With over $220 billion in medical debt, patients in the U.S. are burdened by substantial financial obligations. These numbers also distress healthcare providers, who face cash flow and other operational challenges stemming from unpaid patient bills—and debt collection can further strain the relationship between care providers and patients. An efficient financial clearance process at the beginning of each patient encounter can benefit the entire system. But what is healthcare financial clearance and how can providers achieve it?
What is financial clearance in healthcare?
Financial clearance in healthcare is an administrative process that ensures patients understand their financial obligations before service delivery. It’s often a manual workflow that involves verifying insurance coverage, estimating out-of-pocket costs, and discussing payment options or plans.
The main objectives of financial clearance in healthcare are to prevent unexpected financial burdens for the patient, reduce the risk of unpaid medical bills for the provider, and streamline billing and payment.
Common challenges with healthcare financial clearance
Complex insurance policies, inaccurate or incomplete patient information, and lack of patient understanding of their own policy requirements are just a few of the challenges healthcare providers face in financial clearance. Not all healthcare providers have access to advanced technology or automated systems to streamline financial clearance, leading to reliance on manual processes that are prone to errors.
Determining eligibility for financial assistance involves navigating complex criteria, which include assessing individual income, household size, savings, and medical requirements. When patients need help understanding their policy requirements, the educational burden often rests on the healthcare provider. Traditional manual methods of collecting and analyzing this data are prone to inefficiencies and inaccuracies, leading to missed opportunities to provide necessary financial support to patients. This makes the financial clearance process even more time-consuming, requiring significant administrative effort to verify insurance details, secure authorizations, and communicate with patients and insurers.
Verifying a patient’s insurance details during financial clearance ensures that the provider has the correct information about the patient’s coverage, reducing the risk of denials due to eligibility issues. Financial clearance involves confirming that the patient is eligible for the services under their insurance plan. If eligibility is not verified beforehand, providers may deliver services that are not covered, leading to denials.
Financial clearance also involves estimating the patient’s out-of-pocket costs and ensuring the patient understands their financial responsibility. This process helps reduce denials related to unmet deductibles or co-payments, as patients are informed about their financial obligations upfront.
Enhancing the healthcare financial clearance process improves revenue cycle management and significantly boosts patient satisfaction. As reimbursement denials continue to rise, healthcare providers have a vested financial interest in minimizing the financial uncertainties patients face early on in their healthcare journey. The use of technology to automate many of these manual processes allows healthcare providers to focus on minimizing financial uncertainty for patients, thereby enhancing their overall experience.
Improve revenue cycle with automated healthcare financial clearance
Healthcare providers can use technology to understand patient payment challenges and recommend the best financial pathway during the registration process. Providers like UC Health in Colorado leveraged Experian Health’s Patient Financial Clearance software to write off $26 million in charity care. The technology integrates cleanly with the provider’s electronic health record (EHR) to lessen the back-and-forth between systems during patient registration. Identifying the patients who need financial assistance upfront lessens the time spent pursuing bad debt and connects those who qualify for financial assistance with the right programs.
Experian Health’s Patient Financial Clearance solution fosters clear communication between the healthcare provider and the patient regarding coverage, costs, and payment expectations. This transparency helps in addressing potential issues that could lead to denials before they occur.
Automation reduces bad debt and improves the patient experience
Technology answers the question of ‘what is financial clearance in healthcare?’ with outcomes that include higher patient satisfaction and a better bottom line.
Patient Financial Clearance automates screening to determine financial and clinical eligibility for each person at the first point of service. It answers critical questions such as:
- Does the patient qualify for financial assistance?
- What constitutes a realistic patient payment plan?
Notably, the software helps set the tone for the patient intake specialist, approaching payment terms proactively and empowering everyone to take on their financial responsibilities early in the care delivery process.
Patient Financial Clearance automates and streamlines manual workflows to optimize the revenue cycle. For example, this software can:
- Automate screening prior to service or at the point-of-service to determine if patients qualify for financial assistance, Medicaid, or other assistance programs, without relying on patients for information
- Leverage Experian’s comprehensive data and analytics capabilities to calculate the patient’s optimal payment plan amount based on the patient’s unique financial situation
- Predict propensity to pay using Experian’s proprietary Healthcare Payment Risk Score
The benefits of Patient Financial Clearance for providers include:
- Improved point-of-service collections
- Lowered bad debt write-offs
- Increased staff productivity
- IRS 501(r) compliance
- Improved patient and staff experience
For patients, Experian Health’s Self-Service Patient Financial Clearance option enables patients to conveniently complete eligibility checks at their own pace. Through a mobile and web-based platform, patients can submit screening forms and upload necessary documents, receiving real-time updates without the need to contact their healthcare providers. All information is securely stored, allowing staff to access application statuses as required.
Automating financial clearance in healthcare transforms an unwieldy process into an efficient way to manage the delicate relationship between providers and patients. Technology can free up intake specialists to concentrate on creating a better patient experience and eliminate the frustrations surrounding collecting payment after the service is complete.
Learn more about how Patient Financial Clearance can help healthcare organizations reduce bad debt by automating the patient financial assistance process.
