Patient Financial Responsibility: How to Determine It & Convey It for Better Provider Revenue

Patient-as-payer is a new reality that healthcare organizations are still adjusting to. 

But adjust you must, as 30 percent of provider revenue now comes from patients, according to HFMA. 

Not only are you responsible for securing these funds to keep your organization viable, but you are also responsible for educating patients about what they owe and when they need to pay.

In this article, you’ll understand how you can determine patient financial responsibility and finesse the conversation around collecting both upfront and after service in a way that retains patient loyalty, increases patient satisfaction, and collects the net revenue you have earned. Here, we cover just how you can embrace the new reality of increased patient financial responsibility and encourage your staff to do the same. 

What is patient financial responsibility?

‍Patient financial responsibility is the portion of medical expenses that a patient is required to pay providers after insurance coverage is applied. These fees include deductibles, copayments, and coinsurance, all of which are determined by the patient's specific insurance plan and the healthcare provider's billing policies.

Providers know (but patients sometimes don’t understand) that: 

• Copay is the rate that payers set for prescriptions, doctor visits, and other types of care.
• Coinsurance is the percentage of costs patients are responsible for after they’ve met their deductible.
• The deductible is the set amount patients must pay for medical services and prescriptions upfront before their coinsurance kicks in.
  

In the era when patients paid less, they weren’t focused on the discrepancies between these concepts. Now they have to be. The average premium for employer-sponsored family coverage increased 43% over the last ten years, while the average deductible for single coverage increased 61%. With this increased financial burden, patients now must pay more attention to their healthcare costs. 

You can help patients understand their responsibility and improve your upfront collections with good faith and patient payment estimates. Take a quick tour of how you can automate this process here:

New provider tasks in a higher patient financial responsibility landscape

While insurance companies try to deliver coverage information, patients really only face its complexities when they are in the doctor’s office or their payment portal. That means providers are left to deliver coverage or lack of coverage news. 

The following tactics help to soften the news of significant payment responsibilities: 

Communicate before treatment as much as possible

Healthcare leaders agree that being completely transparent about patient financial responsibilities as soon as possible is the best way to retain patient trust and satisfaction. Today, this transparency takes the form of an accurate and detailed patient payment estimate. Remember that today’s patients are getting the message from other sources that their responsibilities have risen. You won’t be the first to deliver this news and an estimate.

Most patients today want and even seek pre-service estimates. A 2024 study from Patient Rights Advocate, Inc. and Marist of 1,130 American adults reveals that 94 percent support true healthcare price transparency. After all, given the rise in consumerism among patients, 91 percent claim a big reason they want these upfront prices is so they can shop for the best quality care at the lowest price. Many other studies echo these findings. 

• When delivering an estimate, maintain eye contact and ask for payment assertively. Share what the full cost of the treatment is and then what the patient is responsible for. “Your visit today amounts to $275, but your responsibility is just $65.” Your estimates should include detailed breakdowns.  
  

• Offer flexible payment options
• Provide options like credit cards, Google Pay, Apple Pay, electronic funds transfer, and payment plans. Listen to patient concerns, answer questions patiently, and provide resources or referrals to financial counselors if needed. Demonstrating your flexibility indicates your understanding of the burden healthcare expenses place on patients. 

Consider keeping a credit card on file to improve collection rates and ease the payment process for patients. 

Provide an estimate

While the federal government only mandates providers give good faith estimates to uninsured and self-pay patients at this time, some healthcare organizations are experimenting with providing them to all patients. This convenience for patients can translate into profit for you. When Florida's four-hospital healthcare system Health First adopted a “100 percent estimate” protocol, they increased upfront collections by 27 percent.  

As mentioned above, patients welcome estimates, as long as they are accurate. Estimates help them plan how they will pay.  In a study conducted by Experian and PYMNTS, patients who were not provided cost estimates reported lower satisfaction than those who did receive an estimate (78 percent vs. 88 percent).

Use online patient portals

An extensive review of 3,456 records by the Journal of Internet Medical Research has found that patient portals have a number of advantages for both patients and providers.  Patients appreciate the flexibility to explore their records and payment options. The study even found that these portals enhance patient awareness of their health conditions and prompt better adherence to treatment plans. The freedom to review their data and options in the comfort of home for as much time as they want goes far in improving patient understanding, yet another factor in satisfaction. Salucro Healthcare’s study of 1,348 U.S. healthcare consumers shows 62 percent of respondents saying patient portals were their favorite method for paying medical bills.

The 2023 State of Patient Access Survey by Experian echoes these benefits, indicating that patient engagement through easy-to-use self-service portals bolsters patient loyalty and possibly recommendations to peers.

