2024 Guidelines for Better Management of Self-Pay Patients

Effective management of self-pay patients is crucial for revenue cycle health. Healthcare systems and hospitals must adapt and implement effective strategies to navigate the challenges posed by this category of patients.

You can take multiple proactive measures to optimize patients’ self-pay management and help you reach 2024 financial goals for your hospital. 

What is a Self-Pay Patient?

A self-pay patient is an individual who pays for their healthcare expenses out-of-pocket rather than relying on insurance or third-party payers to cover the costs. Self-pay patients are typically uninsured, but this distinction may also apply to those who have insurance but opt to pay for certain services themselves. 

Self-pay patients are responsible for paying the full cost of medical services, treatments or procedures directly to healthcare providers. These charges can include payments for doctor visits, hospital stays, diagnostic tests, medications and other healthcare-related expenses. 

Why Patients Choose or End Up as Self-Pay Patients

In healthcare systems where insurance is prevalent, individuals may have health insurance plans that help cover medical expenses. Some may opt not to use it due to deductible or copayment considerations.

However, some people may not have insurance coverage. In the U.S. 7.7% of people (26.5 million individuals) were uninsured as of 2023. There are many reasons for this, a few of which include:

• When a patient leaves their job for any reason, voluntary or involuntary, they are no longer eligible for employer-sponsored health insurance.
• Contractors or freelancers who run small businesses rather than work for someone else may not have health insurance.
• People who work part-time are generally not eligible for employer benefits like health insurance.
• Any number of unexpected life events. 

Statistic Overview of Self-Pay Patients Over the Years 

There is no defined number of self-pay patients in the U.S. each year. So many different circumstances lead to patients being labeled as self-pay, and as a result, they often end up combined with private insurers in a hospital’s reported payer mix.

However, the number of self-pay patients is generally proportional to the number of uninsured people in America at any given time. The uninsured rate decreased from a record 9.6% low in 2022 to a new record low of 7.7% in 2023. It can be assumed that the number of self-pay patients fell alongside this number as more patients received medical coverage. 

However, as small as this number is, it shows no sign of decreasing to 0%, meaning self-pay patients will remain in a hospital’s payor mix for the foreseeable future. 

Impact of Economic and Healthcare Policy Changes

Between 2005 and 2010, the number of uninsured patients in the U.S. held steady above 40 million. After the Affordable Care Act was enacted in 2010, the number of uninsured nonelderly individuals dropped to fewer than 27 million in 2016. 

During the Trump administration, this number increased again. However, it fell shortly after with the introduction of several pieces of legislation tied to the public health emergency (PHE) spurred by the COVID-19 pandemic. The Families First Coronavirus Response Act (FFCRA) mandated that Medicaid recipients would not be disenrolled from the program for the duration of the PHE.

Once the PHE ended in 2023, states could once again disenroll patients from Medicaid, leading to an increase in uninsured (and likely self-pay) patients. It remains to be seen how large this increase will be as redetermination is set to continue through the end of July 2024.

All of this occurred in less than 15 years, indicating how in flux the American uninsured population is. While hospitals can’t predict the number of self-pay patients that walk through hospital doors each year, they can still anticipate their arrival and set up robust self-pay management systems in advance.

How to Better Manage Self-Pay Patients

It’s worth taking time to audit existing self-pay management strategies. Even if the process is external, via a vendor, internal teams can take steps to improve conversion rates of self-pay accounts for a healthier revenue cycle. 

1. Create a Written Self-Pay Payment Policy

Establishing a formal and documented payment policy is the first step in recovering outstanding balances from self-pay patients. This policy should clearly state that the patient is primarily responsible for covering the cost of service (or, in the case of dependents, their guardian or caregiver). 

The policy should also communicate the following points:

• The patient is responsible for settling bills
• Insured patients are accountable for unpaid amounts up to the total bill amount
• Payment is expected on the day of service unless other arrangements are made, documented and signed by both the provider and patient. 
• Accepted payment types and preferences

Staff should communicate this payment policy when the appointment is scheduled then send a written copy to the patient prior to the appointment. Front desk staff can keep copies on hand and explain the payment policy at check-in. Before the appointment, the patient should sign the policy online or on paper.

2. Determine Financial Responsibility Early

Collection issues often happen when financial responsibility is not anticipated or clarified up front. The more time lapses between a patient receiving care and a bill, the less likely they are to pay. 

Take a proactive role and determine existing coverage and anticipated payment ahead of time. Communicate this information to patients in a good faith estimate to initiate payment discussions as quickly as possible. 

3. Identify Insured Self-Pay Patients & Uninsured Self-Pay Patients

The first step in increasing your efficiency with self-pay patients is to identify just who these self-pay patients are. This is a fairly basic concept, but many accounts end up in the metaphorical patient registration abyss as staff work to determine if they have insurance, what insurance they have, etc. Sometimes, patients are tagged as self-pay but do have insurance; sometimes, patients have insurance but are labeled as self-pay.

Revamp your registration process to better identify coverage sooner rather than later. Establish a process to verify that self-pay patient accounts truly do not have any type of insurance before they reach Patient Financial Services.

4. Do a Thorough Check On Patient's History

If a patient has previously been approved for financial assistance within your organization, you may not need to re-enroll or re-screen for eligibility.

