From the January/February 2016 issue of HealthCare Business News magazine
HealthCare Business News spoke with John Talaga, the CEO and co-founder of OnPlan Health, regarding hospital billing under the Affordable Care Act. The company is an innovator in patient financial management that provides hospitals and health systems a data-driven approach to initiating and managing payment plans for patients with high deductibles.
HCB News: Can you describe the patient billing landscape for hospitals after the Affordable Care Act?
John Talaga: Higher deductible health plans have grown exponentially, which has mincreased the patient’s responsibility and, as a result, shifted more of the receivables risk from the health plans to the providers. Medical bills are typically unplanned, unbudgeted expenses. Many patients simply don’t understand the impact that their deductibles will have on their wallet until they receive their bill.
HCB News: How have hospitals and health systems dealt with these changes?
JT: Not very well. Hospital billing systems and processes are the same — set up for collecting a portion of what once was 10 percent of their A/R, but is now leaning toward 30 percent. Consequently, they rely more heavily on third-party collection agencies, which are very expensive, increasing their overall cost to collect.
Hospitals have also invested in collecting at the point of care. Except the problem hasn’t changed, and patients are still very resistant to paying their balance until their insurance has adjudicated their claim. As a result, more than 90 percent of the patient collection issue still sits on the back end of post-service, making it very difficult for hospitals to collect.
HCB News: Are there other impacts to the hospital’s bottom line besides an increased cost to collect?
JT: The old problem was getting patients to understand what they owed. Now, the key issue is patients owe higher balances that they may not be able to pay. This creates a negative patient experience, which is starting to decrease patient visits and volume. These circumstances are directly impacting hospital revenues.
HCB News: What have hospitals done to address these market changes?
JT: Hospitals understand that turning to collection agencies is not a sustainable answer and therefore have deployed various financing programs to get paid. However, these programs are also very expensive, requiring hospitals to pay a percentage on the dollar with lenders maintaining full recourse on the uncollected receivable. As a result, hospitals are now beginning to use technology to assess patients’ ability to pay up front, in order to determine the right payment arrangement that both patients and hospitals can afford. The trick is automating the process so that patients can self-activate a pre-authorized payment plan and stay in good standing (not default).
