High Deductible Health Plans Provide New Opportunities for Financial Institutions

BALTIMORE — With the rise in High-Deductible Health Plans (HDHPs), Healthcare Providers face growing challenges collecting patients’ payments at the time of service. The patient-to-provider payments segment will grow to an estimated $381 billion, an increase from 11 percent to 14 percent of overall healthcare payments by the end of 2014.

Patient-to provider payments segment includes out-of-pocket payments, co-pays, and post-adjudication payments, giving financial institutions new opportunities for increasing EFT adoption through the ACH Network.

“The cost savings of ACH over traditional check payments is substantial, not only in direct processing expense but also in inter-related business processes,” said Jeff Pauly, senior product manager at Bank of America Merrill Lynch, speaking at NACHA’s PAYMENTS 2012 annual conference. “All payments channels are an opportunity for ACH processing whether they are online, in-person, phone-based, or direct debit.”

According to Pauly, financial institutions could play a key role in helping providers collect patients’ fees through the ACH Network using WEB, TEL, POP, and Direct Debit via ACH applications. Both providers and patients using the ACH Network gain benefits, including time and cost savings, enhanced security, faster availability of funds, and improved reporting.

“Providers need practical help from their financial institutions,” Pauly said. He identified specific provider needs, including automated office workflow for electronic payments and enhanced patient payment options such as online payment with security elements.

Financial institutions could further help healthcare clients manage the change process by taking key factors into account — for example, considering whether healthcare clients have access to patient revenue cycle solutions, determining how to help providers manage both dollars and data for electronic patient payments, and finding ways to reduce both direct and indirect costs associated with patient payments.

“Over time, it should be possible to automate the full cycle of information and payment flows in healthcare, from the submission of claims to the receipt of payments and reconciliation,” Pauly said, quoting a McKinsey study. “The development of an automated payment network would reduce bad debt, cut administrative costs, and save billions of dollars.

View related PAYMENTS 2012 session.