How COVID-19 is accelerating digital trends in healthcare payments Insight Article - September 16, 2020 Billing & Collections Sign in to save Deirdre Ruttle In 10 years, the Trends in Healthcare Payments Annual Report has consistently shown that providers are slow to adapt to changes in payment responsibility and left struggling to collect from patients. The most recent report again tells us that providers still depend on manual and paper-based processed and have not embraced the payment options that patients overwhelmingly demand at scale. Providers no longer have the luxury of waiting to see how trends in healthcare payments evolve. Patient tolerance for inconvenient and inefficient payment channels has already been tested to the limits. Providers can benefit by tapping into digital options that patients already have in other industries to improve collections and payment experiences. Although the current report reflects data from 2019, it is impossible to ignore the impacts of the COVID-19 pandemic on the future of the healthcare industry. Already, contactless interactions between providers and patients are significantly growing, most notably in telehealth visits. Social distancing and a focus on contactless interactions have put pressure on legacy approaches to healthcare payments, accelerating the shift to digital for 2020 and beyond. Ten years of increasing costs for patients A decade ago, the tidal wave of increased payment responsibility for patients was beginning to take shape. The 2019 report shows us that payment responsibility continues its increase in both the number of patients who owe a balance and the amounts of those balances due to high-deductible health plans (HDHPs).1 In particular, HDHPs often require providers to collect large balances directly from more patients without any payment from the health plan. In 2019, 82% of covered workers have a deductible in their plan, up from 63% a decade ago.2 Deductible amounts have also increased considerably in that same timeframe. The average deductible for covered workers was $1,655 in 2019, up from $826 a decade ago.3 Not only must providers now collect from more patients, but the amount due is often higher as well due to the rise of HDHPs. Impacts of paper and manual processes Few providers have been left untouched by the pressures of patient collections. At the same time, many providers have not proactively adjusted payment processes to meet the trend of increasing payment responsibility head on. In fact, 87% of providers reported leveraging paper and manual collection processes in 2019.4 These legacy processes frequently result in delays for provider collections. Three quarters of providers say it takes more than a month to collect any patient balance; for large patient balances over $1,000, approximately the same number of providers cannot collect in 30 days either.5 Payment expectations in a digital world Many healthcare provider organizations have managed to avoid the digital revolution that the majority of patients embrace in their daily lives. The digital world permeates the daily experience for most Americans: 9 out of 10 are online, 8 in 10 own a smartphone and 7 in 10 use social media.6 The lack of digital channels available continues to persist in healthcare payments despite the 84% of consumers who report that they pay their non-healthcare bills online.7 Digital options such as a standalone provider portal with limited payment functionality only scratch the surface of patient expectations. For example, 77% of consumers want to enroll in eStatements from providers, yet only 23% of consumers receive eStatements.8 The demand for digital is not likely to go away in the coming years. Millennials now make up a third of the workforce.9 This generation was the first to have digital experiences during their youth and overwhelmingly adopt digital in their adulthood. This creates demand for digital in healthcare payments as 90% of Millennials want to enroll in eStatements.10 Accelerating the trends in healthcare payments Providers no longer have the luxury of waiting to see how trends in healthcare payments may play out as they did a decade ago. The shifts in payment responsibility have almost completely changed how patients interact with providers. The long-term impacts of COVID-19 are predicted to bring additional spotlight to eliminating manual, paper-based, human-dependent approaches to healthcare payments. Stakeholders are being conditioned to rethink ways to avoid unnecessary human contact in all aspects of healthcare. This is especially evident in the 4,347% growth in telehealth claims to private insurers year-over-year.11 Social distancing and a focus on contactless interactions will put even more pressure on providers to accelerate the shift to digital. To dig deeper into these trends and more, the full Trends in Healthcare Payments Annual Report is available online at www.instamed.com/trends. Notes: InstaMed. Trends in Healthcare Payments Tenth Annual Report: 2019. Available from: bit.ly/3bI7T7S. Kaiser Family Foundation. 2019 Employer Health Benefits Survey. Sept. 25, 2019. Available from: bit.ly/33lxYpB. Ibid. InstaMed. Ibid. Pew Research Center. “Mobile Fact Sheet.” Available from: pewrsr.ch/3h62bh1. InstaMed. Ibid. Fry D. “Millennials are the largest generation in the U.S. labor force.” Pew Research Center. April 11, 2018. Available from: pewrsr.ch/3ibxE2H. InstaMed. AHIP. “Telehealth Growth During COVID-19.” July 7, 2020. Available from: bit.ly/35c8cGI.