Revenue Cycle Self Pay Explosion – Are You Ready For It?

by Phil C. Solomon on June 8, 2012

in BPO,Business processing outsourcing,Collecting self pay deductibles and co pays,Hospital Charity Care

Self Pay Account Volumes Continue to Increase – Creating Ongoing Challenges For Revenue Cycle Executives

We all know how the economy has affected our friends, family and associates. The price of gas is has been falling, however at $3.60 per gallon (national average) it’s no bargain. The news sensationalizes the drop in gas prices, but we are still paying way to much for our transportation fuel.

A reduction of healthcare coverage is another example of the financial pressures consumers are now facing. The bad economy has driven consumers to go without health insurance, In fact Commonwealth Fund detailed in an article on Reuters, reported that in 2011, one in four people are currently without insurance and seven out of ten went without insurance coverage at all. They study determined 40% of those who lost insurance were previously covered by employer sponsored plans.

The study concluded that provisions in the Affordable Care Act — such as allowing adults under age 26 to remain on their parents’ insurance, expanding Medicaid, creating insurance exchanges and reforming the insurance market — can increase continuous insurance coverage among Americans. However, this is no panacea. Consumers are still going to pay a large share of their medical treatment costs out of their pockets and providers will still face difficult challenges collecting cash from self pay patients.

Nearly 50 million Americans had no health insurance in 2010, according to the latest census data. Health care costs, which have risen tenfold since 1980, are putting an increasing burden on families, employers, and government programs. Costs also are driving up the ranks of the uninsured and leading fewer companies to offer health benefits to their workers. From 2001 to 2011, the percentage of companies offering health benefits dropped from 68 percent to 60 percent, the Henry J. Kaiser Family Foundation reported.

What does it all really mean? For providers, it means an increase in self pay patients who have no insurance, larger thresholds to meet before insurance kicks in and patients who are under insured. The more the patient has to step up and pay out of their wallets, the greater challenge it is for providers.

What are the strategies providers can integrate into their revenue cycle workflow to mitigate the increase in self pay accounts? Here some suggestions:

Integrate a registration quality tool which will catch insurance accounts that are mistakenly added to the self pay financial class.

Use automated Insurance eligibility technology to check self pay patients at every touch point throughout the entire collection cycle. I recommend looking for firms which offer the ability to run unlimited transactions. Typically, this will reduce transaction costs by 40% to 50% and allow the checking of more accounts, thus delivering better hit rates.

Consider using address verification software in the emergency room and wherever the provider experiences large volumes of mail returns. Not all verification products are alike. Select products with caution.

Integrate a self pay POS collection tool which identifies past due balances and estimates current charges so collection efforts at POS are more successful.

Use a consumer financial scoring tool to segment the propensity of payment expected on your self pay accounts and then develop modified workflows based on scoring results. Make sure the tool utilizes credit data and is validated by true collection accounts, not data trending. Also, make sure the scoring tool separates out potential charity accounts by evaluating total household income estimates against the FPG.

If you cannot or are not making at least 20 outbound calls between the hours of 8:00 AM to 8:00 PM to each of your self pay accounts for 90 to 120 days, you should consider hiring a business process outsourcing firm to collect your accounts. Without proper patient outreach, you are leaving cash on the table and missing important opportunities to relay good will to your patients.

I hope these suggestions resonate with you. For more ideas about how to improve cash collections and revenue cycle performance, contact me, Phil C. Solomon at


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