Medical laboratories can increase revenue and reduce bad debt by using technology to verify patient ID and insurance information before a specimen is provided
Due to a need to collect payment directly from the growing number of patients with high-deductible health plans, many clinical laboratories and anatomic pathology groups are experiencing flat or even declining cash flow. This issue has medical lab CFOs scrambling to find solutions.
Moreover, this problem is noticeably greater in 2014 than it was in 2013. One factor behind this worrisome trend is the Affordable Care Act (ACA). As of January 1, most newly insured patients enrolled under ACA have high-deductible health plans (HDHPs) that require substantial copayments when patients receive healthcare services. Employers are also increasingly shifting their employees to HDHPs, as well.
Families with HDHPs Have Sizeable Upfront, Annual Deductibles
HDHPs require families to pay sizeable upfront, annual deductibles before any insurance coverage kicks in. Consequently, clinical laboratories now serve large numbers of patients who must pay a substantially high out-of-pocket share of their healthcare costs before their insurance pays for anything, including lab tests.
Enactment of the ACA is accelerating enrollment in HDHPs. For example, the ACA bronze plan (lowest cost) covers just 60% of the enrollee’s medical expenses and the patient is responsible for remaining 40%, according to HealthPocket, a company that compares and ranks health plans. But before the plan pays anything, an individual enrolled in this plan must pay the first $5,801 (deductible) of healthcare expenses, or a family must pay the first $10,386 (deductible) of expenses.
Clinical Labs and Pathology Groups Need to Collect from Patients
When patients have such high deductibles, it’s important for clinical laboratories and pathology groups to collect all they can from each patient at the time of service. A recent article in Healthcare Finance News titled: ““Point of Service Collections on the Rise,” made the point that collections at the point of service are critically important to sustain cash flow.
Not only do medical laboratories need to do a better job of collecting from high-deductible patients, hospitals must increase collection efforts too. “As providers continue adjusting to the reimbursement changes wrought by the Affordable Care Act, it appears increasingly likely that hospitals will place more emphasis on collecting payments [from patients] at the point of service,” noted Healthcare Finance News.
“There are technologies today to address this problem, and they require little IT time or cost,” observed Jim Whitehurst, Chief Sales Officer of tevixMD, a company in Palm Beach Gardens, Florida, that offers real-time, on-demand batch identity and eligibility verification systems to healthcare providers.
Simple Changes Can Increase Medical Laboratories’ Cash Flow
“The main consideration is whether labs are ready to make the difficult decisions needed to stay profitable,” said Whitehurst. “A significant portion of bad debt actually is created at the front door. This is important because something as simple as a change in the provider’s mentality to respond to this market trend will have a major impact on cash.
“Collecting from patients at the time of service is one of the fundamental shifts now occurring across the entire healthcare system,” emphasized Whitehurst. “That is why hospitals, medical groups, and clinical laboratories are installing the tools and the work processes necessary to have this capability.
“It is also important to recognize that these patient co-payments are not the small deductibles of $5 or $15 that were common in past years,” he observed. “Today, some patients with HDHPs may be required to pay 100% of their bill until their annual family deductible is met, and these deductibles may be more than $10,000 for the year!
Using Collection Tools When Patients Present at Time of Service
“Today’s reality is that, if the clinical laboratory does put tools in place to ensure payment from every patient, it will immediately increase the revenue it collects,” Whitehurst said. “My recommendation is that clinical laboratories adopt the same model that retail businesses follow. Wherever possible, collect from each patient at the time of service.”
According to Whitehurst, the processes medical labs and pathology groups should have in place to gather information required to collect from a patient providing a specimen include the following:
• Verify the patient’s identity
• Validate a patient’s insurance information; and,
• Determine the patient’s co-pay and deductible amounts.
“One secret to success with this approach is to utilize an advanced, real-time patient search technology,” he stated. “You want such information as a patient’s first and last names, Social Security number, billing address, phone number and date of birth.
Real-Time, Positive Patient ID Helps Increase Lab Revenue
“Armed with this positive ID information, every lab can verify insurance coverage in real time, then work with the patient to collect what’s owed at the point of care,” continued Whitehurst. “For any unpaid amounts, the clinical lab now has verified information on the patient to bill and follow up on amounts due.”
Recognizing the significance of this trend and the need for clinical laboratories and pathology groups to improve how they collect directly from patients, Dark Daily has produced a white paper on this topic, “Collecting More Dollars From Patients: Why It’s Time For Clinical Labs and Pathology Groups To Move To The Retail Model.” The report is available for download .
Growing numbers of patients now have high-deductible health plans that require individuals to pay annual deductibles of $5,000 or more and families $10,000 or more. This trend makes it imperative that clinical laboratories and pathology groups develop the tools and workflow processes to collect directly from patients when they provide a medical laboratory specimen. Dark Daily has published a white paper on this topic, titled: “Why It’s Time For Clinical Labs and Pathology Groups To Move To The Retail Model.”
Readers of the white paper will learn why all of healthcare is moving toward a “retail model” that requires providers to collect money owed by patients at the time of service. The white paper explains the changes that medical labs should make in billing and collection practices to collect more money from patients.
What Medical Labs Can Learn from Urgent Care Centers
Of interest to pathologists and clinical laboratory managers are sections in the white paper that describe how urgent care centers have adopted procedures that allow them to collect substantial deductibles directly from patients at the time of service. Clinical labs and pathology groups can adopt many of these techniques.
“There is time for labs to acquire and deploy the technology they need to bill the insurer accurately and to bill the patient if necessary,” concluded Whitehurst. “There is no reason for any lab to leave any money on the table. But it is necessary for every lab to put the tools and workflow processes in place so that, at time of service, they can work with the patient to accurately determine the amount owed and then collect that money!”
—By Joseph Burns
Related Information:
Point of Service Collections on the Rise
Workers struggling to pay HDHP costs
Deductibles, Out-Of-Pocket Costs, and the Affordable Care Act
The New Normal in Health Insurance: High Deductibles
