A Buyer’s Guide to Patient Billing and Payment

What is patient billing and payment? 

Patient billing and payment is the ability of individual patients to access their billing information, understand their coverage and financial responsibility, and complete payment. The process can vary depending on providers and insurance coverage, but a typical patient view of billing and payment follows this pattern: 

1. The patient checks benefits and searches for out-of-pocket costs prior to scheduling an appointment.

2. Before the encounter, the patient pays applicable co-pays, any outstanding balance and pre-service payment.

3. After the encounter, a claim is generated and submitted to the payer for adjudication and reimbursement. The payer generates an Explanation of Benefits (EOB) for the patient to review.

4. The provider generates a statement that reflects any outstanding fees and sends it to the patient.

5. The patient reconciles the statement(s) and EOB(s) and selects an appropriate payment option. Providers may require payment in full or offer payment plans or financing.

The case for digital patient billing and payment

Out-of-pocket costs for patients are rising, and health systems have seen corresponding increases in bad debt and administrative costs related to collections. On average, providers only collect about 40 percent of outstanding patient balances. As the proportion of revenue attributable to patients continues to grow, effective management of patient receivables is essential to protect health system margins. 

Digital patient payment and billing solutions can improve patient financial engagement with greater visibility into their financial obligations, streamlined billing information and flexible payment capabilities. Health systems that successfully implement digital patient billing and payment solutions can drive liquidation of patient balances and help create and support positive margins for health systems. AVIA Marketplace estimates that each percentage point of lift in digital payments translates into approximately $2 million in net collections.

How digital patient billing and payment works

While the revenue cycle process remains unchanged, digital patient billing and payment solutions condense and simplify the consumer experience with four key elements: 

1. Self-service estimates for out-of-pocket costs

2. Consolidated billing information across types of providers, care sites and encounters, along with insurance information

3. Multiple payment options for patients to pay at the point of care or after visits

4. Access or referrals to financing options

What leading digital patient billing and payment solutions offer

Self-service out-of-pocket estimator

This feature allows patients to generate specific detail on their out-of-pocket costs and should reflect patient eligibility and preferences.

Digital statements

Paperless billing options should allow patients to select their preferred statement frequency and modality (such as text or email).

Statement consolidation

Top digital billing and payment solutions allow account guarantors to review and consolidate billing information across entire households into a single balance with a detailed breakdown of charges. 

EOB reconciliation

Digital billing and payment software should automatically reconcile health system statements against EOB information and flag the discrepancies for account guarantors to review. 

Post-service patient payment

Flexible payment options that accommodate a variety of patient preferences and needs help drive liquidation of balances. An advanced-capability solution should support multiple methods, including IVR, credit card, HSA and PayPal.

EHRs versus third-party solutions

Native EHR patient billing and payment solutions allow consolidated billing and multiple payment options, can be accessed alongside patient-facing clinical tools for a streamlined experience, and offer strong integration with payment processors and other vendors that handle patient liabilities. EHRs also allow health systems to implement single billing offices to issue single statements for providers on that platform. 

But EHRs come with some noteworthy trade-offs. Patients must download mobile apps or visit patient portals to access self-service billing and payments, and limited customization options create a fragmented user experience with fewer flexible payment options. In addition, outsourced collections management and single billing offices may incur substantial implementation costs. 

In comparison, third parties can create agnostic platforms that allow affiliates to combine statements and insurance information. Leading third-party solutions also offer patient-friendly EOB reconciliation, which improves coordination and promotes issue resolution.

Organizing for digital patient billing and payment success in your health system

Selecting a digital solution to manage patient receivables is a strategic decision with long-term consequences for an organization’s financial health. Before implementing a new patient billing and payment solution, health systems should: 

• Work with relevant stakeholders to identify any issues or deficiencies in the current system and define priorities for a new solution, such as included revenue cycle management features. 

• Assess the financial health and payment challenges of the patient population to identify payment options and features to boost engagement. 

• Obtain organizational buy-in ahead of potentially significant changes to billing and payments, such as implementing a single billing office or flexible financing or payment plans.