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Mastercard Worldwide

Health plan administrators, employers, and consumers are looking for ways to increasingly utilize card programs and leverage technology to create a positive experience with health care providers. Pre-paid, credit and debit, corporate, and smart cards can help to facilitate that experience.

There continue to be strong initiatives for improved quality of services, which drives up provider costs, while the market is pushing for lower levels of health inflation. With the efficiencies of managed care already realized, the industry will need to achieve gains from increased productivity and lower administration costs (estimated at $200 billion annually) in both the near and long term, in order to help keep inflation in check. This includes billing and collection processes between provider groups and payers, as well as consumers. Communication and collaboration between payers, employers, and provider groups will be important in order to achieve this goal.

Consumers Play a More Active Role in Health Care

The California HealthCare Foundation, in conjunction with the Institute for the Future (IFTF), forecast in 1999 that by 2005 more than half of U.S. consumers will have household incomes of $50,000 or more, some college education, and access to a computer at home or at work. This translates into a more sophisticated and discerning consumer. The institute is also finding that in today's health care environment the consumer may not always be the patient. A family member or friend may provide information that the patient will act on. In either case, this new consumer continues to have rising expectations around health care. Families want the best medical care available, but at the least cost. The IFTF has also identified several factors that will accelerate the move toward consumer-driven health care in America. These include:

• A shift in patients' self-perception from passive recipients of medical care to active consumers of health services, including a cultural shift in the relationship between patients and physicians.
• The growth of accessible and inexpensive sources of information about health insurance, physicians, hospitals, and other aspects of the health care system.
• Rising out-of-pocket costs that force consumers to think more about the cost and quality trade-offs of their health care services.
• Increased choice of providers through open provider networks.

These new consumers will attempt to use their indirect influence to access hospitals with the best reputation, both for quality of medical care and for customer service. Billing and flexible payment will continue to be an important part of the hospital's customer service.

Payment Card Acceptance - Inpatient, Outpatient, and Non-Face-to-Face

As direct employee health care premiums have grown from 11 percent of plan costs in 1988 to 16 percent in 2002, health plans are increasing consumer out-of-pocket costs in order to keep additional increases to a minimum. For example, where plans had no patient costs for hospital stays, many have implemented deductibles for first and second hospital stays, as well as for other services.

As a result, consumer spending will continue to grow at significant levels. As consumers review their payment options, they are opting to use their payment cards for everyday purchases and for new categories of spending (see Figure 1).

Figure 1: MasterCard health care sales volumne has grown dramatically.
Source: MasterCard International

To keep patient receivables from growing, hospitals and their physician providers will have to be even more diligent in their patient billing and collection process. Providing clear and easy-to-read bills with multiple payment choices will be critical in order to keep accounts receivable to a minimum. This should include a card payment option incorporated directly onto the patient bill. Additionally, service and access to health care information are evolving, and new channels are opening for consumers. These non-face-to-face channels lend themselves to new technologies for payment cards.

Telemedicine

In the non-face-to-face arena, telehealth is bringing new opportunities for an integrated delivery network that continues the relationship with the patient after discharge from the hospital. With organizations trying to maximize their reimbursements from plans, organizations are looking at ways to lower their costs. New technology can monitor patients in the home at decreased costs, in a manner in which patients are comfortable with, and which health plans will reimburse. In addition, quality outcomes are generated.

As these encounters become more integrated into employer and insurance plans, consumers will want to include this technology as part of their disease management. Consumer payment will become a part of these transactions, and it will be important for organizations to determine how best to collect from the patient — from standard billing to putting a consumer's card on file to wireless card devices. Future card payment applications could also be incorporated into these devices. If the health care organization is working within its local community at a health related event, wireless card payment terminals are also helpful in receiving payment for given services.

Internet

The Internet is fast becoming an important tool for all parties, including consumers, health care providers, and health plans. With consumers using the Internet to become their own disease managers, they have an increased interest in communicating through the Internet with their health care organization, which understands their health issues. As health plan administrators are seeing the value in disease management and preventive services, payers have started to investigate including these transactions for reimbursement, with consumer co-pays.

Plans will allow you to consult with your doctor online. However, there may be a fee charged for this type of service. As billing for these consumer-owed transactions can be very expensive given the low dollar amounts of these transactions, incorporating card acceptance technology into these Web sites will provide an efficient way for organizations to ensure payment while providing an extension of the organization.

The Market for Payment Cards in Health Care

New health plans will emerge as payers increasingly try to control utilization and as consumers demand a stronger voice in how, where, and on what they spend their funds. With payer health care insurance premiums expected to continue their double-digit increases and as corporate health benefit managers try to bring down expenses relative to revenue growth, the development of consumerism will lead to increased interest in defined contribution and Section 213-related benefits from employers, consumers, and payers. As a result, insurers will attempt to offer health care benefit plans that incorporate a funded account that patients will utilize for first-dollar coverage.

