The problem with health care billing: A Q&A with Seth Cohen

Something that is constantly talked about in this industry is the price of health care. Many people can’t afford to pay their health care bills, and in return, they avoid care all together. Billing seems to be the problem.

Seth Cohen, president of Cedar, believes that health care billing is not just a provider problem and coordination between payers and providers is the only way to fix healthcare billing.

What are the biggest challenges for patients in managing their medical bill payments?

The financial burden placed on patients today is higher than it has ever been, and Americans are increasingly struggling to cover their bills and delaying care due to cost. The U.S. health care system drives more consumers to bankruptcy than any other sector. At the same time, even when patients can pay their bills, the process is broken and confusing. During a single health care visit — an annual checkup, a specialty consultation, or a major surgery — a typical patient has multiple, disconnected interactions with their provider and insurer about their financial responsibility. This lack of alignment leads to frustration and confusion for consumers, resulting in missed payments, overspending, administrative waste and money left on the table; not only do U.S. consumers spend 12 million hours a week on the phone with health insurers, but more than one-third of consumers have been sent to debt collection.

How do these hurdles cause problems for health care providers and insurers? And what are the challenges for both these parties in making the billing experience easier?

For leaders in this space, these problems are not new. However, to date, these challenges have been framed as a provider problem — when in fact, it is a system problem.

Think about unpaid bills, unhappy patients, expensive revenue cycle and collections processes. These problems are typically associated with provider billing, but insurers face similar challenges, in that their members experience systemic friction that causes confusion and distracts from the true mission of health care. From my time at OODA Health, we realized that billing was actually the single biggest detractor from health plan NPS scores.

By failing to address the systemic nature of the patient billing problem, the issues compound. When a provider writes off bad debt as a result of unpaid patient bills, the payer is forced to absorb higher rate increases. When a patient has a bad billing experience, the payer is typically implicated for poor coverage. And the cycle continues.

A recent study from AKASA found that the majority of people have never disputed or challenged a medical bill. But, EOBs issued by payers often don’t match provider bills — meaning that many people are paying for services they never received or being charged for services that should have been covered by their insurance. How can payers and providers work together to make the health care financial experience smoother for consumers?

I’ve spent my career in the health care industry, and I still often find myself confused by my own medical bills. Even the most well-crafted bill can be confusing and frustrating to patients if the bill does not match the EOB from the payer — in our research, we found that this happens 30% of the time, which is quite staggering. Can you imagine what would happen if your restaurant bill didn’t match the menu prices? When consumers cannot reconcile information from their payer and provider, the easiest response is to disengage.

Interestingly enough, according to a survey from SPH Analytics, more than 90% of payers and providers believe that collaboration is a key determinant of success. The good news is that there are many opportunities for collaboration when consumers have easy access to all the information they need to pay for health care, both providers and payers see results,

When consumers can see their provider bill and EOB information in the same place, they can confidently pay their bills, knowing that the balance is accurate — which also reduces the need to call customer service, reducing administrative burden. When consumers are budgeting for care, integration of real-time HSA, FSA and HRA balances can inform them of available funds and simple payments from these accounts to ensure they never miss an opportunity to save on costs — which reduces bad debt.

Ultimately, by prioritizing the needs and interests of consumers, both providers and payers see results, and build stronger brands by making consumer experience a competitive advantage, improving customer loyalty, and retention, and lifetime value.

During a time when the health care industry is experiencing financial strain, why is now the time to invest in technology to improve the consumer financial experience?

The quality of the billing experience is one of the top drivers of consumer loyalty, and achieving such high standards is more important than ever. Think about every other consumer industry — travel, banking, retail, transportation — they’ve all been revolutionized by technology. That’s why consumers are not only comparing their experiences within health care, but against all other experiences they have as a consumer, with 70% rating customer service as more important than bedside manner. That’s why upfront investments that digitize the patient journey, like coordination between insurers and providers, care preparation and administrative intake, is one of the most effective ways to improve financial outcomes.

Give us a reality check. What kind of progress can we realistically expect in the health care industry in the next 1-2 years?

Now that the federal COVID-19 national emergency is officially over, millions of Americans are set to lose their Medicaid coverage. While many will be able to transition to other kinds of coverage, health officials estimate nearly 7 million people will ultimately lose coverage due to administrative barriers.

What we hear over and over again from patients is that they don’t delay payment because they don’t want to pay their bill – rather, they lack the clarity, transparency, and connection to financial aid options to come to resolve their bills on their own.

Related: Patients are getting blindsided by ‘facility fees,’ and states are taking action

Mass dis-enrollment of Medicaid only further highlights the need (and opportunity) to make financial assistance programs of all kinds — whether that be Medicaid, charity care, payment plans, etc. — more understandable and accessible to patients. In the next few years, we’ll see payers and providers leveraging technology to make it easier to surface these options for patients.