Offer mobile payment options

Providing patient convenience extends beyond portals. To reach today’s remote and mobile workers, use text messages and emails that provide links to portals where bills can be paid.  Text messages have an open rate of  98 percent. 

Standardize billing design and payment procedures

Now that it’s up to you to deliver patient financial responsibility news, it’s important to avoid confusing them. To keep coverage and billing issues clear, standardize your payment procedures and bill designs across your departments. Issuing billing statements that vary in design and payment options gets your bill postponed or tossed aside to be dealt with later. Worse, it risks patient aggravation. Instead, offer a seamless brand experience for patients as they navigate the different healthcare professionals and facilities involved in their treatment journey.

Staff is at the center of enforcing patient payment responsibility

Many articles urge providers to reassure staff about insisting on patient pre-payments, and even provide training to help staff use the right language.  HFMA even recommends “gamifying” staff collections. In this plan, managers track staff to see just who collects more in amount, more often. They explain,

“Thanks to more data insights, organizations can create performance-based incentives to help drive better collection rates…the right activities will improve staff behaviors to increase collections.”

Reading between the lines, they’re clearly recommending providers use software to collect the data to pit staff members or even departments against each other for monetary or other “incentives.” While this could work at some organizations, it runs the risk of backfiring. Finding the root cause of staff reluctance to collect upfront could render better results. 

A recent Reddit discussion provides some insights.

Every day, front-office staff faces sentiments like these from three different patients: 

“They refuse to provide care unless I fork over the payment. I don’t like this. I don’t like paying some portion of deductible without an EOB. How do I even know they will bill insurance? If they don’t, my payment will not be applied to the deductible.”

“I find this incredibly frustrating. I've never been able to get a hospital to give me a firm answer on what something will cost before they do it. Yet they can estimate that I'll have to pay thousands in advance, as that will be my portion of the quantity that they can't estimate? That's laughable.”

“I am looking for the option where I can insist on an EOB before paying anything. It sounds like there is not such an option and that the best I can do is try to find providers that will bill insurance first.”

These comments and the rest of the thread reveal patients are not resisting the fact that they’re responsible for part of their payment. They’re more miffed that they don’t have accurate upfront estimates.  To avoid overpaying, many patients prefer to have providers bill insurers first, and pay the balance after. While this exchange focuses on hospitals, patients using ambulatory care express similar distrust and hesitation. 

The case for providing accurate upfront estimates for insured patients as well as self-pay and uninsured

Starting January 1, 2022, the No Surprises Act (NoSA) mandated that healthcare providers and insurers must offer good faith estimates (GFEs) to patients who are either self-pay or uninsured. These GFEs give patients a list of the expected costs for specific healthcare services or items they request or have arranged. In addition to copays, it also lists coinsurance and remaining deductible amounts. A detailed GFE includes the primary services and items, as well as any supplementary ones that might be required, encompassing services or items from other providers or facilities.

While the No Surprises Act only imposes penalties on healthcare organizations that do not provide GFEs to patients who pay for their own care or do not have insurance, a few providers extend these estimates to patients with insurance.

How to offer patient estimates 

There’s no getting around that patient payment estimates require work. That work has to come from either a staff member or a software solution. 

Center for Medicare and Medicaid Services (CMS) shares that having a staff member generate a good faith or patient payment estimate requires 1.3 hours at a cost of $203 per estimate. The time and budget to carry out these tasks manually would decimate most healthcare organization’s revenue. Only the smallest provider offices could get by hiring one or two additional staff members to compile patient payment estimates. 

Consider, too, that it will be difficult and expensive to hire employees during a RCM staff shortage. One online survey  of 205 CFOs and VPs of revenue cycle in the U.S. from large health systems and physician groups covered the operational deficiencies they’re experiencing due to the labor shortage. Over 90 percent of these respondents confessed to experiencing a labor shortage in their RCM department. Many went on to say that half of these roles are currently vacant. Because patients must be billed, it’s not surprising that one-third of these respondents plan on finding an RCM partner to help them get their work done. 

Patient financial responsibility software in action

Imagine if you had to process hundreds of patient estimates daily. One reproductive healthcare group with 35 locations and a large self-pay patient population faced compiling and sending 445 daily after the passage of the No Surprises Act. Without these documents, they risked compliance penalties. 

To comply with the new requirements, leaders determined it would take four to eight additional full-time employees to handle the estimate load. Given an average annual cost of $43,000 per FTE, hiring that number would cost the group $172,000 to $344,000 yearly, an expense they couldn’t afford. 

They selected software solution at a fraction of that price. This solution verifies benefits, generates estimates, and sends these estimates to patients, most often upon scheduling. Nearly all estimates – 99 percent – are processed without any staff effort. Provider staff intervenes only in a very few exceptions forwarded by the software. 

