Becker's Hospital Review

18 Executive Briefing Sponsored by: Avoiding Friction in the Age of High-Deductible Health Plans: How Innovative Solutions Can Help Providers Succeed T he consumer-driven healthcare era has transformed the role of the patient. Today, patients are more informed about their treatment options and what they will have to pay out-of-pocket. Driven by a desire to obtain affordable healthcare, patients seek providers that align with their overall needs without compromising care. As higher premiums and deductibles propel healthcare orga- nizations into more consumer-facing interactions, hospitals and health systems today understand they can no longer solely fo- cus on the clinical side of care. They must also be upstanding in the revenue cycle management process and ensure patients have the information they need to follow through on payments. Healthcare's transformative business model The evolution of the healthcare business model corresponds to the development of the payment process. What once was a business-to-business transaction has been replaced by some- thing more complex and difficult to navigate — a business-to-busi- ness-to-consumer model. In a business-to-business model, a prac- tice would file a claim to the insurance company who would then adjudicate the claim and pay the provider for services rendered. "That was the easy money," says T. Scott Law, founder and CEO of Zotec Partners, a leading provider of revenue cycle manage- ment services to multi-specialty practices and health systems. "The transaction was electronic; you were dealing with a busi- ness. You had rules to comply with — but it was pretty straight- forward with reasonable technology." In the business-to-business-to-consumer payment model, pro- viders have to send the insurance company a bill and get it ad- judicated. The insurance company may well come back to the provider saying a patient owes the deductible, so the provider then bills the patient for that deductible. After billing the patient for the deductible, a provider has to get that money adjudicat- ed by the insurance company and only then can the provider bill the patient and collect for the services rendered. This model has taken shape due to rising deductibles and copay- ments. In 2016, covered employees had an average deductible of $1,478 for single coverage, up from $1,318 in 2015, according to data from the Kaiser Family Foundation. Additionally, many covered workers have copayments. Sixty-seven percent of covered workers have a copayment for a primary care visit. For primary care, the average in-network copayment totaled $24 in 2016. An InstaMed study found the number of consumer payments to healthcare pro- viders increased 193 percent between 2011 and 2014. All facets of the healthcare industry are waiting to see if Re- publicans' healthcare bill, the American Health Care Act, will pass, as reform legislation may increase premiums for some and lower rates for others depending on their age and health. Recent Congressional Budget Office data found the average premium for a 21-year-old will total $5,100 under the ACA and $3,900 under the AHCA in 2026. A 64-year-old will pay an av- erage premium of $15,300 under the ACA and $19,500 under the AHCA in 2026. Any escalated premiums will likely create more price-sensitive consumers who seek a relatively seamless process in all aspect of care, including the payment process. Therefore, hospitals and providers will need to employ the right tools to make this process as painless as possible. Limiting friction in the payment process When providers fail to effectively manage claims and obtain the necessary information from patients to avoid payer denials, they risk creating diversions in the payment process that can harm the patient-provider relationship and create friction. Mr. Law defines friction as any irregularity to an otherwise smooth payment process. For instance, a provider could obtain an inappropriate denial from an insurance company, which raises a slew of questions including whether the administrative team received all the cor- rect information from the patient. This could be a product of a staff member failing to verify a patient's information or a patient hastily writing down their information and making an error in the process. Nonetheless, friction occurs and this is a phenom- enon providers want to avoid in their RCM process. Mr. Law cites data that found almost 30 percent of all claims are either inappropriately denied or inappropriately paid. Of that 30 percent, half of claims are not followed up on. In those cases, a provider is essentially walking away with nothing. "If a patient calls and complains, that's friction in the process," Mr. Law explains. "We measure the amount of friction, which depends on how clean the data is, how the carrier processes the claims, the ability of a patient to pay... Friction is any excep- tion to the payment process." Zotec's technology has the ability to predict the likelihood of friction on a per-patient basis. Technology can assess several factors to determine this value, including a patient's propensity to pay, as well as the insurance company's likelihood of deny- ing or filing inappropriate denials and the provider's consisten- cy in relaying accurate insurance or payment information to the patient. However, all of this information must be 100 percent correct because inaccurate information can completely alter a specific patient's estimated friction. "We have statistic modeling tools we use under the umbrella of big data. The most important thing we've found is you have to be able to track these events with a great deal of certainty so you come up with the proper conclusion," Mr. Law says.

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