Navigating the Challenges of High-Deductible Health Plans: Strategies for Reducing Uncollected Debt in Healthcare Organizations

High-deductible health plans make patients pay a big part of their medical bills before insurance helps. This change has made patients’ costs much higher in recent years. Surveys show about 23% of working-age adults do not have enough insurance now, up from 16% in 2010. This increase has caused patient bad debt to grow by 14% between 2023 and 2024. This puts a big strain on healthcare systems.

Patient balances over $7,500 have tripled from 2018 to 2022. This makes it harder for healthcare providers to collect payments. On average, hospitals collect only 24% of the total patient bills, according to a recent survey. This low rate is because deductibles and coinsurance have gone up, and many patients cannot afford to pay.

Besides unpaid bills, healthcare providers also deal with long collection times, loss of working money, and more use of collection agencies. All these make managing revenue harder. Medical practice administrators must use new methods that help patients pay, improve collection steps, and use technology to make things simpler.

Major Challenges Created by HDHPs

Increased Patient Financial Burden and Confusion

One clear effect of HDHPs is that patients have to pay more money out of pocket. Because of this, many patients have unpaid bills since they cannot afford them. Studies show about 21% of patients can pay only $15 to $30 per month for medical bills. The average amount patients can pay each month is $97.

This money stress also causes confusion and unhappiness because many patients do not understand their bills or costs. Steve Mach, Director of Patient Financial Services at Halifax Health, says that confusion makes patients unhappy and slows down payments. If providers explain costs clearly from the start, it helps patients pay on time.

Rising Bad Debt and Write-Offs

Bad debt means patients or payers do not pay what they owe. Hospitals then have to write off these amounts as money they cannot get back. As HDHPs grow, bad debt grows too, reducing hospital revenues. For example, a big health system making $2 billion could lose $3 million if bad debt grows by 10%. This makes it harder to pay for care, staff, and buildings.

Complex Billing and Coding

Billing for healthcare is already complicated because of many rules from payers. HDHPs make it more complex by shifting more costs to patients at service time. Providers must bill carefully and verify patient coverage to avoid denied or delayed claims.

Bills with errors or wrong codes often get denied, causing lost revenue. Studies show denial rates have increased since the pandemic because of missing paperwork or wrong data. Fixing these problems is important to get paid faster.

Limited In-House Payment Options

Hospitals often offer in-house payment plans to help patients pay bills over time. But these plans usually are not very flexible. Many hospitals only allow plans for 12 or 24 months. Plans longer than 12 months see default rates between 20% and 30%, which is risky.

Also, only about 7% of hospitals do not offer any in-house payment plans. This makes it harder for patients to pay large bills without missing or delaying payments. Since many patients have limited ability to pay, this gap leads to more unpaid bills and bad debt.

Strategies for Reducing Uncollected Debt

Healthcare providers can use several ways to handle the challenges of HDHPs and reduce unpaid patient bills. These ways focus on better financial communication, using technology to check coverage, teaching patients, and improving payment choices.

1. Early Identification of Financial Risk and Patient Engagement

Finding patients who might not pay early is very important. Some hospitals use machine learning models called “propensity to pay” (P2P) models to guess if a patient will pay. For example, Allina Health used a P2P model and increased collections by $2 million a year by knowing who was likely to pay and planning accordingly.

Financial checks before care and upfront counseling also help patients know what costs they must pay. This helps them get ready or find payment options. Early talks reduce billing surprises and increase on-time payments.

2. Transparent Communication of Costs and Payment Options

Talking clearly with patients about their costs helps reduce confusion and boosts payments. Tools like price transparency indexes, cost estimators, and easy-to-read bills help patients plan ahead. Halifax Health shows that using emails, mail, and phone calls to reach patients encourages payments.

Teaching patients about other payment options like Medicaid help, interest-free loans, or third-party financing creates more ways to pay. This lowers patient money stress and cuts down on unpaid care.

3. Flexible Payment Plans and Use of Third-Party Financing

Healthcare providers should change payment plans to match what patients can pay. Longer payment options, maybe up to 60 months, let patients pay smaller amounts each month. This helps more patients finish payments.

Third-party financing companies can help by loaning money to patients with no interest and no risk to providers. This lowers risk for providers and makes payments faster. But more than 60% of healthcare systems do not work with these financing services, missing a chance to improve money flow.

Also, asking for payments or deposits before care, combined with flexible payment plans, can raise collections by 20% without stopping patients from getting care.

4. Use of Technology to Streamline Eligibility Verification and Billing Workflows

Checking insurance coverage fast and accurately helps prevent denied claims and late payments. Real-time tools can check coverage right away, avoiding surprises and helping hospitals collect deductibles and co-pays on the spot.

Tools like Clearance Patient Access Suite, used by Halifax Health, improve registration accuracy and speed up billing steps. This helps staff work better and speeds up payment collection by reducing mistakes.

AI and Workflow Automation in Revenue Cycle Management

Artificial intelligence (AI) and automation help healthcare providers run revenue cycles better despite HDHP challenges. AI can help from first contact to final payment by making processes faster and reducing money lost.

Automated Claim Processing to Prevent Denials

AI looks at billing data to find errors or missing information before claims go out. Fixing problems early lowers denied claims and improves cash flow. Denied claims cause delays and lost money.

Advanced AI groups similar denials to find main problems fast. This helps billing teams fix issues quicker and get payments sooner.

Enhancing Patient Eligibility Verification and Payment Estimates

AI-powered tools check insurance and deductibles right away. This gives both patients and providers clear cost info at registration or scheduling, improving payment timing.

Linking AI to scheduling and billing systems helps automate verifying patient info, estimating costs, and sending payment reminders. This reduces work for staff and speeds payments.

Predictive Analytics for Payment Likelihood

Propensity to pay models use machine learning to guess if a patient will pay bills on time. This helps managers focus on patients who will likely pay and offer help to those who might not.

Hospitals using these models have seen millions more in collections by focusing efforts wisely.

Improving Staff Efficiency and Patient Communication

AI-based communication platforms can send automated reminders via calls, texts, emails, and apps based on what patients prefer. This approach gets more responses and encourages payments while reducing confusion.

Dashboards powered by AI let managers see workflow status in real-time. This helps find problems quickly and supports staff better.

Specific Recommendations for U.S. Medical Practices

• Invest in real-time eligibility verification to collect co-pays and deductibles correctly at service time.
• Use AI systems to check claims and manage denials, cutting errors and speeding reimbursements.
• Work with third-party financing providers to give patients more payment choices and lower risk for providers.
• Create patient-focused communication plans with clear cost info, multiple ways to reach patients, and education about financial responsibilities.
• Use propensity to pay models to target collection efforts and lower bad debt.
• Standardize and automate workflows from patient registration to billing for better efficiency.
• Consider requiring payments or deposits before service combined with flexible payment plans to boost collections without blocking care access.

Using these steps, healthcare providers in the U.S. can better handle money problems from HDHPs, reduce unpaid patient bills, and keep healthier revenue systems. This is important for maintaining good patient care and steady operations.