Communicating Patient Financial Responsibility: 5 Best Practices

92.3% of the U.S. population, or 316 million people, have health insurance, according to the Congressional Budget Office. Yet, according to a study revealed by TechTarget, 77% of patients have low health insurance literacy and do not understand what copayment, coinsurance, and deductibles mean. This can result in high, unmanaged patient financial responsibility.

While patients should be responsible for how much they owe out-of-pocket, communicating with them about their financial responsibilities can reduce bad debt and ensure smooth revenue cycle operations for your practice.

Here are five best practices for communicating financial responsibility with your patients.

What Is Patient Financial Responsibility And Why Is It Important?

Patient financial responsibility (PFR) refers to out-of-pocket costs (OOP) or how much patients owe for services received from the clinic that are not covered by their insurance. PFR usually includes co-pays, coinsurance, and deductibles.

Communicating PFR to your patients has a significant impact on patient satisfaction. A study by West Insights and Impact on the patient experience found that approximately 80% of patients want their providers to help them deal with their financial responsibilities by clarifying how much they owe outside their insurance coverage.

Five Best Practices For Communicating Patient Financial Responsibilities

1. Internal Protocols Around Patient Financial Responsibility

Effectively communicating with patients about their financial responsibilities starts within your team. Establishing protocols surrounding PFR builds the foundation for forming the processes and guidelines to communicate it among patients. Otherwise, confusion can ensue in your team, leading to patient collection bottlenecks and frustration among patients.

Some crucial protocols you should consider implementing are:

• Proactive communication – 39% of adult patients received unexpected (or “surprise”) bills. Encouraging patients to contact their insurance provider is highly recommended to ensure the quote they’re provided matches the verification of benefits quoted to their care provider. It also enables patients to understand their expectations & financial responsibilities clearly.
• Improving health insurance literacy – The only true guarantee of what a patient will owe after insurance is when the claim is processed through their insurance provider. Informing them about this and other basic terms and aspects of their insurance coverage reduces confusion and ensures a smooth billing experience.
• Clear, open, and frequent communication – You must inform patients that any time a balance drops, as their responsibility outside of their insurance carrier, the responsibility will be communicated and collected at their visit. This provides excellent service to the patient as it keeps their accounts at a manageable level. It also reduces outstanding patient accounts receivable with your revenue cycle.

Each staff member in your clinic must be sufficiently knowledgeable of your financial workflow and implement it with patients. Additionally, documenting all instances of communication with the patient about their balance within their medical record or EMR notes is highly recommended for smoother workflow.

2. Coordinating Payment Plans With Patients

A 2022 PYMNTS report on patient financing found that 32% of patients who scheduled an appointment canceled within the last 12 months of the study. 46% of these patients cited “high healthcare costs” as their reason for canceling.

Offering various practical financing methods to your patients allows them to fund their treatment based on what suits them best. It also encourages them to be more forward-thinking with how they will finance their recovery under your practice. Most importantly, your offered payment methods must be clearly understood by both staff & patients for seamless communication.

Coordinating their patient payment plans proactively not only ensures they will fulfill their balance — it also instills a sense of responsibility that they reciprocate when you accommodate them with their financial obligations. Of course, your practice may or may not offer payment plans; nevertheless, working together with your patients to come up with an amicable solution is highly recommended.

In sum:

• Support as many traditional payment methods as possible – Cash, credit card, bank transfer, online payment, and other modes of payment that are understood by both patients and staff clearly
• Offer alternative payment plans – Sustainable payment schemes that enable patients to pay their balance fully over time

On top of this, you must also provide them with a detailed breakdown of their financial responsibilities and offer an estimation of future payments so they can plan ahead.

3. Communicating Through Patient Appointment Reminders

Appointment reminders are effective opportunities to help patients understand and acknowledge how much they owe outside of their insurance coverage.

However, billing concerns are HIPAA-related matters and best communicated verbally to avoid potentially violating regulations. Instead, ask them via appointment reminders if they’d like to see a breakdown of their medical billing so you can show it to them on their next visit.

Take a look at this sample patient reminder:

Hi [Patient Name], your appointment at [Clinic Name] is scheduled on [Appointment Date] at [Appointment Time]. If you need to reschedule or ask questions about your booking, please feel free to reply or call [Clinic Phone Number]. If you would like to have a detailed breakdown of your billing, please text ‘BILL’ so we can prepare and show it to you upon your next visit. Thank you!

Even if your patients don’t choose to see a detailed billing breakdown, offering it to them anyway keeps it in mind and entices them to think about their finances.

Read this blog to learn six best practices for managing patient reminders!

4. Regularly Asking Patients If They Have Billing Questions

A study on the effect of the socioeconomic status of patients on clinic perceptions found that patients seen as having high socioeconomic status tend to receive preferential access to primary care than patients seen as having low socioeconomic status.

Some patients may find it challenging to keep up with their bills. Nevertheless, your practice must treat each patient with the same empathy and regard. This applies to every aspect of the patient experience, including check-in, care coordination, and appointment scheduling.

When patients feel accommodated regardless of their financial capabilities, they’re significantly more likely to return the favor by paying their responsibilities on time.

Communicate Financial Responsibility For Practice Success

Clarifying your patients’ financial responsibility can substantially improve their satisfaction with your clinic. Regardless of the patient’s socioeconomic status, your practice must support them every step of the way, not only to ensure the security of your revenue cycle but also for the benefit of your patients.

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