The U.S. health care industry's billing and payment system is a “horse-and-buggy in a world contemplating driverless cars,” according to a new report from the accounting and consulting firm PricewaterhouseCoopers. Consumers are shouldering higher costs and they are frustrated by a system that still largely relies on paper and telephone calls for billing and payment, according to the report, “Money Matters: Billing and Payment for a New Health Economy.”
PwC said the $2.9 trillion health care sector needs to transform the way it does business, and create “a more transparent, seamless, convenient way to bill and collect money from its customers.”
The study found commercial health insurers on average receive only about 15 percent of payments electronically — compared with 43 percent for the rest of the U.S. business world.
“Businesses that make this shift — offering convenient, seamless, quality, reliable and transparent billing and payment — will be rewarded in the new health economy,” said Kelly Barnes, PwC's U.S. health industries leader. “They will retain more customers and attract new ones.”
PwC’s Health Research Institute commissioned a survey of 1,000 U.S. adults and analyzed commercial claims from 34 million Americans in the Truven 2012 commercial claims database.
Key findings include:
- Patients and affluent consumers are most dissatisfied with the health care billing and payment system. For example, one in two Americans in poor or fair health — the greatest utilizers of the system — rated hospitals poorly on price transparency and affordability.
- Cost-conscious millennials are more likely than the general population to judge health care organizations based on their billing practices. They also are more likely to challenge medical bills, search for better deals and make value-based decisions.
- Consumers and new entrants are beginning to circumvent the claims-based health care payment system, especially when seeking primary care and chronic disease management.
- Four in five adults with commercial insurance paid less than $1,000 in out-of-pocket expenses in a year, according to an HRI analysis. Approximately half had medical claims of less than $1,000. And yet, as deductibles rise, more patients will find paying their share of their medical bills difficult. Medical bills continue to be a major cause of consumer bankruptcy.
The report said heavy regulation of both the financial services and health care industries adds complexity and risk to innovation. It identified strategies to incorporate key principles patients want: convenience; transparency; affordability; reliability; seamlessness; and quality. These strategies include:
- Accelerate the migration to digital. Commercial health insurers conduct just 15 percent of payments and 27 percent of payment remittance advice electronically. The rest of U.S. businesses average 43 percent for payment. This remains one of the system’s most critical bottlenecks.
- Partner with a sidestepper. The growth of high-deductible plans means more consumers will pay for care out-of-pocket and many find the claims process confusing and expensive. Providers and insurers should consider partnering with nontraditional companies offering services that sidestep claims.
- Embrace simplicity. Many consumers do not understand their insurance benefits and are confused by their medical bills. Online payment sites, mobile apps and aggregated billing are all steps toward a simplified consumer experience.
- Multiply payment options. As many as two out of three bankruptcies involve illness, injury, significant uncovered medical bills or a combination of these factors and the fallout from them. Offering choices for payment, making payment easy and helping consumers plan for costs can reduce bad debt and days in accounts receivable.
“Health care companies must consider shifting from a business-to-business to business-to-consumer billing and payment approach,” said Paul D’Alessandro, PwC principal and customer leader, health industries. “Technology will play a significant role in creating ways to consolidate billing and payments, and mobile apps, online portals and other innovations should become more commonplace in the immediate future. For longer term solutions, the system should be redesigned to remove complexity and support a seamless customer experience.”
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