Today’s health insurance policies have patients paying more of their medical costs. That, in turn, creates financial challenges for many physicians.
Consider this statistic: 73% of physicians say it typically takes at least one month to collect payments from patients, with 12% of patients waiting more than three months to pay, according to the most recent Trends in Healthcare Payments from healthcare payments network InstaMed.
In response, some physicians opt to keep their patients’ credit card information on file so that they can more quickly collect the money they’re owed, says Pam Jodock, senior director of health business solutions for the Healthcare Information and Management Systems Society (HIMSS), a nonprofit organization promoting the use of information technology in healthcare.
“About 35% of provider revenue now comes from patient pay, so it becomes more and more critical to improve collections,” Jodock says.
Keeping credit card information on file can ensure patients pay their bills and that those payments come through promptly, according to consultants and health IT experts. However, they stress that keeping credit card data on file comes with risks. And some say the drawbacks aren’t worth the benefits.
Industry changes fuel demand
Changes in insurance policies are among the biggest drivers behind physician interest in keeping patients’ credit cards on file.
For starters, more patients are covered by high-deductible health insurance plans, which puts more of the payment responsibility on individuals. America’s Health Insurance Plans, a trade organization for commercial payers, says in its February 2017 report that enrollment in high-deductible health plans was 20.2 million in 2016, up from 19.7 million in 2015 and a dramatic spike from about 1 million in 2005.
At the same time, insurance plans have become increasingly complex in their coverage criteria, which again leaves patients with more cost-sharing responsibilities. For example, plans that don’t require copayments for annual preventative visits do require copayments if additional services are provided during those visits.
Many physicians need to repeatedly bill patients to collect those kinds of payments because patients often don’t pay after the first reminders. This is administrative work that can be both costly and inefficient by draining staff time and creating lags in cash flow.
“The doctor shouldn’t be the one extending credit all the time. But that’s the situation we have today,” says Susanne Madden, MBA, president and chief executive officer of the Verden Group, a practice management consulting firm in Nyack, New York. “We have practices that are stretched really thin because they’re extending all this credit.”
Proponents of keeping card information on file acknowledge that security is a major concern among physicians. They also point out that some practices don’t even realize the level of safeguards required when handling credit card information.
Madden says she’s helping a medical practice revamp its credit card procedures. The office has a computer file containing patients’ names and credit card information stored in its own IT systems—a practice that leaves the data vulnerable to theft by cyber criminals and staffers alike who, if skilled and motivated, could bypass or hack the security measures typically used by practices.
As risky as that setup is, Madden says it’s not the worst she’s seen: “The worst is to have someone fill out paper forms and store it in a drawer. That’s just an embezzlement waiting to happen,” she says.
Experts agree that physicians who want to keep credit cards on file should not keep the data in their computer systems, whether onsite or in the cloud. Instead, they should contract with credit card processing vendors who have vault technology specifically designed to store the data for such purposes.