Healthcare News & Insights

Pros and cons of payors’ payment methods

Payors are changing how they distribute payments so there are more options for your facility to pick from. But not every method will have the same benefits. 

99958439As the healthcare industry continues to digitize, payors are looking for new technology to increase the efficiency and flexibility of their payment options, according to Healthcare Payer News.

But newer may not necessarily mean better.

That’s why it’s important that hospital leaders find the best options to streamline their facility’s payment processing and posting if they want to keep their operations running at peak efficiency.

Here are the benefits and barriers behind different reimbursement methods being used now:

Old-fashioned checks

The most common form of payment in health care is paper checks.

Pros: The biggest advantage of using paper checks is their simplicity. There aren’t any confusing enrollment requirements and you don’t have to give out as much financial information as you would for other payment options. All you need is a bank account for depositing the check.

Cons: Processing paper checks can be time-consuming and inefficient. There’s also a greater risk of fraud since people could intercept a check and alter information in their favor.

It’s best to go the paper check route if you feel confident in your staff’s capability for manual processing.

But it also may be beneficial to limit using this option for payors that only make occasional or small payments to reduce fraud risks.

Standard automated clearing houses

Automated clearing houses (ACH) are currently the standard for electronic payments.

Pros: ACH payments generally are more efficient and less expensive than paper checks. Plus, after setting up ACH payments, hospitals don’t have much manual processing to worry about — they can just let the system take over.

Cons: One downside to this option is the IT cost of setting up ACH payments. Depending on your accounts receivable system, you may also have to deal with the cost of testing out ACH payments before you fully automate payment posting. Some providers are hesitant about giving out sensitive bank information to a litany of payors in order to use ACH payments.

Taking this into account, it may be best to limit ACH payments for the payors your hospital frequently works with, rather than using ACH for every carrier.

New virtual card payments

Virtual card (VC) payments are the newest payment innovation coming to health care, and are quickly replacing paper checks for some hospitals. VC payments function the same way other card payments do. An explanation of payments is mailed with the card payment information that providers then enter into online terminals to complete deposits and post the information.

Pros: Providers don’t have any special enrollment requirements to use VC payments like they do with ACH payments. And since VC payments use the same infrastructure as other card payments, there’s greater fraud detection and prevention programs in place to protect your reimbursement.

Cons: Unfortunately, like other card payments, providers are charged a fee for using VC payments. There’s also some lingering apprehension and confusion about using this option since it is so new.

Overall, provider will likely achieve the best results using different options for certain payors.

In the future, there may be technology that condenses the payment-remittance process.

But for now it’s important that leaders take a close look at their facility’s operations, the size and capability of its IT and accounts payable staff, and the frequency of business with different payors to determine which combination of payment options work best.

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