Credit Card Pre-Authorization: A Cure for Patient Collection Woes

Years ago, a patient could present his/her health insurance card for a medical visit and a provider could be almost certain of getting paid for that visit.  Prior to the passage of the 2010 Patient Protection and Affordable Care Act (PPACA), employers and payers were already shifting a greater proportion of the cost of basic medical services to patients. Now that the PPACA has taken effect and insurance exchanges are active, there has been a dramatic increase in the percentage of patients with high deductibles and co-insurance, or who are in narrow-network accountable care organizations (ACOs) requiring referrals or payer consent.  As a result, more “insured” patients must pay for their medical visits out-of-pocket and it’s more difficult than ever for providers to get paid.

Patients Increasingly Responsible for the Cost of Medical Visits

Structural changes in health insurance have increased the share of workers in employer-sponsored plans with a deductible from 55% in 2006 to 80% in 2014 and the average deductible for a single worker is now $1,217 up from $584 during the same time period (1).  This increased patient responsibility coupled with rising health care costs is hitting consumers in the pocketbook…hard.  Forty-three percent of the 150 million Americans who receive health insurance through their employers report they’re unable to afford their deductibles and 40% report skipping or delaying care if they have an unmet deductible (2).

For the urgent care operator, this post-reform environment means that patients who present insurance cards have a high likelihood of being fully responsible for their visit fees—out-of-pocket. Processing patient transactions has thus become a complicated process of identifying eligibility, determining whether a deductible exists and has been met, identifying the appropriate co-pay, and/or determining whether the visit is subject to co-insurance.   Many of these tasks cannot be completed until after the provider encounter when all charges have been calculated.

Ideally the front desk should settle any patient financial responsibility at the time of service, but given the complexity and inconsistency of insurance information, the skill level of front office staff, and the need to keep patient flow moving; many urgent care centers do not bill patients until the claim has been processed and explanation of benefits (EOB) has been received.  The problem is that when patients are billed for their share weeks or months after a visit, many do not pay their bills in a timely fashion.  For the urgent care center, this results in creeping accounts receivable days and percentage of accounts going into collections.

Credit Card Pre-Authorization Eases Collection of Patient Balances

The antidote to these collections woes is credit card pre-authorization.  This process entails swiping a patient’s credit card and placing an authorization on the account for the expected amount of charges. If it turns out after insurance remittance that the patient owes money for the visit, the patient will be notified by email and within seven days, the credit card that was authorized at the visit will be charged.   This notification timeframe enables the patient to make other payment arrangements if they do not want the authorized card charged.  Also, if it turns out there is no patient financial responsibility, the authorization will simply expire.

Consumers are already familiar with “holds” on their credit card accounts when renting a car or hotel room. It’s a common practice for cards to be “held” for the expected amount of charges.  Pre-authorization is a less intrusive approach, there is no impact on the credit card account and no amount “held” until the patient responsible balance is charged. The urgent care center simply has the right to charge the card when the patient balance has been determined.

Although pre-authorization is a new concept in healthcare—and some providers and patients may need time and training to become comfortable with it—when the front desk staff explains to patients that they have a deductible or co-insurance and must provide a a credit card to cover the charges that they will be responsible for, most patients understand and agree.  Asking for pre-authorization sets an expectation that the patient will be responsible for some portion of the visit fees, but does not let payment at time of service stand in the way of immediate treatment for their medical concern. Experiences in urgent care centers that have implemented this process have been positive in improving patient satisfaction, speeding collections, and reducing delinquent patient accounts.

Urgent Care Benefits from Credit Card Pre-Authorization

Marque Urgent Care, which operates three centers in Orange County, California and has additional locations under development, has found success with credit card pre-authorization, but only after the center’s front office staff and patients fully understand how the process works.

According to Chief Executive Officer Pierre Bergougnan, the front office staff should be well-versed in all aspects of the service before offering it to patients.  That’s why Marque Urgent Care has its staff engage in role-playing exercises in which they rehearse the primary talking points.  According to Bergougnan, investing time in staff training has improved patient acceptance of the program by reducing the element of surprise when a medical charge eventually appears on the patient’s credit card statement. Staff is also able to proactively address common patient concerns, including the availability of their credit line or checking balance and the security of their credit card information.

Of course, there are some restrictions on the ability of an urgent care center to implement the pre-authorization process.  The patient must sign an approval for current charges and the credit card “pre-authorization.”  Credit card information may never be held by the urgent care center or in the billing system due to federal security requirements.  Rather, credit card data must be managed by an authorized processor who will accept the pre-authorization, process the patient notification and execute the eventual charge.  This reduces the risk that an unscrupulous employee of the medical practice will pilfer the credit card numbers. And, last, the practice management system used by the urgent care center must smoothly integrate the pre-authorization process into the overall billing functionality without requiring significant additional work at the front desk or in the billing office.

If implemented well with an integrated practice management system and thorough front office training, credit card pre-authorization will reduce negative patient interactions regarding balances, improve the speed and amount of patient collections and dramatically reduce days and total accounts receivable.

David Stern, MD, is Chief Executive Officer at Practice Velocity Urgent Care Solutions.

References:

(1) Recent Trends in Employer-Provided Health Insurance, Journal of the American Medical Association, November 12, 2014. https://jamanetwork.com/journals/jama/fullarticle/1930824 Accessed on September 18, 2015.

(2) Collins, Sara.  Too High a Price: Out-of-Pocket Health Care Costs in the United States.  Findings from the Commonwealth Fund Health Care Affordability Tracking Survey, September–October 2014.   http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2014/nov/1784_collins_too_high_a_price_out_of_pocket_tb_v2.pdf  Accessed on September 18, 2014.