The revenue cycle from the patient's perspective: improve your revenue cycle by tailoring patient financial communications to meet patient needs

Healthcare Financial Management, Sept, 2003 by Terry Allison Rappuhn

A patient visits a provider, is asked for and pays her copayment, and receives medical treatment. Six weeks later, she receives notification from both the payer and the provider that her account has been paid and no further amount is due.

Another patient visits a provider, is asked for and pays her copayment, receives medical treatment, and begins an 18-month process of trying to get the bill resolved. After 18 months, the provider has been paid only the initial copayment, the insurer has been contacted repeatedly and has denied the claim each time, and the patient has angrily decided to pay the entire bill even though she is convinced that the provider and insurer are at fault, She will tell at least 20 people her opinion of both.

These two glaringly different outcomes for the patient, the insurer, and the provider illustrate the importance of a streamlined, accurate, "friendly" billing process. Hospitals that consider the revenue cycle from the patient's point of view see higher patient satisfaction, lower days in accounts receivable, improved cash collections, reduced bad debts and past-due accounts, and reduced complaints per account.

Hospitals can improve financial results and operational efficiency by basing patient financial communications on strategies and techniques that accomplish the following objectives:

* Ensure the patient understands the financial aspects of the episode of care and the process for resolving the account

* Ensure procedures are in place to promptly process and resolve outstanding claims Ensure prompt and helpful responses to patients' questions and complaints

The patient plays an integral part in the revenue cycle. Patients who understand what they are expected to do during the billing process are more likely to do it. This is true regardless of the next step for the patient, which could include updating inaccurate demographic or insurance information, paying the portion of the bill that the patient owes, or providing coordination-of-benefits information. Although only to percent of a provider's total payments may be directly received from the patient, the patient plays a key role in speeding payments to the provider by providing the information necessary obtain payment from all payers.

At or before the time of care, patients want to understand what is expected of them financially. They want claims to be processed promptly and seamlessly by both the provider and the insurer.

In general, they want to be billed only after their insurance has paid its portion of the claim, and they typically are willing to pay their balance at that time. Throughout the process, they want information to be presented consistently and concisely, using understandable terminology.

The PATIENT FRIENDLY BILLING[R] project aims to support the development of financial communications that contribute to the patient's satisfaction with his or her hospital experience. Much of the information presented in this article has been taken from research performed as part of the Patient Friendly Billing project (see sidebar, page 72).

Patients want to understand their financial obligations. Although providers usually do not know the exact amount the patient will owe before a healthcare service is provided, providers can tell the patient what to expect in general terms. Patients should be told about the overall billing process and the typical time frame. Providers should present patients with information and tools to help them better understand how they can meet their financial obligations.

If the patient is expected to have a high personal liability, the provider should offer financial counseling to the patient, which might include helping the patient apply for financial assistance or arranging a payment plan.

There are two obvious exceptions to these rules. First, providers should not discuss financial obligations with an emergency patient before the patient's condition is stabilized. Second, even the best systems and processes cannot identify upfront all patients who will have high personal liabilities. The provider should help those patients who can be identified early in the process, and work with the others as they are identified.

Patients want insurance claims to be processed by the provider and insurer promptly and seamlessly. Patients are troubled when their accounts are not paid promptly or under the terms that they expected. Regardless of who is at fault, the patient is in the middle.

Providers can increase the chances of bills being paid properly by simplifying contractual relationships with payers. Complex arrangements are difficult for providers to bill, for insurers to adjudicate, and for patients to understand. Providers can also improve the chances of proper payment of the claim by sending insured patients a letter when their insurance claims are sent to the payer. The letter should thank the patient for choosing the provider for his or her healthcare needs, highlight the billing process that is under way, provide contact information and service hours for the provider, and ask the patient to confirm the accuracy of the billing or contact information and to correct the information if necessary. Such a letter both reinforces the patient's understanding of the billing process and provides an opportunity to correct a claim that may have been sent to the wrong payer or sent with erroneous information.