CEO SUMMARY: Labs and pathology groups have always found it tough to bill patients and collect a high proportion of those obligations. That situation is about to change, and fast! Payers recognize that, as more consumers are required to pay higher deductibles, co-pays, and out-of-pocket expenses, they will have to offer physicians and other providers near-real time services to verify eligibility and settle claims.
FOR YEARS, the laboratory industry has searched for effective methods to boost the collection rate from patients. It now appears health insurers will soon introduce a variety of tools that will eventually help laboratories in this effort.
The need for these eligibility and claims verification tools is a direct consequence of the growing number of patients participating in high-deductible health plans, health savings accounts (HSAs), and other forms of consumer-directed health plans (CDHPs). These new types of health insurance plans usually have one thing in common: the provider must collect substantially more money from the patient.
Patients Need To Pay More
High-deductible health plans often require the consumer to pay deductibles of $1,000 or more before insurance coverage kicks in. HSAs may require a family to pay as much as $5,000 out-of-pocket during the year before the insurance policy begins to pay providers.
Requirements that the patient pay high-deductibles and out-of-pocket expenses are creating a new problem for physicians. They must now organize their office to collect large amounts of money directly from the patients—preferably at the time of service, before the patient has left the physician’s office.
And remember, even as physicians must cope with this new problem, payers continue to reduce reimbursement for clinical services. This places the physician in a double-whammy. On one hand, he must collect more money than ever before from a patient. That’s never been easy, as labs can attest. Second, since payer reimbursement for clinical services is shrinking, physicians need, with some financial urgency, to collect every possible penny from patients.
Collecting from patients while they are still in the physician office is an ideal solution—but impractical for an obvious reason. Most patients don’t know what their copayment, deductible, or out-of-pocket is. That generally means physicians must bill the insurer, wait weeks for a settlement, and only then can they bill the patient for the balance.
This situation has not gone unnoticed by health insurers. They recognize that high-deductible health plans and HSAs will not succeed unless the physician can do a better job of getting patients to pay the full amount owed, on a timely basis. For this reason, health insurers are introducing new systems specifically designed to help physicians more efficiently collect all the money due them from patients.
Calculating A Patient’s Bill
A new system from Companion Technologies in Columbia, South Carolina, a subsidiary of Blue Cross Blue Shield of South Carolina (BCB- SSC), makes it faster and simpler for a physician to collect from patients at the point of service. At the same time, this system is designed to increase the cash flow of medical group practices and other providers, like laboratories.
“What this system does on the patient side is settle the patient’s responsibility before the patient leaves the doctor’s office,” said Deryl Metze, Vice President of Electronic Data Interchange for Companion Technologies. “The system is a card reader that accepts patients’ credit, debit, or insurance cards.
Helping Docs Collect $s
“It has a small footprint, consisting of an alphanumeric keypad, a small screen, and a printer that prints a patient receipt,” explained Metze. “It’s called the Companion Direct Point of Care system. In August, Companion began leasing this system to physicians for $19.95 per month plus 20 cents per transaction.”
The primary objective of this new system is to let both the patient and the physician’s office staff know how much the patient owes—before the patient leaves the office. It is designed to process claims in real time.
Besides the cards of BCBSSC patients, the Companion Point System also works with cards from other health plans, including Aetna, Cigna, UnitedHealthCare, and South Carolina’s Medicaid program,” noted Metze. “Companion Technologies is working to get the system to work with Medicare as well. Access to these insurer’s systems occurs in less than 10 seconds.
“Because the system can be used to verify eligibility and process claims instantly in real-time, physicians’ staff can collect payment at the point of care,” he explained. “It’s turning healthcare into a retail transaction. When you go to a retail store to buy a product, you pay for it before you leave. That’s not been true in healthcare—at least until now. That’s why we think doctors will love it.”
Faster Payments to Docs Is Now a Major Priority
BANKS AND INSURERS ARE DEVELOPING technology to help speed up the medical payment process. Many of these efforts center around use of smart cards that can be swiped and will eventually be used in laboratories and pathology groups across the country.
Semtek, a technology company in San Diego, California, offers a magnetic stripe card reader in a handheld computer for use in healthcare settings. The system can identify, access, and update patient’s medical records. It can also collect and process credit card data.
Several Blue Cross and Blue Shield plans are among the insurers offering swipe cards to their members.Regence Blue Cross Blue Shield of Oregon gives its members cards with features that allow physicians to speed up payments from health reimbursement arrangements (HRAs), health savings accounts (HSAs) or flexible spending accounts (FSAs). Also, several Regence health plans offer a stand-alone debit card that members can use to pay for out-of-pocket costs.
“Indeed they do,” said Marilyn Meyers, Practice Administrator for West Ashley Family Medicine, a four-physician practice in Charleston, South Carolina. “We absolutely love it.” West Ashley Family Medicine is one of 21 beta-test sites that’s been testing Companion Direct Point of Care system since February. With that test concluded, Meyers plans to recommend that the practice lease the system from Companion Technologies.
“If a BCBSSC patient does not have a swipe card, then nine times out of 10, we don’t know how much the patient owes, in terms of the deductible,” observed Meyers. “The situation is completely different when the BCBSSC patient does have a swipe card. Right on the spot we get a report directly from the insurer that shows how much they owe. This has proved to be quite a benefit for both our patient and our medical group.”
THE DARK REPORT predicts that lab executives and pathologists will be surprised at how rapidly real-time eligibility verification and real-time claims settlement becomes common in the offices of providers around the country. Payers already understand that they must help physicians collect higher copays and deductibles from patients. The examples provided in this intelligence briefing demonstrate how payers in different regions are already offering enhanced eligibility and claims settlement services to physicians in their care networks.
Laboratories and pathology groups will be impacted in several ways from this trend. First, as greater numbers of patients grow accustomed to paying significant amounts of money to physicians, hospitals, and other providers, they will expect their laboratory provider to offer them the same eligibility verification/claims settlement service they get from the physicians.
This means labs and pathology groups must prepare to deal with patients on a cash basis. Patient service centers ( PSCs) will need the capability to accept cash, credit cards, and health debit cards. PSCs will need the same kind of electronic link with payers to perform real-time eligibility verification and claims settlement while the patient is present.
Second, as consumers grow accustomed to paying more money directly to providers, laboratories and pathology groups should enjoy a better collection ratio for patient-billed services. On balance, this will be a positive development for the laboratory industry. But it represents a significant shift in mindset by both patients and providers.
In the world of consumer-directed healthcare, prices charged by providers, including laboratories, will need to be transparent and readily available to consumers. Payment—and arrangements for deferred payment—will be determined at the point of service.
Laboratories and pathology group practices should look at this as an opportunity to create competitive advantage. Rapid and effective responses to these trends will help labs and pathology groups keep existing clients, and grab more market share.