The Impact of the Growing Patient Financial Responsibility Amounts on Healthcare Providers

1. The Impact of the Growing Patient Financial Responsibility Amounts on Healthcare Providers Stuart Hanson, MBA Director, Healthcare Provider Solutions Executive Citi Steven S. Lazarus, phd, cpehr, cphie, cphit, CPORA, fhimss President, boundary information group Co-founder, HEALTH it certification, llc October 8, 2013

2. Session Objectives • Explain strategies to address changing patient self-pay conditions • Prepare a list of operational actions to implement in your practice to improve revenue cycle metrics • Outline the options for the use of technology to efficiently increase collections

3. Discussion Agenda • Background & Financials • Patient Financial Responsibility Evolution • Research Overview • Key Findings • Challenges for Providers • Best Practices • Ten Tips • Question & Answer Session

4. Background – Top Global Economies • Quiz time – Top Global Economies, 2012 Source: International Monetary Fund data

5. Background – Projected US Healthcare Expenditures * Source: Citi analysis based upon 2011 data from the US Dept. of Health & Human Services & Center for Medicare & Medicaid Services

6. Patient Financial Responsibility Worse News The problem is expected to double to more than $200 billion; almost 33% of patient responsibility Projected financial impact for providers* Bad News In 2011, patient Write-Offs represented an estimated 25% of “collectible” patient financial responsibility, or $102 billion Billed Collections $232B 37.14% Patient Write-Off $203B 32.49% Patient Write-Off $102B 24.53% over 8 years Billed Collections $172B 41.50% POS Collections $189B 30.37% POS Collections $141B 33.96% * Source: Citi analysis based upon 2011 data from the US Dept. of Health & Human Services & Center for Medicare & Medicaid Services

7. Trend is Accelerating… Source: Aon Hewitt Private Exchange Survey Sees Employee Movement to CDHPs.” Health Insurance Marketplace News, Volume 1, Issue 1, 2013, pg 3, 5

8. Trend is Accelerating… “Employees’ share of premiums increased 8.7 percent between 2012 and 2013, with the dollar burden rising from $2,658 to $2,888. In fact, employees contribute 42 percent more for healthcare than they did five years ago, compared to a 32 percent increase for employers. Likewise, out-of-pocket expenses at the point of care continue to rise — up by 15 percent over the last two years, from 15.9 percent to 18.4 percent. The total employee cost share, including premiums and out-of-pocket costs, has climbed from about 34 percent in 2011 to 37 percent in 2013. Employees are also paying more through out-of-pocket costs at the point of care. Continued increases in the cost of healthcare may motivate employees to use employer programs designed to contain and lower costs for both employers and employees by supporting healthier choices, greater accountability and acceptance of value-based plans.” - Towers Watson Employer Survey Source: Towers Watson/NBGH Employer Survey “Reshaping Healthcare Best Performers Leading the Way”, March 2013

9. Overview of Research Conducted • Objectives • Refresh understanding of the impact of growing patient financial responsibility on providers • Ensure that feedback & findings were unbiased and broadly based • Research Methodology • Number of interviews with CFOs, Patient Accounting Directors and selected thought leaders from hospitals and physician groups from across the nation

10. Findings: Key Provider Challenges • Patient responsibility is growing rapidly • This strains technology, staff, processes • Expected patient responsibility higher growth rate is cause for provider concern • Consumer demand for information and transparency is growing • Lots of provider distractions prevent focus on patient revenue cycle (e.g., Meaningful Use) • New models, tools, and consumer expectations are emerging…quickly

11. Findings: Key Provider Challenges • Shift creates need for new staffing, technology and patient-friendly solutions • Simplify billing of patients • Offer enhanced payment flexibility – funding sources, scheduling, etc. • Consumers are coming to expect the same tools they have online for shopping and paying bills to extend to their healthcare experience

12. Sample Interview Findings “Consumers don't sit down regularly today to pay a stack of bills every week like they used to. Healthcare bills are typically paper. So people put them off, and pay them later and later because they are different from most of their other bills. There is no incentive to pay these types of bills really, and no one is aggressively hounding them to pay. Payment is very delayed from the date of service, services are typically non-recurring and no one gives us an incentive to pay up. Isn't that the "perfect storm?" - Health Plan Executive

13. Sample Interview Findings “We want to move the process up to the patient's smart phone, tablet or via a portal pre-visit, and are not making a big investment in kiosks. Smart phones and portals will replace kiosks.” - Hospital CFO “The only way to function efficiently is to use "bolt-ons" to the HIS (Health Information System). We "bolt-on" four or five just up front, including address verification, an estimator, eligibility/benefits checking and other special functionality. A problem with this approach is that any one of these "bolt-ons" might fail or delay processing and then the whole process gets delayed.” - Hospital Revenue Cycle Executive

14. Sample Interview Findings “Absolutely, our portal makes us more efficient. We put on the patient statement that payments can be made on the portal. We give them a password and I.D. Each statement has a new password. We are giving patients a lot more information on statements and on the portal.” -Hospital CFO “The portal actually reduces problems with mail and phone calls. We aren’t forced to take credit cards over the telephone (with a person) when patients go to the IVR, and this reduces liability for identity theft.” - Physician Revenue Cycle Executive

