Patient Pay. Click to edit subtitle. Pete Thompson, Sr. Solutions Architect March 14, PDF Free Download

CLICK Trends TO and EDIT Best HEADLINE Practices to Encourage Patient Pay Click to edit subtitle Pete Thompson, Sr. Solutions Architect March 14, 2017

91%Healthcare is a big ticket expense Page 2

Agenda New Significance of Patient Pay Healthcare consumerism Growth in high deductible plans Financial dynamics Health System Response Improving the patient financial experience Internal workflow Focus on RCM improvement Creating an Effective Return on Investment Model Identifying areas of focus Utilizing proven strategies Creating and measuring to a benchmark Proven results Page 3

Patients Feel Financial Pressure, Too HDHPs on the Rise No end to HDHPs increase of 25% in 10 years More people are insured, but have higher medical costs 70% of Americans who struggle with healthcare debt have insurance 81% of covered, single workers have an average deductible of $1,318 Deductible = 5% + of income Out-of-pocket = 10% + of income 30% 25% 20% 15% 10% 5% 4% 5% Percent of covered workers enrolled in an HDHP/HRA or HSA-Qualified HDHP, 2006-2016 7% 8% 13% 17% 19% 20% 21% 24% 29% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 HDHP/HRA HSA-Qualified HDHP Sources: Advisory Board Company, Commonwealth Fund, Kaiser Family Foundation, Crowe Horwath Page 5

Yesterday s Reimbursement Mix 50% 45% 40% 35% 30% 25% Low Margin High Margin Profitability of Medicare and commercial reimbursement once compensated for negative patient reimbursement 20% 15% 10% 5% No Margin Negative Margin 0% Medicare Commercial Medicaid Patient % of Revenue % of Cost Source: National Hospital Discharge Survey, Midwest Region 2009 Page 6 Copyright 2017 ClearBalance. All rights reserved. Do not distribute without consent.

Living in a Two-Payer System The reimbursement mix has changed 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% No Margin Low Margin Negative Margin Must improve for profitability Today s focus must shift: improving patient reimbursement is critical to maintain profitability 0% Medicare Commercial Medicaid Patient % of Revenue % of Cost Source: McKinsey Quarterly, 2014 Page 7 Copyright 2017 ClearBalance. All rights reserved. Do not distribute without consent.

Consumerism Is a Priority at the C-Level Health systems are facing a push toward consumerization, fueled by more patient financial accountability. Lisa Bielamowicz, MD, Chief Medical Officer and Executive Director, Research and Insights The Advisory Board Company CEO Top 5 Priorities MDS INVOLVED TO REDUCE VARIATION REDESIGN FOR POPULATION HEALTH 53% 52% MEET CONSUMER EXPECTATIONS 47% PATIENT ENGAGEMENT STRATEGIES CONTROL AVOIDABLE UTILIZATION 42% 42% 0% 10% 20% 30% 40% 50% 60% Page 8

New Significance of Patient Pay Healthcare Consumerism The impact of healthcare costs Healthcare as a big ticket expense Cost increasingly is a variable in the care selection process. Most will consider cost when selecting a physician or hospital. And a good many would delay care. 91% Patient s portion of medical bills requires financing for more than 12 months PHYSICIAN 79% HOSPITAL 81% 1-IN-3 WOULD DELAY CARE without long-term financing 34% Source: Healthcare Consumerism Study, ClearBalance, Aug. 2016 Page 9

Experience Doesn t End at Discharge Billing and collections a lingering dis-satisfier Billing Experience Linked to Overall Experience Impact of Billing Process Satisfaction on Key Indicators n=500 15% 82% 58% 95% 33% 74% Not Easy to Pay Bills 55% 61% 65% Percentage of survey respondents reporting being sometimes or always confused by medical bills Percentage of survey respondents reporting being sometimes or always surprised by out-ofpocket costs Percentage of survey respondents indicating that clear, easy-to-understand bills would have positive impact on provider selection Would Recommend Would Return Paid Full Bill Unsatisfied with Billing Fully Satisfied with Billing Source: The Advisory Board Company Page 10 Source: Connance Inc., 2014 Connance Consumer Impact Study, 2014; TransUnion Healthcare Survey 2013; TransUnion Healthcare Cost Survey, 2015; Health Care Advisory Board interviews and analysis.

