are almost overwhelming. It’s complicated by the fact that outcome measures are often affected by variables outside of a practice’s control.

A practice may have done a wonderful job with a patient, but in the days following treatment, elements of the patient’s lifestyle may lead to readmission. These might include diet and exercise, or their inability to pay for medication and rehabilitation.

Additionally, there are growing financial incentives for practices to meet outcome standards.

For example, the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) is a star rating system aimed at helping consumers find excellent care and at elevating quality healthcare facilities. According to research, practices with higher HCAHPS patient ratings have significantly higher net margins.

It’s no surprise, a positive patient journey results in a greater collection rate from satisfied patients. It also improves patient retention.

In other words, healthcare practices have every reason to ensure patients follow recommended treatment, rehabilitation and/or follow-ups.     

The single best way to do this is to improve the patient journey. It’s a matter of making every patient touchpoint a pleasant one. It’s a matter of creating a patient-centric system.

Therefore, improving the patient journey is simple, but not always easy. Consider this research conducted by the Journal of Internal Medicine. It suggests that doctors spend an average of 11 seconds listening to patients. It also suggests that this limited time is likely due to time constraints and physician burnout.

So, it stands to reason that in order to improve the patient journey, time constraints and physician burnout need to be alleviated.

Fortunately, the best solutions work for patients and practices. Here are three ways you can improve the journey – for your patients and you.

Three Ways to Improve the Patient Journey

1. Shared Decision-Making Model

You can improve the earlier stages of a patient’s journey with the shared decision-making model. When a practice works together with patients to decide on treatment and care, and how they are going to pay, there’s an opportunity to balance clinical evidence with the patient’s own preferences. This is a great way to improve patient engagement, as patients who participate in the decision-making process:

This has a powerful effect on the overall patient journey. Patients who engage in shared decision making are more trusting of their physicians. They’re also better educated, which is another key component in the patient journey.

2. Make the Patient Journey Resemble Their Retail Journey

With the rise of healthcare consumerism, the healthcare industry is looking more and more like the retail industry. In this digital age, patients expect payment to be a quick, easy and above all a convenient process. They also require that they know how much they will have to pay during the time of treatment rather than receiving a surprise bill a few weeks after. If you give patients the cost information up front and offer financing that provides the ability to pay in a way that’s convenient for them, you’re simultaneously enhancing the patient journey and your bottom line.

Convenient payment options may include the ability to pay via:

At the end of the day, your practice is still a business. Just as in retail, a successful business is successful because it emphasizes the experience of the consumer (or in healthcare’s case, the patient). By offering flexible payment options, practices are better able to meet patients on their terms while streamlining the medical billing and collections process.

3. Financing

The Medical Group Management Association estimates that the average practice receives $15.77 for every $100.00 charged. And since patients are being forced to shoulder increasingly more of their healthcare costs, they naturally want to understand the part of the billing process that’s relevant to them.

The combination of uncertainty and increased financial burden contributes to patients’ disillusionment with providers.

Patient financing addresses both of these issues. By implementing patient financing, a practice helps patients by:

Financing is a way of both alleviating financial burden and uncertainty. The practice benefits from financing, too, by having the ability to:

Your Guide to a Better Patient Journey

SaaS technology is bridging the gap between providers and patients to create the optimal patient journey. Want to learn more? Discover how ClearGage can delight your patients and improve your bottom line when you schedule a demo with us today.