15. Peer-Based Best Practices • Focus on Front Office Capabilities and Staff Training • Improve / update training • High account balance collection team • Leverage electronic eligibility • Fully utilize real-time eligibility (ACA operating rules) before and at registration/check-in • Collect co-pays, outstanding balances, and expected amounts due at check-in/check-out (be prepared to issue prompt refunds after insurance adjudication if overpayments have been collected)

16. Peer-Based Best Practices • Expand Payment Options • Improve patient billing experience • Accept any payment method • Automate financial assistance programs • Use electronic tools to determine and initiate Medicaid enrollment, where applicable • Use, if they become available, similar tools for the ACA healthcare marketplace options • Invoice and Payment Protocols • Segment self pay balances & processes • Concentrate efforts on patients with propensity to pay; don’t waste time on those who will not pay

17. Peer-Based Best Practices • Use Technology Systems to Save Time and Money • Improve out of pocket transparency and start dialogue with patients early in process • Leverage real-time payer tools (e.g., ACA mandated real-time eligibility and claim status inquiry) • Offer Patient-centric solutions that simplify process and offer easy to use payment methods • Utilize multiple options, if appropriate (e.g., patient portal for Meaningful Use and patient collections, consumer mobile applications, etc.)

18. Peer-Based Best Practices • Automate the back office • Implement real-time claim status (mandated by ACA Operating Rules) to identify pended claims and denials early • Automate denied claims management and payment posting utilizing the ERA/EFT ACA Operating rules • Reduces staff A/R posting resources • Facilitates denied claims workflow for increased efficiency and accelerated cash flow

19. Reasons for Lack of Provider Attention to this Burning Issue • Obama care • Significant uncertainty over the future of Obama care until 2013 with the re-election of President Obama and the Supreme Court decision • Meaningful Use incentive payments • Hospitals and physician providers, and their vendors have been focused on Meaningful Use to support vendor sales and provider achievement of incentive payments • Lack of integrated IT tools from existing vendor base • Increased patient transparency has not been a provider or vendor strategy in the past

20. Reasons to Act Now to Navigate the Perfect Storm • Growing patient financial responsibility • ACA healthcare marketplace Federal and State programs • Raises new challenges to be addressed by training, tools and ability to answer patients’ questions • Many individuals under these new insurance programs will not be used to what is covered and not covered, and how the deductible and co-pay work, and what their deductible and co-pay obligations are

21. Ten Tips • Focus on Front Office Capabilities and Staff Training • Improve and expand staff training to emphasize up-front copayment and deductible collection and instill the mentality to “ask for payment” on a regular and consistent basis. • Provide effective processes and staff training for a “high account balance collection team”. • Build into existing processes the routine electronic verification of insurance eligibility and benefits. Use this process at multiple times throughout the revenue cycle and for pure self-pay accounts, and check patient Medicaid eligibility on a monthly basis.

22. Ten Tips • Expand Payment Options • Enable patients to understand their responsibility and resolve it at any time. Ensure that you can accept any common form of payment including cash, debit cards, credit cards, healthcare account cards, checks and e-checks. • Provide automated tools and improve processes to facilitate financial assistance or loans, enable payment plans and provide a process for Presumptive Financial Assistance.

23. Ten Tips • Invoice and Payment Protocols • Define and implement separate, unique protocols for the handling of “self-pay after insurance” and pure “self-pay” following the models widely used in plastic surgery and dermatology where there is a mix of insurance and high value self-pay patients. • Stratify pure self-pay patients with specialized attention focused on Medicaid, medical assistance or charity care as early in the revenue cycle as possible. This way, providers can concentrate their efforts on patients who will be more able to make payments, while reducing the effort spent on those who will not pay.

24. Ten Tips • Use Technology Systems to Save Time and Money • Where feasible, implement patient financial responsibility estimation software capabilities to support staff/financial counselors. Enable patients to choose their preferred method to satisfy their account and set up payment in advance to automate the process. • Take advantage of automated real-time communication abilities provided by insurance payers. • Focus all revenue cycle decisions on creating a patient-centric focus that increases your ability to receive payment and jointly improve your patients’ satisfaction with the process. New, web-based patient portals enable patients to go online or use their mobile devices to reconcile their healthcare bills, receive alerts when claims are ready to be viewed, pay amounts due and view past payments – all in one digital location – streamlining payments and increasing overall payment satisfaction.

25. To Obtain a Complimentary Copy of the Research Report • “The Impact of the Growing Patient Financial Responsibility Amounts on Healthcare Providers” Go to: www.boundary.net and download the report following the instructions on the top of the home page on the right hand side

26. Discussion

27. Contact Slide • Steven S. Lazarus, PhD, CPEHR, CPHIE, CPHIT, CPORA, FHIMSS President, Boundary Information Group www.boundary.net Co-Founder, Health IT Certification, LLC www.healthitcertification.com sslazarus@boundary.net (303) 488-9911 (office) (303) 809-9337 (cell) • Stuart Hanson, MBA Director, Healthcare Provider Solutions Executive, Citi www.citi.com http://health.citimoney2.com stuart.hanson@citi.com (312) 627-3418 (office) (630) 235-0616 (cell)