How to Handle Patient Refunds: Best Practices for Providers

Why Are There Refunds in Healthcare?

Many factors determine patient payment responsibility, such as patient health benefits, provider contracted rates with a health insurer, discounts and more. When the sources for these pieces of information are disparate or not talking to each other, the result can mean confusion, miscommunication, and ultimately, overpayment. Some of the most common reasons for overpayment include:

• The patient’s benefit information was not up-to-date when it was initially captured
• Staff collected too much upfront based on an estimate
• A patient’s coverage changed in the time between the healthcare encounter and the billing process
• There was an error in the billing process
• The patient overpaid by mistake

When overpayment occurs in healthcare, providers find themselves in the business of issuing refunds. How a provider handles the refund process will influence the patient’s overall impression of their healthcare experience. We talk a lot about what providers need to do to deliver a consumer-friendly healthcare payments experience to patients, including setting clear expectations upfront, offering new, digital payment options and eliminating paper wherever possible. Providers should consider the refund process a key component of the consumer healthcare payment experience and strive to deliver simplicity and convenience for their patients.

The Problem With Refunds in Healthcare

There are two common experiences associated with refunds in healthcare. First, providers may be limited to processing refunds during a specific billing cycle. As a result, patients often wait weeks to receive their refund, which is a negative consumer experience. Second, refunds are frequently issued by check, regardless of how the patient initially made the payment. We know that most patients do not like to use checks to pay their healthcare bills. According to the Trends in Healthcare Payments Eleventh Annual Report, only 13% of consumers prefer to use checks to make healthcare payments. If that’s the case, it is likely that they would also prefer not to receive refunds in the form of a paper check.

Consider the refund experience you have in other industries. When you purchase something online and return it, you don’t wait weeks for the refund to show up in your mailbox in the form of a paper check. Instead, you expect the refund to go back onto your card or be deposited back into your bank account. In healthcare, a slow and paper-based refund process only hurts the consumer experience.

Refund checks can hurt the provider as well. In a world moving away from paper, a refund check is one more paper payment that involves print and mail costs and the administrative cost of staff manually posting and reconciling that paper-based refund.

Best Practices for Issuing Refunds in Healthcare

Don’t hurt the consumer healthcare payment experience or incur unnecessary costs by issuing refund checks. Here are three best practices for refunds in healthcare payments.

Go Electronic

Unless a patient specifically asks for a check, there is no reason you can’t issue every refund electronically. Your staff should be able to issue refunds electronically, even if the patient initially paid by check. In fact, you can create a positive experience by having staff reach out to patients who did pay by check and explain to them that they can receive their refund much faster if they receive it by an electronic payment method. This gives the patient a positive impression of your healthcare organization. You benefit because this is an opportunity to capture a payment method on file that may not have been previously stored. The most efficient way for staff to issue a refund is the “one-click” method. Within your source system, staff should be able to access the patient’s payment receipt and, in one click, issue payment back onto the original payment method.

Easily View and Reconcile Refunds

To ensure the refund process is simple and convenient for everyone, you should have clear visibility into refunds just as you do into payments collected. Receipts for refunds should be accessible to both staff and patients through a simple search. Refunds also shouldn’t have to disrupt staff’s workflow by introducing a manual step into their process; refunds should post back into your source system in real-time, so no one has to go through the manual work of making sure the balance is correct.

Put Controls in Place

A good way to establish controls over refunds at your organization is to limit the ability to offer refunds to just a few staff members. You should be able to easily manage users within your system to assign refund rights to the staff member(s) who will be responsible for handling refunds. You should also be able to set up a control that prevents over-refunds. An over-refund is when a patient is refunded more than what they over-paid in the first place. When this occurs, your organization has to collect the over-refund, which is a negative consumer experience and a waste of time and effort for staff.

How to Avoid Refunds

In many cases, quick, easy refunds are an expected part of the healthcare payment experience. Therefore, the above best practices will come in handy if your organization is reconsidering the way you approach refunds. However, there are also ways that you can avoid refunds in the first place:

Estimate Patient Responsibility

You can use an estimator tool to create an estimate of a patient’s payment responsibility before or during the point of service. Put in place a policy where your staff collect a portion of the payment upfront and then collect the rest of the patient’s responsibility after the claim has been adjudicated. For patients with larger balances, set up a payment plan to collect the balance over time. This prevents over-collecting, as your staff can track payments along the way. It also ensures the healthcare organization gets paid because patient expectations have been set, and a payment method has been stored on file to collect the estimated responsibility or recurring balance.

Check Patient Eligibility in Real-Time

Ensure a patient’s benefit information is up-to-date in your system before moving forward with the billing process. Check patient eligibility before their visit and in the office the day of their healthcare encounter to ensure you have the most current information possible. Using out-of-date benefit information can lead to over-payment and billing errors.

Give Patients Self-Service Payment Tools

When you put payment in the hands of your patients, they are more likely to pay close attention to how much they owe and for what. Give them payment options that allow them to make payments the same way they already pay other bills; this creates a convenient experience and helps patients associate their healthcare bills with their other monthly bills that they always pay on time and in full. When patients have control over their healthcare payment experience, they are less likely to make payment errors and more likely to keep track of what they owe and when.