3 Ways the Right Payment Processing Technology Can Increase Physician Profitability

Written by on April 1, 2014 in Practice tips - No comments

PaymentWEBThe rollout of the Affordable Care Act raises several legitimate concerns among physicians about maintaining a profitable practice. Insurance companies are under intense pressure to cut costs while growing revenues. This could result in lower payments to doctors for patient visits and services performed, making it difficult for doctors to cover even basic operating expenses.

At the same time, President Obama’s new healthcare law is expected to cut annual reimbursement rates for physicians by more than 20 percent. The effects on physician profitability are very real.

Medicare and Medicaid reimbursement rates have long been lower than reimbursement rates for patients with private insurance. In order to cover an additional 32 million Americans, the Affordable Care Act will increase Medicaid participation to include approximately 16 million additional individuals. An uptick in Medicare and Medicaid enrollment translates into a reduction in reimbursements for many doctors who accept these patients.

With the enactment of the Affordable Care Act, the federal government lowered medical reimbursement rates from health insurance companies, and private insurance companies are expected to follow suit. While there are still uncertainties around the implications and regulations of the law, a significant reduction in reimbursements will have a negative impact on bottom line of physician offices.

There is also a shift happening toward a flat reimbursement rate model driven by the Centers for Medicare and Medicaid Services (CMS) after it announced that its five different billing code levels for outpatient visits would be consolidated into one flat rate. This means that a physician’s facility will be reimbursed a flat rate regardless of the type and level of care provided.

In addition, current ICD-9 codes for medical diagnosis will replaced by IDC-10 codes on October 1, 2014. The updates to the codes will have the biggest impact on insurance reimbursement timelines, which will take anywhere from two to three months or longer to process, meaning cash flow for physician offices could be severely restricted.

The sum total of these factors paints a troubling picture for medical offices. But cost savings can be found hiding in plain sight – for example, office managers should take a serious look at their payment processing technology to look for opportunities to create efficiency and keep more money from each transaction.

Payment Technologies Improve Physician Profitability

In today’s complex healthcare environment, streamlined billing and collection management powered by progressive payment technology can dramatically improve profitability and shield medical practices from future changes in federal regulations.

Physicians and medical office managers must take advantage of cutting-edge payment technologies to increase automation, streamline workflow and speed payments receipt. The right payment technology also offers value-add business benefits, including access to actionable insights and analytics that can further improve financial performance and payment collections.

With credit and debit cards as the preferred payment form of patients, physicians can make several simple changes in the way they process credit and debit cards to improve cash flow and profitability. When you decide it’s time to reevaluate your payment processor, take a close look at these capabilities:

1. Secure vault & recurring billing. The ideal payment processing technology stores credit card information for recurring payments such as a patient’s balance-due after insurance settlements.

Instead of billing the patient and waiting for reimbursements, the right platform allows you to charge the credit card at amounts up to a predetermined limit as soon as the insurance settlement is received. Stop waiting weeks or months for the payment to be submitted.

Look for a payment processor with a credit card “vault” and recurring billing features that make automatic payments possible. In situations where a patient cannot cover the entire medical bill in one payment, recurring billing allows for installment plans to be set up. This can improve cash flow while reducing back-office paperwork and billing bottlenecks, improving efficiency and productivity in any medical office, while providing patients will a plan that best works for them.

2. Multiple payment options. A strong payment processing solution will allow physicians to accept payments through multiple channels, depending on what is most convenient for the patient.

This includes hosting payment pages on the practice’s website, allowing patients to make secure medical payments online with their credit or debit cards, as well as point-of-service (POS) payments after an office visit. The ideal payment processor accepts multiple payment types under one account and reports payments on one statement.

The payment processor should also be responsible for meeting Payment Card Industry (PCI) security standards and compliance requirements for the protection of patient data.

3. Lower credit card processing fees. When selecting a payment processing solution, practice managers should carefully compare the fees, typically structured as a small percentage of each card transaction. Because this money comes directly off the top of the revenue of each transaction, it’s in the offices best interest to seek the lowest fee possible.

It may seem trivial at first, but this small percentage can add up quickly. I’ve seen a single medical office save $10,000 per year at a two-physician practice by opting for a lower fee option.

Given that the total size of the healthcare payments market is $442 billion annually, even a small percentage savings in credit card processing fees could add up to billions in savings per year.

While cash flow and profitability pressures will continue to mount in the medical industry, simple changes in payment processing can help physicians and other healthcare practitioners lower costs and increase revenues. And the best part – once these changes are made, you can get back to what matters: patient care.

By Brent Warrington
CEO, SecureNet

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