InstaMed Blog

The latest trends in the healthcare industry — the rise in consumerism, increase of costs and new regulatory mandates — are driving change in the healthcare payments process. As health insurance premiums continue to grow, employers are switching to lower cost, high-deductible plans, resulting in an overall decrease in payer payments and, consequently, an increase in patient payments. As a percentage of provider revenue, in 2009, payer payments represented 79% of the allowed amount, while patient payments represented 21%. In 2011, payer payments represented 74% of the allowed amount, while patient payments represented 26%.

However, while providers rely on patients for an increasing portion of their revenue, they face challenges with collecting, as providers wrote off an estimated $65 billion in patient bad debt in 2010 (McKinsey Quarterly, 2010). In order to collect more from patients and reduce administrative costs, providers need to offer more convenient, consumer-friendly payment options. To meet this need, providers are offering electronic payment options, such as online payments and payment plans. These payment options are quickly becoming more prevalent for patient payments as, since 2009, the number of payments made via payment plans has doubled, and online payments have tripled.

Industry changes are affecting payers, too, as healthcare reform is driving payers to improve efficiency. Today, payers face problems with the administrative costs of disbursing payments, as this paper-intensive process contributes to inefficiencies and costs of over $300 billion each year. To reduce administrative costs and meet regulatory mandates, payers are implementing more efficient payment delivery methods. One such method is ERA/EFT, which combines both the payment and the healthcare payment information to enable auto posting and reconciliation.

A newly released report on healthcare payments presents the latest market trends impacting the industry in order to promote awareness, change and greater efficiency for all constituents involved in the healthcare payments process. The report showcases quantitative data based on over $30 billion in healthcare payments processed on the InstaMed Network, as well as qualitative data obtained from healthcare providers, payers and patients nationwide.

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