Improving the Financial Experience: Patient s Perspective Cultural overhaul acknowledging patients need and want financial assistance Novant Health revenue cycle revolution focused on patients who want to pay vs. those who will ultimately go to bad debt Ascension Health waived any financial responsibility for their bill for patients who fall below 250 percent of the poverty level Florida Hospital patient pay strategy evolved from collections to payment resolution Multiple payment options including online, mobile and payment plans Page 11

Traditional Revenue Cycle Collection Model Pre-Registration and Point of Service Business Office Primary and Secondary Bad Debt Page 12

Intuitive Revenue Cycle Collection Model Pre-Registration and Point of Service Business Office Primary and Secondary Bad Debt Page 13

Barriers to the Intuitive Revenue Cycle Process Operational Does registration staff have the tools to collect? Can you accurately know what the patient will owe? Does your staff have the skill set to carry a financial conversation? Consumer Requiring payment in full prior to service will cause patients to avoid receiving care Patients are unwilling to pay before insurance has paid Patients may not have the means to make payment Regulatory ACA prohibits collection of bills for prior services before providing medically necessary care EMTALA prevents collections in certain situations Page 14

Optimized Revenue Cycle Model Pre-Registration and Point of Service Business Office Primary and Secondary Bad Debt Financial Counseling to Help Patient Understand Responsibility Robust Options for Payment, Including Online Payment, Short-Term Payment Plans and Long-Term Patient Financing Page 15

PoS Collections Part of Comprehensive Patient Pay Strategy Collecting $20 up front from every patient reduces bad debt <4% of NPR* Health system partners focused on front/back-end strategy Better tools and payment options empower better results Estimation tools, payment platforms, dialing technologies for pre-registration Financial counseling triage augmented with payment options Baylor Scott & White Health: nearly $200,000 PoS increase weekly Novant Health: $41.4M collections increase YoY 2015-2016 Ochsner Health System: up front financial clearance helped reduce bad debt $11M *Source: Advisory Board Company, Oct. 2015 Page 16

Health System Response to Two-Payer Market Reducing bad debt and improving patient satisfaction are top two motivators driving consideration of more robust long term payment options REDUCE BAD DEBT 9.0 IMPROVE PATIENT SATISFACTION 8.8 REDUCE AR DAYS 8.6 IMMEDIATE CASH INFUSION 8.3 ELIMINATE COLLECTIONS OVERHEAD 8.0 IMPROVE STAFF & PHYSICIAN SATISFACTION 7.9 Source: ClearBalance Patient Pay Research, June 2014 Page 17

Health System Response for Financing Options Regulatory compliance review Updates to financial assistance policy (FAP) Account for 501r Truth in Lending/Regulation Z Screening for charity care Implement presumptive screening to ensure time is spent attempting collections on the appropriate patients Long-term payment plan Confine internal payment plan: 4 months or less Provide long-term option that extends to 5 or 6 years depending on balance Page 18

A Word About Financial Compliance Why It s Important Truth in Lending Regulation Z: Any business that allows consumers to repay in 4+ months Proper disclosure of credit terms & consumer billing rights Failure to comply could mean actual and statutory damages, civil litigation Must ensure your payment vendors early out, etc. comply ECOA: Consistent billing practices; offer patients/customers the same payment opportunities UDAAP: Must be aware of unfair, deceptive or abusive acts or practices in providing payment plans & debt collection Fair Credit Reporting Act: Proper use and protection of consumer credit reports Gramm Leach Bliley Act: Protection of consumer personal information State laws/retail Installment Act: Certain states require compliance with certain lending laws for 4+ month repayment terms Page 19

Payment Plan Trends Average guarantor balance for payment plan is $1,660 Average repayment terms have increased 15-18 months in 2014 to 19-24 months today The patient s portion has steadily increased Adding new balances for themselves, spouse, dependents Average monthly payment amount is $85 Impact of Medicaid expansion Non-expansion states, like Tennessee, show 20% - 30% increase in payment plan Health Empowerment Act likely to accelerate payment plan growth further with growth of HDHPs Total balance owed Duration Monthly payment Page 20

