AR Automation: Just What Doctor Ordered

The national healthcare debate rages on, with cost at or near the center of most deliberations. Less talked about — and yet intrinsic to the matter — is the subject of payments. As healthcare providers and insurers duke it out over contract rates and reimbursement policies, friction in their B2B payments systems adds cost and, more importantly, loses valuable time.

At worst, insurance payment snafus can even become a matter of life and death.

Weightier concerns about what kind of healthcare system America should have are, for the moment, secondary to payments issues plaguing the system that’s in place. Much of that tracks back to friction in legacy accounting systems at the hospital level. Still more has to do with a manual claims submission process that seems to favor institutions over individuals.

This is where Accounts Receivable (AR) automation comes in, digitizing heavily regulated healthcare billing to bring accuracy and velocity to a system that everyone agrees needs fixing. Complex problems and innovative solutions around healthcare payments are dissected in the latest B2B Healthcare Payments Report, a collaboration between PYMNTS and American Express.

A Clean Digital Bill of Health

Hospital and healthcare insurance billing are still paper-based to an astonishing degree. With regard to cash flow, it causes issues that reverberate from the ER to the operating theater to the recovery room. Billing and reimbursement failures also follow patients home from the hospital; stories of people wiped out by unpaid medical bills are sadly commonplace.

InsurTechs have moved into the space with some creative solutions. One such firm is Oscar Health, whose aggressive approach to help “… rebuild the country’s broken health care system …” involves digital payments through the Automated Clearing House (ACH) network and the EDI 835 Electronic Remittance standard. The speed and trackability of digital payments enable Oscar Health to remove friction (and frustration) from B2B healthcare reimbursements.

“We try to steer as many of our providers as we can to electronic payments because that way we can communicate more information to them about what we paid for, how we paid for it, why we covered it in a certain way or why we didn’t cover something,” said Brett Lotito, vice president of insurance operations. Oscar Health says claims processing time has been brought down to an average of five days since instituting digital payments capabilities.

Getting Better

New developments and innovations are coming faster now as players large and small vie for a piece of the U.S. healthcare industry, expected to be worth upwards of $6 trillion within the next seven years. JPMorgan Chase & Co.’s purchase of medical billing automation firm InstaMed for a half billion dollars is a clear indicator that there’s profit in helping hospitals settle up faster.

The prognosis? Commerce is going digital, including healthcare. Hospitals maybe lugging around legacy AR systems now, but they’re ready for change. As the report notes, “The American Hospital Association (AHA) [said] hospitals often prefer that insurance companies pay them through the low-cost, digital Healthcare Electronic Funds Transfer standard.”