In this article, we’ll explore patient cost transparency in healthcare, the rise of transparency guidelines, how patient cost estimates can increase revenue, and how estimates reduce patient A/R days.
A patient cost estimate is an estimated dollar amount for patient care costs from a healthcare insurance provider or a healthcare provider. Estimates can usually be found through a health care provider before services are rendered, or using an online resource such as a state-mandated website or an insurance provider’s website.
Patient cost estimates help patients understand how their insurance benefits apply to specific services. People want to know what their financial responsibility will be, and how much of the cost will be covered by their deductible, copay, and coinsurance. Without this clarity, many patients may assume that their insurance plans cover more than it actually does.
Providing patient estimates supports shared decision-making and reduces the risk of surprise bills. When people understand their expected financial responsibility due to accurate estimates, they can plan for care and request financial assistance when eligible.
Knowing how much of a claim will be covered by insurance is a difficult feat, especially for health care providers. But the truth is that most patients (83%) want to see accurate information on out-of-pocket costs before having health care services, and 25% have avoided obtaining care due to a lack of cost information, according to the 2021 Annual Consumer Sentiment Benchmark.
In an effort to offer patients more insights into pricing for all types of healthcare services, a transparency executive order was issued by President Trump in 2019, and although the Biden administration has focused significant efforts on rolling back Trump-era policies, healthcare transparency mandates don't appear to be going anywhere. In fact, the first phase of the mandates is set to take effect in January 2022.
These requirements have evolved under the No Surprises Act, which has made providing patient estimates a requirement for uninsured and self-pay individuals for non-emergent services. In many cases, you must provide the information within a specified timeframe so that patients can make informed decisions about their healthcare.
For example, patients are generally required to receive an estimate within one business day for services scheduled near term and within several days for services booked further in advance. Medicare and Medicaid billing rules also influence how cost estimates are generated.
You can dig further into this topic with our free ebook, the Patient Costs Playbook.
Christopher Holt, Director of Health Care Policy at the American Action Forum, (along with Ashley Brooks) wrote that advocates of these healthcare transparency rules believe “they will empower patients and drive down health care costs by increasing competition and exposing profiteering.”
They continued, “Critics contend that transparency will do little to aid patients already constrained by insurer networks and will encourage consolidation.”
The American Journal of Roentgenology found that “some physicians worry that if they disclose prices, patients will focus preferentially on price (instead of quality) and turn into price shoppers.”
However, research found that “most patients do not regard communications about price as an avenue for reducing health care spending.” For example, take a study of patients requiring elective plastic surgery. Getting an estimate from hospital staff increased the odds of showing up by 91% compared to patients who generated their own estimates.
No matter which side you fall on, critic or advocate, the fact of the matter is that every insurance provider and health care provider will be expected to take part in offering cost transparency.
Providing patient estimates enables providers to help those in their care fulfill their financial responsibilities. When patients are aware of their out-of-pocket costs upfront, they can prepare to pay by making necessary arrangements and planning ahead.
Patient cost estimates can also promote improved reimbursement performance. When patients know what hospital charges will be in advance, and what their out-of-pocket expenses will be, they are less likely to dispute the charges.
However, it can be difficult to generate estimates due to variations in insurance information and coverage. Identifying a user-friendly way to generate estimates is another concern, as manual processes put undue burden on your administrative team.
Cost transparency is also becoming increasingly expected by patients, though many patients don’t feel they have access to the information they need. A recent study showed that 89% of uninsured patients were able to obtain out-of-pocket price information when scheduling an appointment with a primary care provider; 62% of patients with employer-sponsored insurance, and 47% of those with marketplace plans were able to obtain that information.
Many providers don’t have good software tools to provide estimates to patients in an easy, streamlined manner. Christine Clingman, Director of Revenue Cycle at Northwest Orthopaedics Specialists, said they used to use an Excel spreadsheet for their estimates before using Rivet. “It was not as reader-friendly for the patient,” she said. “The spreadsheet had many info boxes that the patient didn’t understand or need to know.”
