Second in a series. Read part one.
With more patients paying part or all of their health care expenses directly, health care providers find themselves thrust into the world of consumer payments and collections, where providers face different costs, risks and expectations than they did working primarily with insurance companies.
Smaller health care providers are facing the same economic issues that plague small retailers. They pay the same interchange rates, and thus want to push more transactions to card-present than the costlier card-not-present process. Those who could already accept swiped card payments must also cope with the shift to EMV-chip cards.
Simply put, "the biggest thing we are seeing now is that health care is going retail," said Michael Trilli, senior healthcare analyst for Aite Group.
But there is one strict difference that makes this whole process harder on the health care industry: "Unlike the retail environment when you generally go in for a specific reason, with health care the patient can go in with one thing in mind, but walk out with four other things that they have to deal with, and pay for," he said.
This confusion is an opportunity for payment technology vendors and acquirers, who can help health care providers address their needs for payment acceptance, security and compliance.
Many smaller providers are impaired by the lack of integration at their point of service, said Kevin Kidd, president of AxiaMed, which provides health care payment technology.
"A provider may have multiple software platforms for practice management, but they are not integrations as it applies to payments," Kidd said. "Health care is complicated enough, so these providers are looking for more efficient ways to make revenue and collect revenue."
Even some large hospitals are using older, standalone payment terminals that push reconciliation to back offices, Kidd added.
An inability to offer and accept different payment types at the point of service leads to far more patient payments coming through phone calls, mail and the Web, which means the provider is paying higher card-not-present transaction rates, Kidd said.
AxiaMed hopes to resolve some issues for providers through a partnership with Experian Health in delivering devices capable of accepting EMV-chip cards and Near Field Communication-based mobile wallets like Apple Pay. The systems also accept mag-stripe and keyed payments made via phone.
"We'd like to move the payment collection up sooner because waiting for insurance to settle or patients calling in payments drives up costs," said Jorge Wong, senior product director for Experian Health.
Experian provides information about a patient's ability to pay, opening the door for the provider to accept partial payments while waiting for the insurance statement.
"What is needed today is to integrate everything so that all revenue cycle flows are communicating with each other, and the payment collection event is the most important part of that cycle," Wong added.
Health care payments provider InstaMed recently added Apple Pay mobile payments as an option on its platform, adding another way for patients to pay at least part of their bills while at the provider's office.
Providers are best served when the complex five-party system of healthcare payments patient, provider, insurance, bank and vendor combines in one system, said Chris Seib, chief technology officer for InstaMed.
"The consumer often does not have an appropriate expectation of what they might owe in advance," Seib said. It leads to the "expensive, confusing and ineffective payment process you see in the industry today," he added.
Out-of-pocket expenditures for consumers are expected to grow to $420 billion in 2015, up from $250 billion in 2007, according to National Health Expenditures data.
MasterCard did not have an executive available to speak about healthcare payments, but sent a company statement via e-mail acknowledging "providers have historically been slow to update their POS technology, but they need to collect consumer payment as quickly and efficiently as they can."
Health care providers are among the many companies facing a shift in fraud liability on Oct. 1 if they are not able to accept payments from EMV-chip cards.
"EMV will catch the small providers off guard, and we are seeing that already," AxiaMed's Kidd said. "We are starting to educate providers so they can understand what EMV does and the risks without it."
Still, it is beneficial that EMV is coming at a time when health care providers are already pressured to modernize the way they handle payments and collections.
"We call it the 100-year storm," Experian's Wong said. Physicians are "raising their hands up and saying they have had enough and they want someone to help."