Bringing Order To Chaos: Open Banking Meets Healthcare Payments

In the accelerated, digital-first world, few things are more complicated than healthcare payments.

In fact, even a medical school degree isn’t enough to sort out the different payment accounts, billing statements and various insurance plans. However, chaos invites someone or something than can bring order, and i2c wants to contribute to that effort.

Because healthcare payments, as i2c President Jim McCarthy told Karen Webster in an interview, are a mess for both patients and providers.

The patient, McCarthy noted, has become the largest payor in the entire healthcare system. But the process of making those payments is complicated and confusing. For example, billing statements have scores of numbers but lack an actual final tally of what is owed. Then there’s navigating things like health spending accounts (HSAs) and flexible spending accounts (FSAs). Add to that the fact that consumers often don’t pay — not because they can’t, but because they get entirely lost in the “complexity … of payments hoisted on them,” he said.

This means providers — doctors who likely went to medical school with the goal of treating patients — have been thrust into the unfortunate job of being accounts receivable (AR) managers and bill collectors. And the trajectory of the situation is getting worse before it gets better, as the masses of patients who have put off medical care during the pandemic begin flooding back into the system, McCarthy said.

But it doesn’t have to get worse. McCarthy said what’s becoming apparent is that for perhaps the first time, technology like artificial intelligence (AI) and sophisticated data modeling are catching up to the problems. They’re making archaic, often paper-based models obsolete in favor of digitally enabled alternatives.

One such innovation has been i2c’s collaboration with SmartHealth to use an open banking platform to build the first credit card dedicated solely to healthcare. The card uses payments rails that already exist today as the multitool designed to cut through the complexity for patients and providers.

Capturing Card-Based Healthcare Potential

While the history of card products is full of products that launched fairly fast, the SmartHealth PayCard’s launch may be a record setter. It went from concept to reality in 19 days this past June. McCarthy said that was a feat largely made possible by the fact that SmartHealth came in with a banking partner and use case already well-defined, making it mostly just a matter of putting a tech stack in place.

What the companies managed to build is a one-of-a-kind credit card ready to roll wherever Visa is accepted. The card only pays for healthcare — no using it for a new pair of shoes — and is designed to make the payments piece of the patient/provider relationship much smoother and more manageable, particularly for consumers under the weight of a high-deductible plan who will end up paying the vast majority of their own medical expenses out of pocket, something that is notoriously difficult to plan for, as COVID-19 has spent the last half-year demonstrating.

“Specifically because of the high-deductible and [high] copay plans that, unfortunately for consumers, mean they are having to be ready to plan for unplanned events and take care of them,” McCarthy said. “Ultimately, [the costs] are increasingly on the patient.”

And an unplanned medical expense, especially a major event, can leave a consumer in tens of thousands of dollars in unplanned debt nearly overnight — a situation the SmartHealth PayCard is built for, providing a buffer in the case of a major event that has near ubiquitous acceptance no matter where consumers are seeking care.

Moreover, McCarthy said i2c is increasingly working with partners that are looking to see how they can further build on cards, perhaps opening them up to more general-purpose spending.

That, he noted, is a somewhat more fine-tuned effort at customizing back-end systems that can recognize and properly bucket the spending that goes through such cards. It’s something he said is complex but far from impossible given the abilities of modern AI. More importantly, that kind of expansion then allows healthcare providers to bundle in even greater capabilities when it comes to influencing consumers toward healthier behavior with the power of incentives and rewards for positive spending habits.

Cards can do a lot do take the immediate pain of inefficiency and confusion out of the medical payments process directly, but they also have a future where they can be used as a relationship channel with patients to drive better habits and better compliance with care.

Ready For Innovation

McCarthy said that in many ways, healthcare today greatly resembles the world of financial services a little over a decade ago, before disruptors like Square and Stripe entered the field.

“When these players came into the space, they weren’t wedded to the systems as they were built,” he said.

Instead, McCarthy said, the new firms were “looking at the plumbing with fresh eyes and saying: ‘Why is it like this and how can we improve it?’”

He said the newcomers “were willing to chuck out all the baggage built up over time that doesn’t really help the consumer journey.”

But McCarthy added that like financial services, healthcare is a highly regulated, compliance-driven business. So, every innovation is only as good as its ability to better the consumer journey while staying within the lines laid down by regulators.

He said that’s certainly not easy, but not outside technology’s ability.

“I’d like to think if we can build a car that can drive itself, we should be able to build a card that can separate medical expenses from everyday spend expenses and that can push rewards to customers for doing the right thing,” McCarthy said. “It shouldn’t be that hard — something I think is a testament to the data-modeling and artificial intelligence systems that have come along.”

And, he noted, it’s something the world needs at least as much as it needs self-driving cars because consumers and providers are increasingly caught up in a healthcare payments system that doesn’t work well for anyone involved. And with the technology available today — and innovations already on the table — it’s well past time to start building something much better.