With patient collections at 31%, is AI providers' new strategy?

How do systems plan to address patient collections?

Revenue cycle leaders are shifting their focus to patient billing and collections, aiming to capture more revenue.

Nearly half of the survey respondents said their top patient balance priority over the next year is increasing new collections, while about 41% want to reduce bad debt and 36% decrease days in A/R.

However, more revenue cycle leaders are also prioritizing the patient financial experience. Approximately 41% of respondents said enhancing the experience is top of mind this year, versus just 18% in last year's survey.

Patients aren't happy with how they pay for healthcare. A survey released by health IT developer RevSpring earlier this month found that 39% of patients are frustrated with understanding the cost of care, and just as many feel confused about their healthcare insurance coverage or denials.

Without a clear understanding of benefits and costs, about a fifth of patients said they don't seek care if it's too expensive.

Increasingly, the patient financial experience is also linked to loyalty -- a major concern for systems right now as they seek to retain and generate revenue amid strong financial headwinds and a growing self-pay patient population.

Revenue cycle leaders are also looking to address another building concern: Medicaid changes.

Driven by H.R. 1, also known as the One Big Beautiful Bill Act, key Medicaid changes include national work requirements for adults in states that expand the program, stricter eligibility rules for immigrants and more frequent redeterminations. The law also effectively ends automatic enrollment for many beneficiaries.

Over 10 million people could lose Medicaid coverage over the next decade under the law, leading to higher uncompensated care and more self-pay patients for health systems.

Nearly 30% of leaders responding to the PayZen survey said improving Medicaid eligibility screening is a top patient balance priority over the next year. About two-thirds of leaders want to shift these checks and financial screening to scheduling, yet only 21% do that today.

Most systems still screen for Medicaid eligibility later in the financial experience, such as at the visit itself. However, just under 4% of leaders believe in-visit screening should remain the standard.

Operational misalignment with patient financial experience

Medicaid eligibility screenings aren't the only area where strategy and priority are misaligned. The survey also found significant operational disconnects in how systems are collecting money from patients.

For one, in-house payment plan options are falling short of patient needs. The survey cited previous survey data showing that patients can afford only about $82 a month for medical bills. However, the latest data shows that six in ten hospitals cap in-house payment plans at 24 months or less.

Patients paying just $82 a month would need over five years to pay off a $5,000 hospital bill, researchers reported.

What’s more, about 16% of systems with less than $1 billion in net patient revenue do not offer in-house payment plans at all. And fewer than half of all health systems use a third-party financing vendor to bolster their payment plan options.

Health systems have also reinforced their pre-service collection strategies, with nearly 92% of organizations now encouraging payment, requiring payment or collecting a payment method on file during the estimate process. Last year, about 81% of organizations did this.

However, pre-service collection performance continues to lag at an average of about 21% of total collections.

Systems may be prioritizing affordable care access for patients, with most of those that require payment before care still proceeding with the visit, even if patients don't pay. But it is a delicate balance between collecting revenue owed and ensuring access to care, especially amid significant health policy shifts, the survey noted.

Revenue cycle AI steps in to help

No revenue cycle management strategy is seemingly complete without AI, and patient collections is no different. The survey found that revenue cycle leaders are increasingly leveraging AI tools to improve patient financial experience and revenue capture.

Revenue cycle AI adoption remains largely in the denials and appeals space, with about 45% of leaders reporting using AI for denials-related workflows. Smaller systems, especially, focus their AI investments in this area, with many also using AI for coding support, clinical documentation improvement and analytics and predictive modeling.

However, systems with over $5 billion have cast a wider net. About 20% of leaders in these organizations say they use AI for prior authorizations, 20% for patient access and scheduling and 20% for financial assistance and eligibility workflows.

Smaller health systems have yet to demonstrate this more distributed set of use cases, particularly when it comes to patient financial experience and collections. However, the survey underscores the need for a shift in strategy.

"Healthcare organizations are evolving quickly, but many revenue leaders still lack the resources -- both people and budget -- to evaluate the data and tools required to make confident decisions around AI, patient financing, and revenue cycle performance," Tobias Mezger, CRO of PayZen, said in a statement.

Revenue cycle leaders will need to drive transparency, consistency and personalization across the patient financial experience and do it at scale in this next phase, he stated.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016