Rice Hospital sees smooth implementation of pay-in-advance policy
WILLMAR -- When Rice Memorial Hospital adopted a policy last December asking patients to pay at least part of their bill up front, there were some worries. Would people object? Would there be pushback?
But six months into the new policy, few if any problems have materialized, say hospital officials.
"Overall it's been very positive -- and that's from direct comments from patients," said Bill Fenske, chief financial officer.
About half the time, the patient's out-of-pocket share is now being collected up front, "which I think is fantastic," said Jackie Hinderks, director of revenue and reimbursement for the city-owned hospital.
The hospital also is hearing good reviews of CarePricer, a new electronic tool that crunches cost and insurance information to come up with individual billing estimates.
"It's a pretty accurate tool," Hinderks said. "Most people just think it's great we can offer this."
Asking for payment at the time of service is one of the ways hospital officials hope to bring more transparency -- and less sticker shock -- to the cost of health care.
Not incidentally, it also will help cut down on the administrative overhead of trying to collect deductibles and copayments after the patient has left the hospital.
Money often occupies an uneasy place in health care. Although it costs money to provide and receive health care services, paying the bill can be a sensitive topic for patients and families.
"It's not easy to ask for money," Fenske said.
Under Rice's new policy, patients won't be refused care if they can't pay their share ahead of time, he said. But more openness about the cost of care helps make consumers more aware of prices and their responsibility for their own out-of-pocket share, Fenske said. "One aspect of patient care is the financial aspect and we're helping to resolve that. It's all part of the transparency we're trying to bring... It's our attempt to bring the patient on board to help us both reduce the cost of care."
Industrywide figures on how many hospitals have instituted point-of-service collections are hard to come by. But as high-deductible health plans and health savings accounts become more widespread, the practice seems to be increasingly common, especially among urban and suburban hospitals.
Rice Hospital's point-of-service policy went into effect Dec. 1 after months of discussion, planning and preparation. It applies to all scheduled procedures, mainly non-emergency inpatient surgeries, outpatient surgeries and outpatient radiology services. Labor and delivery were added this spring.
In June the hospital began collecting copayments from emergency-room outpatients.
Hospital officials continue to monitor the entire process for potential problems and have fielded only a few complaints. Most patients in fact seem relieved to know up front what their hospital procedure will cost and to settle the out-of-pocket portion of the bill right away, Fenske and Hinderks said.
Expectant mothers, for instance, can now receive an estimate weeks ahead of time of what their labor and delivery are likely to cost.
"We give them the option to pay a portion of their bill before they come in and deliver," Hinderks said. "We tell them, 'You can start making weekly payments today.'"
In many cases, new parents can have their entire share of the bill paid in full before the baby even arrives.
To sweeten the deal, the hospital also provides a discount when patients settle their bill early.
Another benefit of the policy: Patients who truly cannot pay can be connected sooner with resources to help them. In some cases they might be able to receive a small grant from the hospital. Others might be eligible for programs such as MinnesotaCare or Medicaid.
"We want patients to know there are options for them," Hinderks said.
Rice had already been doing many of these things but the policy has added a structure that wasn't there before, Fenske said. "This is a much more systematic, organized approach."
Hospital officials believe it ultimately will not only help lower the administrative cost of billing patients for their out-of-pocket share but also will reduce the number of bills that go unpaid. In a 2006 study conducted of nearly 1,000 claims at Rice, high out-of-pocket costs were the single biggest predictor of a bill that was likely to be left unpaid.
It's not unusual for a co-pay to be 10 to 20 percent of the total bill, Fenske said. "That's a big chunk we're not collecting, and that increases the cost of health care."
Nationally, the benchmark for collecting at the time of service is 0.8 percent of net revenue. Rice is currently at or better than the national average. The hospital also is tracking its number of unpaid bills that wind up at a collection agency to see whether this starts to go down.
"In the long run it will help lower the amount of accounts we have to write off," Fenske said.
Although it's hard to quantify the impact on patient outcomes, hospital officials believe that at the very least, patients will be less stressed when there are fewer financial unknowns.
"If the patient doesn't have that to worry about, that's going to be a positive for their healing process," Fenske said. "The transparency will continue to advance. People will become much more knowledgeable about health care costs. It's a positive change for everybody."