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PWC on the Health Billing and Payment System

By May 29, 2015Commentary

Better use of information technology has been pushed as an aid to lowering health costs, creating efficiency and improving the overall patient experience with health care system encounters.  While I am dubious about HIT’s ability to lower spending on actual health care services and products, for administrative tasks such as billing, claims submission, payments, utilization reporting, etc., HIT should be able to produce significant cost reductions.  A report from PriceWaterhouseCooper’s Health Research Institute examines the state of the billing and payment system and identifies opportunities for improvement.   (PWC Report)   A fundamental premise of the report is that as consumers have more cost-sharing, providers need to be able to offer more effective billing and payment systems to avoid revenue losses and to improve customer experiences.  Among the barriers identified to having more efficient payment systems, for example, those that are becoming more prevalent in retail, are lack of standards, lack of comprehensive, unified information technology systems at many providers, and use of paper and telephone for some tasks and activities.  I would add to this that many providers, particularly on the outpatient side, simply don’t have the capital or the access to expertise  to invest in newer approaches to billing and payment.  But consumers clearly want better capabilities, the report gives survey data saying that having cost data available ahead of time is strongly desired.

The significance of the problem is reflected in some basic statistics in the report, for example, commercial payers sent only 15% of payments and 27% of remittance advices electronically in 2013.  While these administrative interactions between providers and payers are slowly growing more automated, when a patient shows up at a provider’s site, it is rare that they can be given a clear statement of the cost of the service and what they will owe.  This is frustrating to consumers and lowers their satisfaction levels, and for providers it may mean larger receivables and ultimately bad debt.  Even when knowing their cost responsibility and arranging for its payment is not possible at the time of service, consumers would like to have more ability to manage bills and payments online, as they now do for many other kinds of services.  A fundamental issue, which no modernized payment system can fix, is that many consumers simply can’t afford their cost-sharing amounts.  $5000 deductibles and large copays are common and for many people unaffordable, certainly at the time of service.  Being able to have a precise statement of what is due at the time of service and to pay with an account-linked credit card or a smartphone isn’t going to solve that problem.

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