Payments Modernization in Healthcare: An Expert Conversation

In our inaugural Treasury Services Expert Conversation, we focused on the implications of payments modernization for the healthcare sector. Our panel of experts included Ellen Hecker, Managing Director, Treasury Services Healthcare Sales; Valerie Rodgers, Healthcare Product Manager; and Carl Slabicki, Product Line Manager, Immediate Payments.

What are the underlying business and end user needs driving healthcare payments innovation?

Rodgers: Healthcare providers and insurance companies are challenged to collect timely payments, react to pressures on cost reductions, respond to increased security requirements, and enhance overall efficiencies in the revenue cycle. With increased consumerization and patients being more financially responsible for their care, the need to offer flexible payment options is driving innovations in the payment space.

From the patient perspective, the increases in digital payments within a short period of time, as well as Fintech organizations crossing into the payment space, have altered payment experience expectations. Because of these changing expectations, it is important for healthcare organizations to stay up to date and provide payment solutions that are user-friendly, intuitive, and customized to patient's needs.

Slabicki: Healthcare sees a large volume of transactions and interactions between individuals, small businesses, and providers. There is a lot of friction around exception handling, and identifying and reconciling payments. That results in a high touch rate in terms of customer service calls and interactions. It ultimately leads to a poor experience for the patient and the provider and creates a lot of frustration.

New payments technologies provide tools to enhance the experience of patient visits, reconciliation, paying bills, and issuing refunds. With Real-Time Payments and Directory Services, a provider, hospital, or insurance company can close an item out and provide instant payment to the end customer so that they don't have to wait on a payment, or apply a payment to a receivables platform within an ERP system, all instantly.

It is not just how fast the payment settles. It is how businesses are interacting with each other, and how consumers are interacting with businesses. That changes the whole service model within the industry.

What are some of the barriers to adoption and how do we overcome them?

Hecker: I moderated a panel at the 2017 Association for Financial Professionals where panelists noted the challenge of reconciling innovation with the downside of abandoning existing business models. They also cited the significant investment needed to protect sensitive data, and reengineer processes and procedures to collect cellphone numbers or email addresses.

We heard similar concerns during a recent forum we hosted for healthcare insurance companies. While some organizations do have a desire to jump right in, it may be more likely to see slower adoption with a wait-and-see approach.

However, it is clear that the healthcare industry is gearing up to benefit from new payment technologies. We at BNY Mellon will continue to collaborate with our clients and bring the industry expertise and education needed to adopt new technologies that ultimately can enable them to stay competitive, solve complex business problems, and achieve their goals.

Slabicki: Keep in mind, there is no single ultimate payment type. No one is using 100 percent next-day ACH, same-day ACH, Real-Time Payments, or Tokenized Payments. We provide a series of tools enabling clients to choose, per use case, which is the most cost effective, and provides the best experience to the customer, whether that be speed, finality or the information they already have to make or collect that payment.

The most effective solution is to offer multiple payment types with one integration point. For example, a client utilizing our Unified Payments API can pick multiple payment channels within the same API. From a technology perspective, they have one connectivity point with us, they can populate that with many different types of information, and we can choose the most efficient channel.

What are specific use cases and the benefits?

Hecker: We are seeing a great deal of innovation in the flow of funds between consumers and businesses. By using Real-Time Payments for medical expenses such as co-pays or insurance premium payments, providers and payers can benefit by having finality of payment, reduced levels of bad debt, and a reduced need to cancel policies due to late or nonpayment. Patients and insurance members also benefit by the convenience and finality of payment.

Tokenized Payments satisfy a need for the growing volume of patient and member refunds and rebates, as well as wellness payments. They offer an opportunity to migrate paper to electronics, reducing transaction costs without a need to store consumer bank information while including an explanation of the payment.

One potential application is a completely new claim payment option for healthcare insurance companies to pay providers without having to enroll them in ACH, send costly checks, or maintain bank account information. As Directory Services begins entering the business to small business payment space, we are queuing up a pilot to work through the process. We are excited to be on the verge of something cutting edge in the healthcare market, and that's just by focusing on what our client challenges are, leveraging technology partners and our thought leadership to develop new payment use cases that are not necessarily being focused on by competitors.

Rodgers: Billing and collection experiences must be brought in line with what patients experience whenever they are receiving care. Doctors spend so much time building trust with their patients, but the billing and collection experience is very disjointed. New technologies can bridge that gap between the clinical setting and the payment and collection setting.

Slabicki: In the last couple of months with Real-Time Payments and the launch of our business to consumer Directory Services solution for disbursements, we have reached a turning point. These new products and payment technologies are now live. The healthcare companies that are using them are gaining a competitive edge, so it is no longer something that they can just put off.

To learn more about BNY Mellon Treasury Services healthcare sector solutions, please visit our website. Members of the media, contact Chris Fox (christopher.fox@bnymellon.com).