August 17th, 2009
Big money to be made in health payment processing
Here are some recent entries from my personal checkbook.
$24.28. $16.28. $12.07. $4.56. $3.99.
Each represents a medical payment, billed long after work was performed, after my insurance company had its say. I should add here I have what they call the “good insurance,” a PPO that lets me choose my doctor and hasn’t entirely refused a big bill in almost 30 years.
Multiply this $61 by tens of millions, then consider many patients are going through this exercise several times a year, maybe monthly. These are what I call the “dribs and drabs” of our medical payments system, money that is often not worth collecting once the costs of that collection are added-in.
Consider that last bill, $3.99. To get that money someone had to print an invoice, mail it, then pay the costs of processing either a check or a debit payment. The payment forms offer patients the chance to even pay by credit card. So there’s another 2-5% taken off the top, plus the processing fee.
And if the payment isn’t made in time, you have to bill it again. Maybe go to a collection agency.
This is stupid. It’s also an opportunity.
So let me offer a modest proposal, that insurers offer doctors a “petty cash” service through credit card processors. All charges under, say, $20 are passed to the fund and reported to the patient, not billed but reported. At the end of the billing year patients get one bill, which could be rolled into the next year’s premium.
Insurers call your processors.
This is a payment service. It’s pure cash management. All sorts of businesses do this. Banks know all about it. You’re banking debts for a year on behalf of the doctors, saving money for both sides of the transaction.
Here’s where it gets good. You can make so much money off this debt over the course of a year that the insurer can actually offer “points” to patients that might come out in the form of small premiums or discounts.
For the doctors, they save on processing and get back what amounts to a bonus check at the end of the year. Employers whose customers pay on time could even get a discount next year, which they can gleefully report to the employees. Want an incentive for people to use Health Savings Accounts? Here it is.
And for the insurance companies, for the processors, for the banks who are handling this debt and this processing, it’s a gold mine. Billions and billions of dollars that right now cost more to collect than they’re worth, turned into valuable savings and revenue streams, not to mention goodwill.
Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994. See his full profile and disclosure of his industry affiliations.
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| 08/17/09