Health reimbursement arrangements (HRAs) are an example of the types of plans that will incorporate an employer-funded account. The following is an example of how they can be designed:

1. Corporate funded patient account: $2,500
2. Consumer deductible: $1,000
3. High indemnity policy: 80/20 payout

In order for the patient to access their corporate funded account and pay the health care provider for its services, the patient would be provided with a prepaid card, along with clear instructions on the usage of the card. This patient card will give the patient access to the funded portion of the plan.

Flexible spending accounts (FSAs) are another corporate benefit to employees. An FSA allows an employee to put funds into a separate payment account, on a pre-taxed basis, to pay for out-of-pocket health care services. Third party administrators (TPAs) can offer employees access to FSA balances in one of two ways: either through reimbursement after the patient has paid the health care provider; or by providing the patient with a prepaid FSA access card. With TPAs increasingly favoring providing the patient a payment access card in order to keep patients from paying twice for services (and then trying to get reimbursed), payment cards are experiencing significant growth in the number of FSA cards.

In addition to HRA and FSA access card vehicles, plans will endeavor to provide employers and consumers with additional types of health-related plans that will utilize an account balance structure. While HIPAA legislation promoted the use of medical savings accounts (MSAs), they have not been utilized widely given several limitations. If current MSA legislation is amended and the program's availability is opened, this may become a much more utilized program.

Credit cards have also developed a pre-paid pharmacy card program that pays for a consumer's co-pay when they fill a prescription for a specific drug. Developed for the drug manufacturer, these cards are distributed by providers to consumers in place of samples of the medication to ensure proper distribution and consumer safety. The consumer presents it to the pharmacy with the prescription, providing the manufacturer with a more efficient way of introducing their product to the patient.

Smart cards are also being examined in the health care sector. A health care card with an embedded chip can be used for several applications, including general patient information such as health care plan, blood type, and allergies. While the chip can store information, it can also serve to securely access the hospital's database. Departmental forms can be populated with simple information such as a patient's name and address, or they can act as the conduit to the health care system's clinical information. Payment applications can also be included, such as FSA, HRA, credit, or debit. An important application for which chip cards can be utilized is the reduction of consumer fraud. The cards can be designed to ensure that only the card owner can utilize the genuine card, and therefore securely and confidently access a health care organization's services. Purchasing cards can be utilized for a hospital's materials management needs, using the card's features to provide purchasing levels by individuals while featuring line-item detail for individual hospital departments.

Utilizing Payment Card Technology

Choosing the appropriate technology for your business will vary depending on your organization's size and needs. Hospitals and clinics will also have an opportunity to accept card payment through different types of point-of-service hardware and software. While many organizations currently utilize a POS terminal in order to collect patient out-of-pocket payments, this payment function can also be found in many practice management system software modules, as well as a service on patient scheduling and other devices. Timing Corporation of Montreal has an integrated card payment application that it is piloting within its scheduler program.

PC software and Internet payment applications are also available and easily utilized for card payment. In addition, patient eligibility verification applications can also be integrated into the POS device or Internet program, and combined with the card payment services. Several processors are offering this service. Some existing and new technologies include:

• Desktop point-of-service devices: Can be leased or bought inexpensively.
• PC software: Card payment software may be available from your bank or processor.
• Internet payment processing: Providing an online payment or electronic billing function increases the likelihood of patient compliance.
• Multi-application terminal devices: Can perform functions such as provider and patient scheduling, as well as payment processing.
• Office-based health care practice management software: Check with your practice management solution provider to determine the availability of card payment modules.
• Pre-authorized card payments: Many health care organizations are not aware that they can have their patients fill out a pre-authorized payment form that will keep the patient's card payment information on file in order to pay for consumer responsibilities upon adjudication of the claims by the patient's health care plan. Your bank may also help you automate the scheduling of payments.
  

Billing Practices - Working With Your Patients

While your patients look to their hospital and clinic for excellent health care services, some may not be able to pay for care when they need it. As the patient costs of health care continue to rise, providers who can offer their patients payment options — debit, credit, check and cash, for co-pays and deductibles — will have the greatest opportunity to keep their consumer accounts receivables to a minimum.

Patients who don't pay their bills on time grow less likely to pay every month that bills are past due. After just three months, the probability of collections is less than 75 percent. After six months, the probability is less than 60 percent, as outlined in Figure 2.

Figure 2: Probability and Value of Collections
Source: Commercial Law League of America

Why Payment Card Acceptance Is Important

No matter what, how, where, or when care is given to today's patient, billing and collection will continue to be a critical service for health care organizations, from both a financial and customer service perspective. Implementing card acceptance in today's environment will be very important in order to increase cash flow and limit A/R days outstanding. Health plan administrators, employers, and consumers are looking to increasingly utilize card programs and leverage technology to create a positive experience with health care providers. Ensuring that the health care provider meets their customer's administrative and clinical needs will also help to differentiate them and keep that consumer as a loyal customer.

Accepting payment cards, and marketing these services to your patients, will help provide your organization with a positive payment experience for all parties.