21 February, 2020
If your healthcare organization is making more refunds to patients, you are not alone.
The combination of higher patient obligations for healthcare and increasingly complex healthcare billing models has caused a spike in the volume of refunds healthcare providers make to patients.
The total amount of refunds that providers issue to their privately insured patients is anticipated to increase at a compound annual growth rate of 4.9 percent through 2022, Aite Group reports. Aite Group expects providers to make an estimated $3.1 billion in refunds to patients in 2022.
Patient refunds are a major headache for healthcare providers:
- The IT systems and payment gateways used by many hospitals and other healthcare providers are not set up to easily credit money back to the credit card used for the original payment.
- Most healthcare organizations cannot support new payment technologies that patients prefer.
- Storing patient payment information (e.g. banking account data) in the healthcare provider’s domain if it’s needed for a refund opens the door to significant fraud and compliance risks.
- Poor integration between payment systems and the patient portals used by most healthcare providers requires patients to call their provider to understand the status of their refund.
- Reconciling refunds in a patient accounting or general ledger system is burdensome.
Hospitals and healthcare providers make matters worse by refunding money to patients via paper check. Compared to electronic payments, checks cost more and cause more escheatment.
Patient disbursements lag other markets in the disbursement of electronic funds, as non-electronic disbursements represented 83 percent of the total refund payments volume in 2018, per Aite Group’s report, U.S. Patient Refunds: A Market Sizing. In 2018, 74 percent of the total refunds payment volume was disbursed by check, a figure that Aite Group predicts will increase through 2022.
In an age when patients have been conditioned to expect hassle-free digital experiences, making refunds with checks also can frustrate patients and result in more inbound customer service calls.
Healthcare organizations blame their antiquated approach to making refunds on several factors:
- Lack of IT resources to support the deployment of a modern payment platform
- Lack of departmental resources to manage the migration from paper checks
- Concerns that patients won’t accept electronic refunds
- Concerns that a payments platform won’t support their organization’s business rules
- Fears about how a modern payment platform will integrate with their legacy systems
- Fears about compliance and security risks
While healthcare providers are keen on reducing the volume of refunds that they make to patients, the industry is unlikely to eliminate them. The tremendous growth of high deductible health plans (HDHPs) requires healthcare providers to estimate a patient’s financial obligation, which tends to be an inexact affair. Changes in patient coverage and overpayments by customers also increase the possibility of refunds. That means hospitals and other healthcare providers must find ways to pay out refunds more efficiently, while providing an optimal experience for patients who receive them.
That’s where an omni-channel payment platform comes in.
How to Optimize the Disbursement of Patient Refunds
An omni-channel payment platform optimizes the patient refund process in four important ways:
- Providing a single platform for all refunds, regardless of the payment method: Omni-channel payment platforms enable healthcare organizations to make patient refunds using any electronic payment method, including card and ACH. This provides a single efficient platform for all refunds and ensures that patients are paid via their preferred method.
- Built-in workflows: Patient payments require rigorous controls. Leading omni-channel payment platforms have built-in administrative workflows such as interactive messaging, attachments and digital signatures that can be configured to any business need. Incorporating workflows into the patient refund process eliminates friction and speeds payments.
- Open APIs: An omni-channel payments platform with open APIs eliminates the need for onerous, costly or hard-to-maintain programming. By reducing the need for programming, healthcare providers can bring innovative payments products to market more easily. They also can count on having the most advanced payments technology available because the fintechs that provide omni-channel payments platforms are laser-focused on automating disbursements. And omni-channel platforms were built to scale with refund volumes.
- Better reporting: Omni-channel payment platforms put critical information at the fingertips of program managers so they can better manage the organization’s cash, service and risks.
Why Use an Omni-channel Platform for Patient Refunds
Making patient refunds using an omni-channel platform delivers big benefits to healthcare providers:
- Enhanced patient experience: The efficiency of the patient refund process has a big sway over a patient’s overall impression of their healthcare experience. Unfortunately, it is not uncommon for patients to wait weeks to receive refunds. Moreover, refunds are often issued by check, regardless of how the patient made the original payment or how they prefer to be paid. An omni-channel payment platform enables healthcare providers to make refunds using the payment method that a patient prefers, whether it’s with a reloadable card, virtual card, non-reloadable card, direct deposit, same-day ACH, instant payment or Zelle. And accelerating the patient refund process with an omni-channel platform reduces the number of call center inquiries that providers receive from patients regarding the status of refunds.
- Reduced costs: Hospitals and other healthcare providers can save big money and reduce their escheatment burden by making patient refunds electronically instead of printing and mailing checks. What’s more, crediting refunds to the card that a patient used to make the original payment – rather than issuing a check for the refund – may enable the healthcare provider to recover at least some of the credit card transaction fees and interchange.
- Streamlined operations: An omni-channel payment platform can significantly reduce the amount of time that staff spend on the patient refund process. Built-in administrative workflows eliminate manual tasks for initiating patient refunds. Refund payments can be effortlessly posted to a healthcare provider’s patient accounting or general ledger system. Staff and patients can instantly access information on refunds through a simple search. The platform can prevent the possibility of patients receiving a larger refund than they are entitled to. And electronic payments are less likely to escheat and create downstream headaches.
- Less risk: Compared to check-centric approaches to patient refunds, an omni-channel payment platform provides better tracking and controls and improved fraud protection. For instance, access controls limit the number of individuals who can initiate refunds.
An omni-channel platform makes patient refunds less costly, less burdensome and less risky.
There is no end in sight to patient refunds. But that doesn’t mean that hospitals and other healthcare providers must be saddled with an inefficient and risky process. Making patient refunds with an omni-channel payment platform provides healthcare organizations with compelling benefits.
Ready to improve your patient refund process? Contact Transcard to learn how we can help.