ClearBalance ROI Value Model HFMA Peer Reviewed Distinction Nationally-recognized benchmark by a panel of CFOs and financial analysts Provides transparency and translates underlying complexity into valid modeling of results and comparisons Uncovers true cost of collecting patient pay Compares performance and value when using a patient loan program Models future impact of patient pay in a do nothing scenario Delivers output in financial and operational metrics Accommodates conversion of existing payment plans HFMA staff and volunteers determined that these healthcare business solutions have met specific criteria developed under the HFMA Peer Review process. HFMA does not endorse or guarantee the use of these healthcare business solutions or that any results will be obtained. Page 21

The ClearBalance Benchmark Within 24 months, providers using ClearBalance Reduce bad debt by an average of 4.46% E.g. $100M annual bad debt reduced to $96.5M Reduce net AR by 1.7 Days Achieve an average Return on Investment of 2.38x ClearBalance tracks new and existing relationships to measure performance to projections Growth in patient pay has driven up bad debt Most ClearBalance clients bad debt growth rates below the national average Page 22

Unlocking Value with Updated Patient Pay Strategy Large IDN Leading health system Presence in four states Patient experience top priority >2,500 licensed beds ~$4 billion of net patient revenue $327 million of average patient pay AR Patient Pay Revenue Cycle Process PoS CBO Payment Plans Collection Agency Total Collected Before financing After financing Collected $16.3mm at a cost of 5.5% Collected $25.5mm at a cost of 5.5% Collected $45.7mm at a cost of 6.5% Collected $48.0mm at a cost of 6.5% Collected $22.9mm at a cost of 9.0% Collected $44.4mm at a cost of 13.0% Collected $45.7mm at a cost of 16.0% Collected $23.8mm at a cost of 16.0% $130.6mm at a cost of 10.14% $141.7mm at a cost of 9.96% $11.1mm Improvement in Total Collections @ Lower Cost Page 23

Proven Results Health System #1 Health System #2 Health System #3 Size 16 Hospitals & 68 Clinics Stand-Alone System 22 Hospitals Actual Performance Reduced Bad Debt $5.3mm $6.4mm $13.9mm Bad Debt Reduction 6.0% 4.5% 6.4% Incremental Cost $1.5mm $1.8mm $3.4mm Return on Investment $3.8mm $4.6mm $10.5mm Return Multiple 2.5x 2.57x 3.04x Page 24

Patient Feedback Russell, patient from Louisiana Harold, patient from Kentucky Heather, patient from Texas You guys were a lifesaver at a time when we were overwhelmed. If it weren t for the ClearBalance program, I m not sure I could have had my procedure. I m glad my provider suggested it. ClearBalance is amazing. I told them what I could afford and ClearBalance makes it work. Bill, patient from North Carolina Leydi, patient from Florida Male patient/account holder Millennial Regardless of how good your insurance is, how good Medicare is, you re still going to get hit with your portion of the bill. To know that there s a company like ClearBalance out there, it s kind of your safety net. ClearBalance gave us peace of mind when we were hit with such a huge bill from an unexpected illness. I wouldn't have been able to find quick financing options. I'm not one to run from my debts, and definitely wanted to repay the hospital services so the ClearBalance option was tremendously valuable. Page 25 Copyright 2017 ClearBalance. All rights reserved. Do not distribute without consent.

ClearBalance Company Overview Experience Matters Established in 1992 100% healthcare, 100% patient loans Funded $1 billion+ to healthcare providers Since 2012 Since 2011 Since 2007 Largest, longest-tenured client base of health systems Since 2004 Since 2008 Since 2002 Ability to provide loans in all 50 states Since 2013 Since 2003 Page 26 Copyright 2017 ClearBalance. All rights reserved. Do not distribute without consent.

Questions Page 27

Patient Pay. Click to edit subtitle. Pete Thompson, Sr. Solutions Architect March 14, 2017