The efficiencies of the software solution prompted the group’s director of revenue cycle management to say the software was able to,

“really help us use the product to support our business needs. More, they helped us develop our workflows so that we could operate efficiently.”

 Payers are already using automation to process payments. Providers, too, must leverage these tools to remain competitive. 

The case for providing patient payment estimates for insured patients

The group above came out ahead financially by avoiding penalties and hiring costs, but currently, without a mandate, healthcare organizations serving mostly insured patients do not have as much incentive to offer patient payment estimates. In fact, very few do at this time. The benefits of providing these estimates include: 

Early adopter advantages

Some consumer advocacy organizations are calling for patient payment estimates for all patients, including the insured. In their most recent comments regarding individuals covered by insurance, the Public Interest Research Group,  a federation of non-profit organizations that organize and direct advocacy on consumer protection called on powerful government agents and the CMS to provide “advanced estimate of benefits” AEOB – patient payment estimates – to all. They issued this statement specifically focused on “covered individuals”:

“Patients deserve to know their cost of scheduled care in advance and should be able to rely on that AEOB to make appropriate financial decisions as it relates to their medical treatments. We urge you to swiftly move from this request for comments to formal rulemaking. Every month of delay in implementing AEOB rules is another month during which some patients will hesitate to seek care because of unknown costs, or will schedule care but then be overwhelmed by their financial obligations that they couldn’t anticipate.” 

Given initiatives like this, it may only be a matter of time before all patients receive upfront patient payment estimates. Being an early adopter could put your organization ahead of competitors.  In the meantime, you’ll enjoy benefits like:  

Increased appointment attendance and care completion

Experian Health and PYMNTS data reveals that nearly half of consumers who cancel appointments do so due to cost concerns. But often, these patients haven’t even received a cost estimate or education about their options for paying.  

Patient payment estimates help alleviate patient fears by detailing charges prior to treatment. Armed with this information, patients can make better decisions about their care and ask about payment options.  

More repeat patients and referrals

For too long, healthcare’s personal touch has existed mostly in the exam and hospital rooms. The financial side of healthcare has been applied brutally, often with a broad brush and lack of understanding of the patient’s situation. 

Now that today’s patients are more discerning, a kind and custom approach needs to grow in the billing office. In its 2023 Consumer Health Insights survey, McKinsey & Company shares that patients want the same level of service and customer care they enjoy in retail, travel, and food delivery. As out-of-pocket costs for patients rise, patients become more focused on the value they can get for their money. They research the best value for their medical care as much as they do those new tires. This report emphasizes that healthcare organizations must begin,

“reimagining healthcare through a consumer lens starts with the understanding that consumers have widely divergent experiences with healthcare and attach different levels of importance and satisfaction to the eight steps they take along the healthcare journey.”

To retain their client base and earn optimal revenue, providers who guide patients gently and positively through the financial aspects of their care will benefit.

 As quoted in a Becker’s white paper, Ally Deale, director of patient access operations at Maryland’s Luminis Health, explains:

“Too many patients don’t have a clear understanding of what their responsibility may be or what options are available to help them. So, they either don’t continue care or hide from attempts to get them aid. We want our front end to be patient advocates and educators when it comes to collections. That way, they will be more prepared to work with our financial counselors or lending partners and more focused on their clinical outcomes rather than the financial impact of their care.” 

Know and address staff barriers to executing patient payment responsibilities

As we discussed in a recent post about organization comfort with collecting pre-service, getting physicians and staff onboard with sharing patient financial responsibilities early and often can be tough. As carers, clinicians and staff want to help, not “take” from patients. Physicians and staff dread pushback or resistance from patients when they ask for payments. Providers just don’t get the business management experience they need in their graduate programs. With the right approach outlined in that article, however, you can demonstrate just how you can work with your patients so they can pay for the care they need without risking financial harm. 

A clear and simple way to facilitate patient financial responsibility 

The meticulous determination and transparent communication of patient financial responsibility are cornerstone practices that significantly enhance the healthcare experience for both providers and patients. By sharing financial responsibilities with patients upfront, leveraging technology, and ensuring staff are well-trained in financial discussions, healthcare providers can streamline billing processes and improve revenue management. Ultimately, these efforts lead to a more transparent patient experience and reliable, fair provider revenue. 

User-friendly patient payment estimate systems like MD Clarity’s Clarity Flow accurately estimates patient responsibility, generate accurate patient pay estimates, and send these estimates to patients. All of this is accomplished without any touches from staff for 99 percent of all estimates. Our customer services working with your staff can set up estimates to be sent automatically upon scheduling or via another trigger. Schedule a demo to see how you can use Clarity Flow to automate your growing number of estimates.