Patient Refund Optimization within the Healthcare Sector
Given the increased volume of expensive, time-consuming patient refunds, there's a good cost-benefit to updating refund processes in an effort to lower costs, improve patient and customer satisfaction, and improve workflows.
Patient refund optimization can improve operational workflows and efficiencies while bolstering patient and customer satisfaction — further strengthening trust and loyalty. The escalation of patient refund volumes correlates with billing departments' efforts to expedite the revenue collection process. However, minimizing refund activity without incurring degradation to revenue cycle optimization is an amorphous balancing act that healthcare providers must maintain in order to remain competitive.
Escalation of Patient Refund Volumes
The rising volume of patient refunds stems from the increasing patient financial obligations that arise from larger out-of-pocket expenses, co-pays, and deductibles, which increased by an average of 11 percent in 2017. This is most prevalent with the surge in high deductible health plans (HDHPs) and the growing complexities of health insurance plans. To collect payments earlier in the revenue cycle, prudent billing departments are pre-calculating the patient financial obligations to collect them at the time of treatment. These actions help to bolster cash flows while shrinking accounts receivables and aging balances. The trade-off for accelerating the revenue collection process is the escalation of patient refund volumes.
Causes of Patient Refunds
While the estimated patient financial liability may have been correct at the time of the visit, the actual amount isn't finalized until after the medical claims are processed by the payers (health insurers and administrators). Payers may deny reimbursement for certain treatments and expenses in accordance with the patient and provider contracts and policies. The resulting "allowable" reimbursement amount may obligate the provider to adjust and/or write off charges thereby triggering a refund disbursement back to the patient.
Data Integrity Issues
Enhancing data integrity starts by improving the accuracy of the data at the point of collection (registration) and submission (claims). Data quality issues also contribute to rising refund activity. Issues often include inaccurate or incomplete information, such as missing/omitting secondary payer information and plan coverage details. Human errors include medical coding errors, duplicate and overbilling to overestimating patient financial obligations and even fraud. Accurate validation of coverage details including policy status, benefits, deductibles, copays along with claims submission details for primary and secondary payers is a necessity.
Mapping the Friction Points
Typical refund processing procedures are embedded with many friction points that can culminate into bottlenecks. Maintaining effective communication and interaction between the patient accounts, claims processing, and accounts payables departments becomes more challenging as the refund volumes accumulate. Specific tasks include flagging, validating, calculating, disbursing and reconciling the refund payment. Patient inquiries can tie up call center staff and specific claims may require further investigation directly with payers. All of these incur labor and time, further adding to costs. And over-capacitated workloads may stifle productivity and dampen staff morale.
The Dual Mandate of Refund Optimization
Patient refund optimization centers around two objectives: efficient refund processing and refund volume minimization. Adopting digital automation through flexible and scalable payment management platforms can help alleviate most of the refund processing friction points. For example, integrating automated batch credit card refund processing significantly cuts down on paper and postage expenses while recovering credit card processing fees. For patients, this means quicker refunds back to their credit cards or alternative electronic including e-mail and SMS.