Electronic Health Reporter

By Bob Chin, chief information officer, PayMedix.

I’m a confirmed AI optimist and believe the technology will improve healthcare on a broad scale, from diagnosis to drug discovery, precision medicine, robotic surgery, record keeping, analytics, population health, and streamlined claims processing.

But there remains one nut that AI, for all its astonishing promise, hasn’t yet cracked – the growing burden of healthcare costs on the American family. No large language models or artificial neural networks are likely to change that in the near future.

Rather, the nearest-term solution to rising premiums, deductibles, co-pays and out-of-pocket costs is embarrassingly analog. It’s a conceptual change in the payment process. We need to change the business model until technology can do more to lower our collective costs.

The cost of care avoidance

The current model is broken. Most Americans are covered by an employer’s health insurance plan, but it’s not a gift. The employer and employee share the premium.

Unfortunately, family coverage premiums have increased by 22% in the last five years, reaching almost $24,000. When a covered employee seeks treatment, they pay out of pocket up to their deductible and often owe a co-pay. Since 1960, out-of-pocket costs have grown nearly twice as fast as the economy.

If the patient can’t pay at the time of service, which is increasingly common, the household carries a balance and pays interest on that balance indefinitely, absorbing considerable financial stress along the way. Providers become de facto bill collectors, something they did not sign up for when pursuing careers in healthcare. Shamed patients avoid the doctor, risking their health and nudging up longer-term healthcare costs for everyone. More than four in 10 adults (43%) say they or a household member have put off or postponed care due to cost.

Patients, employers, providers, benefits administrators, and insurers … it’s an ecosystem full of friction. There have been proposed solutions that haven’t solved much, like medical credit cards and provider-sponsored payment plans. With their high interest rates, these measures have only made past-due balances grow, compound, and grow some more.

A new, better way

Although not quite a miracle cure, a new solution is emerging: Third-party financial service companies have found a way to re-engineer the financing and payment models to make things better for everyone involved. The new approach protects patients and providers while enhancing the benefits employers yearn to provide.

It’s a guaranteed payment model. Here’s how it works. The patient goes to the doctor and hands the provider an employer-branded credit card. The card triggers the third-party financial service to step in and pay the provider in full for all in-network charges, including deductibles and co-pays, immediately after the patient’s claim is processed. As a result, the provider can avoid taking on the role of lender, billing agent, debt collector, and write-off accountant.

Having covered the patient’s fees, the third party takes on the job of billing and collecting the patient’s out-of-pocket obligations. The patient pays as soon as they can and carries a balance if they must, but at zero interest. Where does the financial services company get the money to cover the out-of-pocket costs up-front at no interest? From the participating providers, who pay a reasonable fee for their improved cash flow and the relief of getting out of the billing and collection game.

For charges not covered by the employer’s health plan but approved as part of this benefit (such as pharmacy, dental, and even vet costs for pets), the employee can arrange to pay these costs back through payroll or bank account deductions.

These innovative financing and payment solutions are packaged as an employee benefit that companies provide along with health insurance to all employees regardless of their credit history. Also, every enrollee has immediate access to credit for those everyday healthcare costs, and is allowed credit up to their maximum out-of-pocket cost for all covered in-network medical services. This is unlike third-party commercial lenders that finance only a fraction of it. For third-party administrators, their employer clients get a cost-neutral solution that improves access to quality care for all employees and lowers plan trend.

Patient relief

For patients, this innovation means no more compounding interest when life gets in the way of prompt payment of medical bills. No more unreasonable deadlines and unbearable stress. Employers who deliver this benefit earn goodwill from their workforce, with lower absenteeism and higher worker productivity and satisfaction. Health coverage becomes a real benefit again.

Because the third party is the lone in-network payer, there’s another bonus: Employees get a single, simple, consolidated monthly statement explaining their benefits (a “super EOB”), which lists all services, charges, and flexible payment options. This refreshing clarity helps reduce the stress that comes with the more than 70 bills, statements, and explanations of benefits (EOBs) that Americans receive every year.

Better outcomes

Finally, because the provider’s payment is guaranteed, patients save face with their provider and are more likely to get the care they need.

Although this business model could be considered clever, the tech side is elementary – import a list of employee participants into a cloud app and redirect the payment flows. It’s a rare 2024 business success story not involving AI.

To be sure, AI is still promising. It may someday crack the harder nut of skyrocketing healthcare costs in an ingenious way. Until then, let’s not forget the other creative ways we can provide much needed relief and assistance to patients and providers in our community.