Healthcare Reform and its Impact on the Payments Industry

by Pete Wheeler, Senior Vice President and head of Healthcare, KeyBank Treasury Services

The United States Supreme Court’s decision earlier this year to uphold the constitutionality of the Patient Protection and Affordable Care Act (PPACA) will significantly impact the payments industry, with many previously uninsured individuals now gaining healthcare coverage.

The increase in covered individuals potentially represents a significant increase in ACH payments, as well as increased lockbox transactions and ANSI 835 files for financial institutions offering healthcare-specific products.

An additional increase in the number of patient payments to their healthcare providers is also likely with the adoption of PPACA. This trend began about 10 years ago with the advent of high deductible health plans (HDHP). It continues to accelerate as more consumers opt for the lower premiums offered by these plans. The potential for the continued growth of HDHPs as the number of insured patients increases will create more point-of-sale, back-office, and Web transactions.

However, much of the increase in volume will be due to the development and execution of Health Benefits Exchanges (HBE). In coming months and years, HBEs will provide consumers and small businesses with the ability to purchase insurance through markets designed to reduce premium costs and provide government assistance, where applicable.

As more exchanges are established, more premium payments will be made to health plans. While card and check will continue to play an ongoing role in payments, ACH will play a larger role, either as a mechanism for businesses to pay employee premiums or as a convenient way for individuals to make periodic payments.

New Opportunities for Financial Institutions

The potential upsurge in payments from patients with health plans will provide new opportunities for financial institutions to help healthcare providers — hospitals, healthcare systems, and physicians’ offices — evaluate how to make the payments collection process efficient and simple.

Of particular importance is the need for providers to open as many points of payment for patients as possible. Online payments, time-of-appointment payments, and card options all need to be available and accessible. In addition, these collection methods need to work together to control, reconcile, and post all payments.

Automation of health plan payments represents additional opportunities for financial institutions to help providers create efficiencies, reduce overall costs and eliminate as much paper as possible. Most payers offer electronic remittance files, and the NACHA reassociation rules will make remittance reassociation with payments simpler. With the advent of the new reassociation rules championed by NACHA, the ANSI 835 will become a more useful tool in the quest for healthcare payment processing efficiency.

Given the widespread impact of healthcare reform on payments, it is critical that financial institutions understand the many challenges and opportunities that healthcare payments present. But in the end, it is the responsibility of the provider to research available tools and take advantage of the benefits they offer.

About the Author

Peter Wheeler is the National Sales Manager for the Healthcare and Middle Market segment. In this role, Wheeler is responsible for managing a sales team to support Key’s healthcare industry and middle market segments. He is also responsible for working with the product management team to create cash management solutions to meet the specific needs of the healthcare industry. Prior to joining Key, Wheeler served as senior vice president and director of healthcare sales at Wells Fargo Bank, where he was responsible for developing and implementing product strategies and solutions as well as managing the healthcare sales team. Previously, he was senior vice president and director of product consulting and industry strategy at Bank of America. Wheeler is a Certified Cash Manager and a certified Six Sigma Greenbelt with more than 25 years of cash management experience. He earned his bachelor’s degree in economics from St. Lawrence University.


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