6 Best Practices for Patient Payment Plans

A Growing Demand for Payment Plans in Healthcare

The rise in high-deductible health plans and growing out-of-pocket costs is forcing consumers to bear greater financial responsibility for healthcare services. This situation poses challenges to both patients and providers. As costs for care increase, more patients have difficulties managing their healthcare payments, and providers struggle to collect.

Having high unpaid healthcare bills can spur stress and anxiety for consumers. An inability to pay for care can also cause someone to delay or avoid care entirely. In 2021 nearly one-third of Americans did not seek care due to cost¹. This can have serious consequences: Untreated health conditions often worsen over time, which can lead to even higher medical bills.

The soaring cost of healthcare prompts fallout for providers, too. Data shows that 44% of providers were challenged by large patient balances in 2021². To collect these unpaid balances, providers often wind up sending multiple billing statements over several months’ time and writing off more bad debt.

6 Best Practices for Successful Payment Plans

1. Enable Self-Service

Many providers support payment plans manually. They manage a calendar of when each payment is owed and call patients to collect, which takes a significant amount of administrative work. It also makes for a poor patient experience because it does not give a patient full visibility into the status of the payment plan.

A better alternative is to use tools that permit self-service payment plans that give patients full visibility and control over their payments. Patients can then create a plan that works best for their individual circumstances. Some patients may want to pay off a balance-owed quickly and can afford a larger monthly payment. Others may want to make smaller payments and spread the plan out over a longer period. Giving patients the option to determine a timeframe that works best for their budget can help reduce their stress over what may otherwise be a financial hardship. 

2. Automate Payments

Whether you initiate the payment plan when the patient is in the office or after you send the statement, you’ll want to securely save and pre-authorize payment information to automatically receive the money when it’s due. Automation simplifies the process for patients and is more convenient for staff because they won’t need to manually collect the payments. It also reduces the chance for an account to end up in bad-debt collections.

3. Tailor Payment Plans to Patient Needs

Depending on the scenario, there are two main types of payment plans to offer patients:

Installment: Use “installment” plans to collect payments against an outstanding balance and end the plan automatically when the balance is paid in full.

Recurring: Use “recurring” plans to collect payments at a regular, ongoing interval based on usage or services rendered. This type of plan, which may or may not have a defined end date, is commonly used by dentists and orthodontists.

4. Use Patient Preferences to Personalize Payment Plan Options

When first setting up payment plans you’ll want to set up guidelines on the back end to make sure patients and staff create plans that fall within the parameters that make sense for your business. For example, how much time can patients have to pay down their balance? Is it no more than six months, 12 months, or longer? You can also set the payment frequency. While monthly payments are most common for payment plans, you may want to enable patients to pay balances down faster with bi-weekly or even weekly payments.

Here’s where personalization based on patient preferences is a big benefit to your practice. To personalize patient bills, providers can leverage technology with artificial intelligence (AI) that uses payment history and demographic information to identify unique payment preferences and devise payment plan options that best suit each patient’s needs.

For example, using AI, one patient may receive a bill for $950.00 with a recommended payment plan of $475.00 per month for two months, while another patient may receive a bill for the same amount with a recommended payment plan of $79.17 per month for 12 months.

Setting the parameters upfront presents an opportunity to build patient satisfaction, especially when you offer multiple options. By giving patients the flexibility to select their own terms, you empower them to control how they manage their medical bills. It shows you understand paying for healthcare can be challenging and that you are mindful of their personal needs.

5. Implement Effective Communications

Once the tools and technology are in place to implement payment plans, you need to communicate that you offer this option. Promotion of payment plans is key for patient adoption.

Front-office staff can explain how the plans work and answer questions when patients schedule or come in for a healthcare visit. You’ll also want to spread the word via your website, office signage and email. Patients may be reluctant to express their concerns about the cost of healthcare and you can help overcome this hesitation by taking a proactive approach. 

Communication Tip: Create a one-page “FAQ” hand-out for patients explaining how your payment plans work, including payment timing, notifications and payment card security.

Communication Tip : Hand out a one-page “FAQ” for patients explaining how your payment plans work, including payment timing, notifications and payment card security.

Even when patients authorize automated payments, they still may forget that a payment is due. They may get confused when the payment shows up on their bank statement and even call your office to clear things up. To improve communication and offer payment transparency you can automate sending email and text notifications to patients prior to each payment transaction.

6. Analyze Performance

Beyond implementing self-service and automation you’ll want to track and analyze the performance of payment plans over time.

It’s important to have a summary view that presents multiple data points such as which patients have payment plans, when those payments are coming in, and through which channels.

You’ll also want reporting tools that let you search for a payment plan using different variables (e.g., outlet, patient ID, patient last name, patient first name, card number or checking account last name). With the right reporting tools in place, you’ll discover what’s working well and where there are problems. You can then adjust resources, as necessary, to improve your business performance.

1. InstaMed, Trends in Healthcare Payments Twelfth Annual Report 2021
2. InstaMed, Trends in Healthcare Payments Twelfth Annual Report 2021