InstaMed Blog

Refunds in healthcare are hard to eliminate completely. With the increase in patient payment responsibility due to the growth of high deductible health plans, providers are collecting more from patients than ever before. New technologies and better awareness about patient responsibility have helped providers improve the ways they collect. However, the complexities that are inherent in healthcare payments make it difficult to determine the exact amount a patient will owe, which can result in over-payment. Some of the most common reasons for over-payment include:

  • The patient’s benefit information was not up-to-date when it was originally captured
  • Staff collected too much upfront based on an estimate
  • A patient’s coverage changed in the time between the healthcare encounter and the billing process
  • There was an error in the billing process
  • The patient over-paid by mistake

When over-payment occurs in healthcare, providers find themselves in the business of issuing refunds. How a provider handles the refund process will influence the patient’s overall impression of their healthcare experience. We talk a lot about what providers need to do to deliver a consumer-friendly healthcare payments experience to patients, including setting clear expectations upfront, offering new, digital payment options and eliminating as much paper as possible. Providers should consider the refund process a key component of the consumer healthcare payment experience as well, and strive to deliver simplicity and convenience for their patients.

The Problem With Refunds in Healthcare

There are two common experiences associated with refunds in healthcare. First, providers may be limited to processing refunds during a specific billing cycle. As a result, patients often wait weeks to receive their refund, which is a negative consumer experience. Second, refunds are frequently issued by check, regardless of how the patient originally made a payment. We know that most patients do not like to use checks to pay their healthcare bills. According to the Sixth Annual Trends in Healthcare Payments Report, only 24% of consumers actually want to use checks to make healthcare payments. If that’s the case, it is likely that they would also prefer not to receive refunds in the form of a paper check.

Consider the refund experience you have in other industries. When you purchase something online and return it, you don’t wait weeks for the refund to show up in their mailbox in the form of a paper check. Instead, you expect the refund to go back onto your card or deposited back into your bank account. In healthcare, a slow and paper-based refund process only hurts the consumer experience.

Refund checks can have a negative effect on the provider as well. In a world that is moving further away from paper, a refund check is just another paper payment that involves print and mail costs, as well as the administrative cost of staff manually posting and reconciling that paper-based refund.

Don’t hurt the consumer healthcare payment experience or incur unnecessary costs by issuing refund checks. Here are three best practices for refunds in healthcare payments.

  1. Go Electronic
    Unless a patient specifically asks for a check, there is no reason every refund can’t be issued electronically. Your staff should be able to issue refunds electronically, even if the patient originally paid by check. In fact, you can create a positive experience by having staff reach out to patients who did pay by check and explain to them that they can receive their refund much faster if they receive it by an electronic payment method. This gives the patient a positive impression of your healthcare organization. You benefit because this is an opportunity to capture a payment method on file that may not have been previously stored. The most efficient way for staff to issue a refund is the “one-click” method. Within your source system, staff should be able to access the patient’s payment receipt and in one click, issue payment back onto the original payment method.
  2. Easily View and Reconcile Refunds
    To ensure the refund process is simple and convenient for everyone, you should have clear visibility into refunds just as you do into payments collected. Receipts for refunds should be accessible to both staff and patients through a simple search. Refunds also shouldn’t have to disrupt the workflow of staff by introducing a manual step into their process; refunds should post back into your source system in real-time, so no one has to go through the manual work of making sure the balance is correct.
  3. Put Controls in Place
    A good way to establish controls over refunds at your organization is to limit the ability to offer refunds to just a few staff members. You should be able to easily manage users within your system to assign refund rights to the staff member(s) who will be responsible for handling refunds. You should also be able to set up a control that prevents over-refunds. An over-refund is when a patient is refunded more than what they over-paid in the first place. When this occurs, your organization has to go through the process of collecting the over-refund, which is a negative consumer experience and a waste of time and effort for staff.

In many cases, quick, easy refunds are an expected part of the healthcare payment experience. Therefore, the above best practices will come in handy if your organization is reconsidering the way you approach refunds. However, there are also ways that you can avoid refunds in the first place:

Estimate Patient Responsibility
You can use an estimator tool to create an estimate of a patient’s payment responsibility before or during the point of service. Put in place a policy where your staff collect a portion of the payment upfront and then collect the rest of the patient responsibility after the claim has been adjudicated. For patients with larger balances, set up a payment plan to collect the balance over time. This prevents over-collecting, as your staff can track payments along the way. It also ensures the healthcare organization gets paid because patient expectations have been set and a payment method has been stored on file to collect the estimated responsibility or recurring balance.

Check Patient Eligibility in Real-Time
Make sure your patients’ benefit information is up-to-date in your system before you move forward with the billing process. Check patient eligibility before their visit and in the office the day of their healthcare encounter to ensure you have the most current information possible. Using out-of-date benefit information can lead to over-payment and billing errors.

Give Patients Self-Service Payment Tools
When you put payment in the hands of your patients, they are more likely to pay close attention to how much they owe and for what. Give them payment options that allow them to make payments the same way they already pay other bills; this creates a convenient experience but also helps patients associate their healthcare bills with their other monthly bills that they always pay on time and in full. When patients have control over their healthcare payment experience, they are less likely to make payment errors and more likely to keep track of what they owe and when.

Learn more about refunds in healthcare payments. Attend our upcoming Tips & Tricks webinar and have an InstaMed product expert guide you through the process. Click here to register.

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The views expressed within posted comments do not necessarily reflect the views or opinions of InstaMed.

  1. Having an optimized refund system sounds really good to me. If I need the refund of a Medical billing service, I would want to make sure that it did exactly that. I know that system can be really complicated, so having something that streamlines the system, like you said, could be indispensable.

    • Thanks, Kelly – we agree! A streamlined refund process is crucial for a simplified and positive healthcare payments experience.

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