Many hospitals state that financial assistance approvals are good for a certain amount of time, usually 90 days, six months or one year. This will save you valuable time and effort. You may still have to update some key information to validate that they’re in the same circumstances as when they were approved, but this is still much easier than completely re-screening.

To make this self-pay patient guideline as simple as possible, ensure you have a system for tracking financial assistance approval for individuals and families that all relevant personnel can access. Consider creating an audit process wherein staff checks previous approvals on all accounts with a high balance because of co-pay or high deductible plans. 

5. Enhance Your Insurance Coverage Discovery Efforts

When it comes to revenue recovery strategies, insurance discovery is a provider’s first line of defense. With one exhaustive check, a hospital can determine potential sources of existing coverage across multiple payers and convert self-pay accounts into revenue. 

Technology solutions use best practice search methods, algorithms and machine learning to search historical data, public databases and private data sources usually proprietary to the software creator. Results include primary, secondary and tertiary sources of coverage from both government and commercial payers.

If your external vendor or existing solution is underperforming, it’s always a good time to reevaluate and seek out potential new options. 

6. Create a Healthy Relationship With Self-Pay Patient Population

In a hospital setting, there is generally a relationship, whether positive or negative, between a patient and provider due to care. A patient interacts regularly with the doctors and nurses assigned to their case, and the longer the hospital visit, the better chance of a positive rapport.

However, there is not usually a relationship between that same patient and the financial services department. Even though the department’s job is to help the patient, patients usually blur the line between financial services and collections or billing. Patient financial services exist as a resource to help patients, but the department is constantly combating distrust and lack of direct contact with the patient to establish any relationship.

Work to identify and implement measures to proactively establish a relationship with your patient population as a whole. If this task seems Herculean, start with just the self-pay patients. How can you improve outreach and engagement for a more positive relationship and a better chance of enrolling the patient in a financial assistance program?

7. Educate Self-Pay Patients

The world of health insurance coverage is complicated. There are plenty of opportunities to educate self-pay patients and help them navigate their medical bills while increasing their cooperation, trust and satisfaction. Providers can provide educational resources on topics like:

• Understanding medical bills
• Payment options
• Payment plans
• Applying for financial assistance
• Patient rights

Many hospitals are taking this further and hiring part-time or full-time patient advocates to advise and assist patients directly. These advocates have a basic knowledge of available assistance programs, eligibility guidelines, benefit schedules and other areas where patients need the most guidance. 

8. Ensure Clear Communication with Self-Pay Patients

If patients acquire a balance, send clear payment reminders in different forms. Try emails, texts and physical letters. Provide an online portal where patients can check their balance, view itemized bills and pay. Send personalized messages for confirmations, reminders and thank-yous.

If a payment is missed, train staff to call the patient and work out a new schedule with patience at the forefront of the conversation. The more transparent your communication from start to finish, the more likely a patient will understand their options and settle the account. 

9. Flexible Payment Plans Go a Long Way

If a patient has no coverage options and ends up with a balance on their account, they may qualify for a payment plan. While hospitals can predetermine qualifying balances, monthly payment amounts and the length of plans in advance, staff must remember every patient’s situation is different. 

Hospitals should establish payment plan policies up front but leave space for flexibility. Depending on the patient’s financial situation, the hospital may need to offer a discount or incentive in addition to the plan. Flexibility helps ensure payments are made in the long run rather than sending the account to collections or writing off the balance. 

10. Regularly Review Self-Pay Patient Performance

Establishing and tracking relevant KPIs allows your team to set benchmarks, gather feedback and audit system performance. Self-pay management KPIs may include:

• Patient satisfaction
• Collection ratio
• Days in A/R
• Amount of bad debt
• Self-pay revenue

Knowing the numbers helps justify enhancements, find room for improvements and measure progress.

Leveraging Technology in Self-Pay Patient Management

Hospitals can reduce uncompensated care with the help of Office Ally. Our team is pleased to offer a suite of cutting-edge revenue recovery solutions designed for expert self-pay management without the need for an outside vendor. Tools include:

• MAPS: MAPS system helps hospitals convert their self-pay patient population into revenue-generating assistance programs. It accurately and efficiently assesses the uninsured or underinsured, properly qualifies them for appropriate assistance programs and provides complete enrollment support in a single cost-effective software platform. 

• MAPS-clear: The MAPS-clear Patient Portal is designed to keep your organization on the cutting edge of patient outreach and engagement via enhanced electronic capabilities organized into one simple, user-friendly web portal. This full-service portal allows for secure messaging between patients and hospital personnel. 

• Insurance Discovery: Increase revenue by identifying billable insurance on self-pay patients on their date of service. We offer a no-risk insurance discovery assessment with no upfront cost and no fees unless our solution recovers revenue. Click here to contact the Office Ally team and set up your free Insurance Discovery assessment.

Integrate with EHR & Practice Management Tools

These tools are designed to integrate with existing files and systems present in your organization. MAPS is configurable and adaptable to meet specific organizational needs. The MAPS-clear patient portal can be branded with the hospital’s name and logo to enhance the patient experience.

These solutions enhance your team’s experience without disruption. By harnessing the right technology, Office Ally’s software products reduce staff stress, increase recovered revenue and improve patient satisfaction. 

Empower your staff with easy-to-use Revenue Recovery tools. Click here to learn more about the all-in-one MAPS screening and enrollment platform, MAPS-clear patient portal and industry-leading Insurance Discovery software.