Calculating Your Patient’s Out-of-Pocket Medical Expenses

Financial worries are common among Americans, with medical expenses usually at the top of the list. 

Even when cost estimates have the best intentions, they can be wildly inaccurate, leaving patients with a lack of certainty and confidence about how they will pay for necessary medical care.

With high deductible plans becoming the norm, more than ever providers must offer patients guidance regarding their payment responsibility, together with options for making those payments. 

When you help patients accurately anticipate and prepare for out-of-pocket medical expenses, you eliminate a direct source of stress and anxiety for them. Ultimately, you improve the patient experience as a whole, and strengthen the patient-provider relationship.

Patients Are Worried About Healthcare Costs

Americans are so concerned about medical expenses, that they’re taking drastic measures.

In a recent AccessOne survey, nearly ⅓ of respondents aged 18 to 34 indicated that they have postponed needed care or a procedure due to cost concerns, and 40% of them have opted not to fill or have delayed a prescription. 

When people actually get the care they need, even with good health insurance, many times the high costs of out-of-pocket medical expenses force them to delay important life milestones, such as becoming homeowners or having children.

With the surprise of out-of-pocket medical expenses, patients are tempted (and even tricked) to consider risky options for paying, like high-interest credit cards.

The financial fear is just one aspect of concern—these cost-driven delays are actually making Americans sicker. According to a recent survey from The Commonwealth Fund, 54% of people who delayed care because of costs said that their health problems got worse as a consequence.

Healthcare costs are only getting more expensive, and it’s up to providers to offer better patient financing solutions and guidance.  

What Providers Need to Know

Talking about costs can be uncomfortable, especially when it concerns such a delicate matter as health.

When providers have adequate tools and accurate information at their disposal, the conversations surrounding out-of-pocket medical expenses—and healthcare costs in general—not only improve, but become a catalyst for optimizing both the patient experience and revenue cycle management. 

Here’s how you can leverage patient information to give them the precise details they need about their future patient payments.

1) Eligibility

Before a patient comes in for care, providers can confirm a patient’s coverage and any coverage limitations.

Be proactive and ask the patient for:

  • Name and date of birth.
  • Insurance company name and phone number.
  • Name of the primary insurance plan holder and their relationship to the patient.
  • Policy number and group ID number (if applicable). 

Then contact the insurance provider with this information and you’ll be able to verify the patient’s eligibility for medical services, deductibles, co-payments, and out-of-pocket expense limits.

Patients may not be aware of all the nuances of their specific plan, so giving them the full details will help to set patient payment expectations.

2) Charity Care 

For patients who face substantial financial challenges, explore charity care options. Understanding your health system’s internal financial assistance programs or charity options can save both patients and providers extra time, encourage patients to get the care they need, and prevent bad debt. 

Be familiar with the income levels or qualifications required for free or discounted care, and be prepared to offer information about the application and approval process. 

3) Health Plan Fee Schedules

When you know exactly how much a patient’s health plan will reimburse your practice, you can then easily calculate the amount a patient will be responsible for.

Be sure to look up the contracted fee prior to an appointment, based on the kind of appointment your patient has booked (e.g., routine screening vs. procedure).

Then you can confidently communicate to the patient how much they’ll have to pay upon their visit.

4) Health Insurance Deductibles

This is the amount patients must pay before the insurance company begins to pay for covered healthcare services.

For example, if a patient has a health insurance plan with a $1,000 deductible, they’d be responsible for paying the initial $1,000 of medical expenses. Once the deductible is met, the insurance company typically covers only a percentage of the remaining medical expenses.

Deductibles can vary widely among health insurance plans, so make sure that the patient is aware of the exact cost of their insurance.

5) Copays

Copays are a fixed rate, cost-sharing arrangement of a patient’s insurance plan—the insurance will pay for part of an appointment, and the rest is the patient’s responsibility.

Let your patient know ahead of time that they will have to disburse their copay when visiting, and remind them that each visit will incur the same copay. Do this to bolster the patient’s financial confidence and certainty. 

6) Coinsurance

Similar to copays, but a percentage instead of a fixed rate.

After the deductible has been met, some health plans have coinsurance policies that require patients to pay a percentage of the total contracted rate of a visit or service.

For example, even if a patient has met their deductible, they may be responsible for 20% of all covered services. This is part of the total out-of-pocket cost—let the patient know that they might have to pay for it.

How to Calculate Out-Of-Pocket Medical Expenses

To accurately calculate out-of-pocket medical expenses , providers must make it a point to understand the details of a patient’s health insurance plan.

Although there are many insurers and plans, it’s worth the effort in order to provide a top-notch patient experience. After all, by providing an experience based on a detailed patient financial education, you’ll gain their trust and loyalty.

Providers have two options for calculating out-of-pocket medical expenses.

1) Manual Calculations 

This, of course, requires an intense administrative task of researching a patient’s insurance information, and then connecting the dots and adding the numbers.

Each calculation is customized to each patient, and you have a high level of control and awareness at each step of the calculation. 

However, it can be labor-intensive and time-consuming for your workforce to provide manual calculations for every patient. And because it relies almost entirely on manual entries and calculations, it’s vulnerable to human error. 

2) Estimation Tools 

Most hospitals and medical practices today have cost estimation tools available to patients, such as this calculator for Stanford Medicine.

While some estimation tools are broad, others allow for specific patient data (like deductibles or copays) to better accurately estimate total costs.

Because they are a one-size-fits-all tool, they can sometimes lead to inaccuracies and confuse patients with some results, especially when the final information isn’t all that clear. After all, there is no human interaction along the way.

Perhaps the best method for calculating a patient’s out-of-pocket medical expenses is a combination of the two methods. Providers can help patients by offering cost estimation tools, but also guiding them through these calculations and making sure that the data that’s entered is accurate.

What Happens When Patients Can’t Pay?

Let’s say your patient needs a tonsillectomy. While this is a relatively routine procedure, a patient with a high deductible health plan may need to pay their entire deductible before insurance will contribute. 

That entry price tag can be alarming for many American families. In fact, nearly 30% of AccessOne’s survey respondents say that they are “not confident at all” that they could pay a medical bill of $500 or more.

As we mentioned earlier, this many times leads patients to avoiding healthcare services altogether. Charity care can be an option for patients who qualify. If not, patient financing is often the bridge between patients being unable to pay and avoiding treatment or getting the care they need. 

When patients are empowered with flexible patient financing solutions, they’re more likely to proceed with care and continue their relationship with their provider. The same survey revealed that 66% of consumers are more likely to proceed with care when given payment plan options. 

Flexible patient financing options mean everyone wins: patients feel confident in their ability to pay, and providers benefit from increased revenue. 

Demystify Healthcare Payments for Your Patients 

Transparent conversations about healthcare costs should include an accurate calculation of your patients’ out-of-pocket medical expenses.

And these conversations must happen before a patient receives their care or medical service.  They should walk in confidently, knowing that they can afford the care they need.

Do you offer the patient financing solutions that your patients need and deserve? Do they know about their financial responsibilities?

It’s up to you to provide the service and the guidance. Partner with AccessOne to offer equal and clear terms for all. Request your demo with our team today. 

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