Not collecting enough up front is an obvious problem. It leaves the patient with an unexpected bill. But collecting too much also is problematic.
“When a patient has to be refunded, this requires manpower and additional expenses for the revenue cycle,” says Ryan Mills, MBA, director of access services for Baptist Health’s East Region in Lexington, KY.
Refunds stem from too-high price estimates. Mostly, this happens because registrars use inaccurate benefit information to compute the patient’s cost, but timing also is an issue. “The patient may have outstanding claims that process prior to the claim for the estimated service,” Mills explains. If so, the remaining deductible, or the maximum out-of-pocket cost, ends up being much lower after those claims are processed. “This results in over-collection,” Mills says.
Another scenario: The payer decreases the contractual allowance, but the estimator tool has not been updated to reflect this change. The result is the same: The patient pays too much.
When overpayments occur, the first step is to determine if the patient has any other outstanding balances. If so, the overpayment is applied to those accounts. Once all accounts are at a $0 balance, a check has to be mailed to the patient. This is a somewhat time-consuming process, Mills notes. Someone has to print the check, stuff it into an envelope, and run it through a postage machine. “While it may add a few extra seconds to your registration times, the easiest way to prevent the need for refunds is updated benefit information,” Mills offers. Sometimes, a second estimate, performed at the actual point of service, is surprisingly different from the first one.
“We have personally seen that estimates can drastically change based on benefit information in just a matter of a few days,” Mills says. In one such case, a patient came to the ED a week before an echocardiogram. At the time of the echocardiogram, the claim for the ED visit had not been processed yet. The price estimate showed the patient owed $2,000 for the test. After the ED claim was processed, the true amount the patient owed for the echocardiogram turned out to be $900. The patient was refunded $1,100. “Even though we verified benefits at the time of service, there was no way to know how an unprocessed claim will be adjudicated,” Mills says.
Timing is the single biggest cause of an estimate being too high, says Jason Considine, senior vice president and general manager of patient access, collections, and engagement for Experian Health. At issue is the time frame between creating a price estimate and when the insurance processes a claim. “As claims get processed, deductibles and maximum out-of-pocket amounts change,” Considine explains.
An estimate may be created at a point when not one dollar of a $5,000 deductible has been met. By the time the actual claim for that visit gets to the insurance, other providers may have submitted claims totaling $5,000, thereby eliminating the deductible. “By the time the claim with the original estimate processes, there may be little to no patient liability left,” Considine says.
Revenue cycle staff do not always have the right tools to give accurate price estimates. “Patient liability estimation is a complex process of calculating multiple components,” says Considine, noting these include insurance benefits, charges, contractual adjustments, and provider discounts. “If hospital staff are manually estimating the processes, they could be using outdated pricing lists.” These do not always factor in insurance benefits, contract rates, and discounts.
As a front-end leader, Considine directed staff to ask patients what they already paid toward their deductible in recent weeks.
“Without this check and the manual reduction of an estimate, you are almost guaranteed to over-collect,” Considine says.
Baptist Health’s patient access staff first submit an eligibility query. This tells them the patient’s benefits. “For those payers who do not participate in automated responses, users can manually file the benefit into the estimator,” Mills says.
Then, when the patient presents, registrars reverify eligibility and benefit information. This gives them a somewhat more accurate number. “It gets the most updated information from the payer,” Mills says. “But we realize that unprocessed claims are not going to be reflected.”
Services scheduled at the end of the year for a date of service the following year are particularly complex.
“Many times, we must wait until Jan. 1 to see the new plan year benefits,” Mills says. Usually, the estimate is given at the time the service is scheduled. “But there are times that this is not feasible,” Mills acknowledges.
Even if the service is weeks or months away, the cost estimate is performed anyway.
“But we inform the patient that a better estimate will be provided at the time of service due to possible changes in benefits,” Mills adds.