The Impact of Patient Payment Plans on Revenue Cycle Management: Benefits and Challenges

Healthcare costs are increasing significantly and it’s affecting both the patients and healthcare providers. According to a 2022 Kaiser Family Foundation Analysis, roughly 23 million people owe medical debts. Of them, 11 million people owe more than $2000, and 3 million people owe more than $10,000. Direct patient payments form a large chunk of receivables for the hospitals.

This is a worrying trend not just for the patients but also for healthcare providers and their revenue cycle management (RCM). Are you facing similar financial issues with direct patient payments? Then this blog is for you.

To address these challenges and improve patient satisfaction, many healthcare providers are offering patient payment plans. But what are patient payment plans and how do they work? This blog will give you all the information you need.

What are Patient Payment Plans and Their Purpose?

Patient payment plans are flexible agreements that break down the medical bills into manageable chunks, so that the patient can pay them over time, instead of a lump sum. These plans are valuable, especially for patients who cannot afford their healthcare expenses.

This is a great way to promote healthcare inclusivity, enabling patients to access treatments irrespective of their insurance coverage, income, background, or credit history. These plans ensure that neither the patients are overburdened with having to pay a lump sum for their treatment, nor do providers have to worry about insurance coverage and bad debt.

Providers can customize their patient payment plans based on their patient requirements, like instalments or financing through third-party lenders. By doing so, healthcare organizations not only improve patient care but also streamline their cash flow and maintain their financial health.

How Patient Payment Plans Work?

Step 1: Assessing the financial situation

The provider reviews the patient’s financial health, like income, expenses, and other financial information, to assess the patient’s eligibility for a payment plan.

Step 2: Creation of a payment plan agreement

After assessing the eligibility, the provider will create a customized payment plan that includes the total amount due, monthly payment amount, and due dates.

Step 3: Payment options

The provider and the patient will decide upon a payment option, like automatic payment from the patient bank account, online payment through the provider’s portal, or other forms of payment.

Step 4: Interest rates

Some payment plans include interest charges, and some do not, depending on the provider’s policies.

Step 5: Late payments

The agreement should include policies relating to late payments, like charging a late payment fee. If the patient defaults for a long time period, the provider can take legal action to collect the outstanding debt.

Benefits of Patient Payment Plans

Patient payment plans are beneficial for both the patients and the providers.

1. Advantages for Patients

• Reduced financial stress: Patients often postpone treatments for their illnesses because of huge upfront medical bills. Patient payment plans reduce this stress and help them focus on their treatment without worrying about the financials.
• Improved access to care: Patient payment plans help patients avail the necessary medical treatment that was unaffordable for them.
• More manageable payments: Patients can split their medical bills into manageable amounts spread over a period of time, reducing financial stress.

2. Advantages for Healthcare Providers

• Increased patient satisfaction: Patient payment plans improve patient satisfaction and loyalty. They are more likely to return for future needs and recommend the providers to others, thereby increasing revenue.
• Reduced bad debt: Providers can reduce the risk of patients defaulting on their medical bills, minimizing their losses.
• Flexible payment plans to fit patient needs: Providers can adjust the payment terms, frequencies, and contracts based on the patient’s unique needs.

Challenges of Patient Payment Plans

While patient payment plans offer numerous benefits for both the providers and patients, there are a few challenges that have to be addressed to make it beneficial.

1. Implementation costs

Implementing patient payment plans requires significant upfront and ongoing investments in technology and resources to manage the process. For example, providers must invest in payment processing systems, patient portals, and automated billing tools.

Managing patient payment plans will also require additional staff, such as dedicated billing specialists and customer service executives, to handle patient inquiries and payments.

2. Risk of Bad Debt

There is always a risk of patients defaulting on their payment plans, leading to increased bad debts. Healthcare providers must implement effective collection strategies to minimize the risk of bad debt and recover outstanding payments.

3. Compliance Considerations

Healthcare providers must adhere to federal and state regulations regarding patient billing and collection, including the Fair Debt Collection Practices Act (FDCPA) and state-specific laws. They must also comply with patient privacy laws, such as the Health Insurance Portability and Accountability Act (HIPAA).

Best Practices for Implementing Patient Payment Plans

Healthcare providers should implement these strategies to implement patient payment plans successfully and manage all these challenges.

• Customize the payment plans according to the individual patient’s medical needs and their financial situation. Consider factors such as income, insurance coverage, and medical conditions when designing the payment plans. Make the plan flexible to meet any changes in the patient’s financial situation.
• Provide clear communication about the payment plans, terms and conditions, interest rates (if applicable), and payment due dates. Be clear to avoid confusion and make sure that the patients understand the terms and conditions.
• Follow ethical and compliant collection practices to maintain a positive patient relationship throughout the collection process. Follow practices that are compliant with federal and state regulations regarding debt collection.

By implementing these practices, you can create successful patient payment plans that improve patient satisfaction, improve cash flow, and reduce bad debt.

Optimize Your Revenue Cycle Management With Atlantic RCM

With decades of experience in the healthcare industry, Atlantic RCM offers a comprehensive suite of RCM solutions designed to maximize revenue and streamline operations. Our team of experts can help you develop customized payment plans, implement billing and collection processes, improve patient satisfaction, and improve overall financial health.

Contact Atlantic RCM today to learn more about how our solutions can benefit your healthcare practice.

Atlantic RCM is one of the leading multi-specialty medical billing companies in USA that serves 25+ major medical billing specialties. Our experts work across your practice in billing, collections and account receivables management, to help you succeed.

Get in touch with the leading medical billing outsourcing company to learn more. Call us at (469) 501-1500 or write to us Info@atlanticrcm.com