In recent years, federal and state legislators have increased their focus on the patient revenue cycle, patient payments and patient financing. Those changes impact health system revenue, place additional complexity and burden on operations, and require reevaluating existing practices and vendors. As hospitals nationwide experience staffing shortages, many are struggling to keep up with the demands.
At the same time, patients face mounting financial pressures. The rising cost of healthcare services, inflation, and the shifting burden of responsibility through high-deductible health plans (HDHPs) have strained patients’ budgets, resulting in decreasing payment rates and increased levels of bad debt.
The good news: Technology and automation offer win-win solutions by improving healthcare affordability, increasing payments, and freeing up staff’s time, creating a more positive, compliant experience for all.
Price Transparency
The importance of provider price transparency is well established. Laws like the No Surprises Act (2022) and Hospital Price Transparency (2021) aim to protect individuals from unexpected medical bills; consumers should be clear about their financial obligations. A good faith estimate provided before a service allows recipients to budget effectively and make better, more informed decisions about their care.
While this is a positive approach in theory, there are real, tangible challenges related to hospital price transparency. Many hospitals and providers demand payments in advance for nonemergency services, distressing patients with HDHPs. Thankfully, technology squarely addresses two of the most pressing issues.
- Accurate Estimates: Providing estimates prior to service can be cumbersome and inconsistent for providers. Hospital software partners like Epic, which use data to automate accurate pre-service estimates are a much-welcomed relief to hospital staff.
- Healthcare Affordability: Even with transparent pricing, many patients lack the means to pay. Without an affordable option, individuals delay and often avoid care altogether. The PayZen Care Card, which provides customized, interest-free payments helps alleviate financial stress by meeting the patient where they are.
Proactive Financial Assistance
Recent legislation has increased compliance requirements surrounding financial assistance. While individual states are moving at their own legislative pace, an overarching theme is clear: financial aid should be proactively presented and widely publicized to all who qualify, and patients who are eligible should not be pressured to pay or enrolled in payment plans. Ideally, those who qualify for assistance are properly identified and filtered out beforehand.
Hospitals, already stretched thin, face time-consuming and costly processes for identifying eligible patients. Thankfully, technology once again provides solutions:
- Presumptive Charity Screening: Third-party automated screening tools proactively identify patients who qualify for financial assistance, ensuring they receive the support they need before enrolling in payment plans. Most existing tools in the market have a large share of false positives and, therefore, are not suitable for use prior to patient billing.
- Self-Service Tools: User-friendly apps and online platforms enable patients to submit documentation and applications with ease. These should be automatically processed in order to reduce the administrative burden on staff.
- Automated Refunds: If a patient who qualifies for financial assistance has made payments, there should be an easy process to refund those payments to the patient no matter if the health system or an external partner services the patient.
Reasonable, Patient-Friendly Payment Plan Options
Patients who don’t qualify for full financial assistance are shielded from predatory collection practices at both the federal and state level. The Consumer Financial Protection Bureau (CFPB) has scrutinized payment plans, especially when offered by 3rd parties, to ensure they don’t include high interest rates, deferred interest, or hidden fees. Plans must be reasonably affordable for patients. State-specific safeguards are also in place, where legislation defends individuals from aggressive collection tactics. Minnesota and Illinois have recently passed laws that require hospitals to consider a patient’s ability to pay before pursuing collections.
PayZen’s platform offers a comprehensive solution that meets these regulatory requirements. The AI-powered payment plans are transparent, with no interest or hidden fees, and are inclusive, ensuring 100% patient approval. Additionally, the flexible terms allow patients to pay what they can afford, driving revenue for hospitals while enhancing the patient experience.
Restriction of Aggressive Collection Tactics
Recent regulations have placed stricter limits on extraordinary collection tactics (ECA), such as legal action, credit reporting, and selling debt to third-party buyers. Laws like Section 501(r) for nonprofit hospitals and new state-level mandates, such as North Carolina’s executive order, prioritize patient protection while requiring providers to adopt more patient-friendly financial practices. These measures prohibit actions that place additional financial burdens on patients and their families, requiring providers to find compliant and sustainable repayment alternatives.
It is critical that technology platforms and revenue cycle vendors adhere to the following requirements:
- No ECAs: Never pursue aggressive collection tactics i.e. lawsuits, credit reporting, or third-party debt sales.
- Zero Interest or Fees: Never charge interest or fees to ensure patients can meet their financial obligations without hidden costs, reducing provider-patient friction.
- Debt Reassignment: If a patient is later found to qualify for financial assistance, a vendor needs to promptly reassign the debt back to the hospital, allowing financial assistance to be correctly applied.
These policies encourage hospitals to introduce flexible payment options earlier, reducing reliance on aggressive collections on the backend. By partnering with vendors like PayZen, who share this supportive approach, hospitals can maintain compliance, foster patient trust and increase repayment success.
The Patient Financial Journey
Each step in the patient payment cycle is now subject to intense regulatory scrutiny. Health systems need to reevaluate their existing vendors and increasingly look to technology to ensure that patients are given options, treated appropriately and hospitals remain compliant.
