The average American family can expect to receive approximately 125 pieces of mail each year related to healthcare billing. That’s about 2.4 times each week that we are getting a piece of the puzzle as it relates to what we owe and don’t owe, what our insurance company paid and didn’t pay, which provider charged for which procedure and when, and so on.
Confused? So is more than half of America. In one survey, conducted by OnePoll for Bend Financial, 56% of Americans admitted to feeling “completely lost” when it came to understanding how their health insurance worked. Nearly half (47%) were confused about which procedures were covered and which services were considered out-of-network. The infamous “Explanation of Benefits” rarely explains anything the average consumer of healthcare can actually understand.
As human beings, we are conditioned to seek answers. Somewhere within the mountain of medical messages patients receive each month is useful information that could help them understand what they actually owe. But most information is disaggregated, repetitive and often not useful to understanding their payment situation.
What we end up with are confused, frustrated patients who give up trying to get answers about what they owe to the providers who are trying to collect. As an industry, we are training them to ignore us. Rather than take more time figure it out, or spend hours on hold waiting to talk to a customer service rep, they avoid healthcare. The Bend Financial poll also found that among the consequences of confusion is avoidance of care with 59% of those polled saying they put off making healthcare appointments. Confusion leads to more cost as patients put off necessary and preventative procedures that can lead to more expensive, emergent needs for care.
As the share of the total cost of care continues to grow for patients whose employers are increasingly relying on high deductible health plans, the consequences of cost avoidance due to confusion and complexity are raising the stakes for providers. Just two decades ago, fees paid by patients accounted for only 5% of hospitals’ and doctors’ revenue, but in the last several years, that portion has risen to 35%.
Therefore, not only has the financial burden of healthcare payments shifted to consumers who have higher out-of-pocket costs to pay, the burden to collect has shifted to providers who historically relied less on the portion of their billing to come directly from the consumer. And they’re spending more to collect less. A 2018 JAMA study found that the annual cost of billing and insurance-related activities for a single primary-care doctor was $99,000 and represented roughly $1 in $7 collected. That’s one provider among the many patients may hear from as they engage with the healthcare system.
A number of niche “point solution” companies have emerged, attempting to address a small piece of the healthcare problem, but instead of simplifying, these myriad solutions are merely aggravating an already complex system, creating more inefficient paper, collection notices, phone calls and text messages. Confusion, leading to more cost, resulting in more consumer disengagement.
The answer to fixing a broken system is not to add more complexity but to disrupt it from within. Taking a system wide approach to a system-wide problem is the only way to address the problems that the healthcare payments processing industry faces.
Fixing the system from within requires shifting the financial relationship away from providers and indiscriminate debt collection agencies to partners who promise to take inefficiencies out of the system and streamline the payments process for all. At PayMedix, we’ve changed the way healthcare payments are made. We pay the cost of the patient invoice to the provider upfront and then assume the payment relationship with the patient. As a financial company, we provide credit for out-of-pocket costs at low to no interest and construct a payment schedule that fits the patient’s needs. And importantly, we guarantee payment to providers and credit to all patients, regardless of their credit record.
What has become one of the most meaningful aspects of this model is the way we consolidate patients’ medical expense information into one single statement, a “Super EOB” giving them just the useful information they need to determine exactly what they owe. This has reduced the amount of paper going into patients’ homes by six-fold and has achieved a ‘willingness to recommend rating that is three times the average in the healthcare industry.
By reducing confusion, and providing a payment path for consumers who need it, patients can be better informed, more in control of their medical expenses, and, most importantly, re-engaged. The result is a return to the relationship that providers and patients should be focused on – care.
Author: Tom Policelli, CEO of PayMedix
Tom Policelli joined the PayMedix leadership team as CEO in February 2021. Previously, Mr. Policelli was a co-founder and CEO of Minuteman Health, an HMO in Massachusetts and New Hampshire. Prior to that, he was co-founder and CEO of Averde Health. Mr. Policelli also ran United Health Group’s consumer-directed health business and founded a new business unit within the company. He began his career at CIGNA Healthcare, and while at Monitor Company consulted with several leading healthcare companies. For more information visit: https://paymedix.com/