Though many patients can’t always get cost information from their provider before an appointment, many health plans already offer a price estimation or online comparison tool, especially since the federal transparency initiative was set into motion. However, research shows a general lack of awareness that this information is available. Many people (38%) don’t know if their health plan even offers transparency tools.
Accurate patient cost estimates play an important role in reducing billing surprises and promoting compliance with the No Surprises Act. However, gaps in communication can still lead to confusion around non-emergency services and scenarios involving multiple providers.
For example, services such as imaging procedures, a visit to the ER, or surgeries involving anesthesiologists can involve multiple billing components. Without a consolidated estimate, patients may receive separate bills from different providers, leading to confusion and overwhelm.
General knowledge of patient resources can be disseminated to patients, but each practice would have to take the initiative to make it happen. A better, more sustainable option to provide patients cost transparency is actually offering up-front cost estimates because it comes with additional financial benefits for your practice.
Providing patient estimates effectively and responsibly involves more than generating a dollar figure. You also need to:
Delivery matters when dealing with your patients. Communicate each patient’s estimated out-of-pocket cost in plain language that outlines what’s included and what may change. That way, they aren’t taken by surprise if their final bill is higher than your estimate.
You’ll need strong upfront eligibility processes so you can provide accurate estimates. Confirm insurance coverage, deductible status, and plan benefits early in the scheduling process to reduce the risk of discrepancies.
Identify patients who may be eligible for financial assistance, including point-of-care financing. That way, you can provide patients with solutions when their estimated out-of-pocket costs are prohibitive or higher than anticipated.
Patient financial responsibility can change based on updates to their insurance coverage, changes in treatment plans, or updated coding. Make sure estimates are reviewed and updated, especially if there is a long gap between when the estimate is provided and when care is scheduled to take place.
Use patient care estimates as a tool for getting people more involved in their care journeys. When patients understand their expected financial responsibilities, they can better evaluate their options.
Providing patient estimates is an important move toward transparency. However, you also need to measure how the change impacts your practice and the care journey. To do that, you should:
One of the most important metrics of success is how closely your estimates align with final billed amounts. If there is a large variance in most estimates, it indicates a problem with insurance verification, coding, or payer contract data accuracy. Improving estimate accuracy will promote higher patient trust.
Track how often patients pay upfront and how that behavior changes once you offer better estimates. Patients may be more likely to pay upfront if they know they won’t get a surprise bill later.
Administer patient experience surveys to determine how financial transparency affects overall satisfaction. Patients who understand their financial responsibility before treatment are more likely to report higher levels of trust and satisfaction.
Finally, consider how providing patient estimates is impacting cash flow and revenue. Accurate estimates can help cut down on claim denials and improve upfront collections.
You can start collecting full or partial payment from patients before an upcoming procedure or appointment. With software such as Rivet, you can quickly create patient cost estimates, collect payment through PHI-compliant text messages or email, and even remind patients who haven’t yet paid. This guarantees your payment, increasing your revenue quickly with Rivet’s same-day billing.
You can estimate patient responsibility for patients with multiple levels of coverage in Rivet. Moreover, you can create a single comprehensive estimate for patients who will see multiple providers, have multiple visits, or receive care comprising professional, technical, and/or ASC services.
For more information about Rivet's modern product suite, schedule a Rivet demo.
A patient estimate provides patients with a pre-service calculation of the expected out-of-pocket cost for a medical service or procedure. It is based on a person’s insurance benefits, provider pricing, and the expected clinical services.
Patient cost estimates are more important than ever, largely because of the No Surprises Act. Patient expectations are changing as well. People are more aware of their rights and responsibilities when it comes to healthcare. By providing patient estimates, you can fulfill your obligations under the No Surprises Act and promote trust with your patient population.
A good-faith estimate is a requirement under the No Surprises Act. It applies to uninsured and self-pay patients. You are required to provide a written estimate of expected charges for non-emergency services before you deliver care or perform diagnostic testing. The goal is to improve price transparency and help patients understand their expected financial responsibility in advance.
The accuracy of hospital estimates will vary largely depending on the quality and accuracy of your data collection practices. Verify the patient’s insurance and benefits before calculating the estimate. A good estimate will be close to the patient’s out-of-pocket costs.
