Injecting innovation: time to rehabilitate U.S. health care payments

This photo shows a traditional health care payments in actionFrom next-generation sequencing to immunotherapy, the U.S. is a global leader in medical innovation — yet when it comes to health care payments, perhaps it’s time someone called a doctor.

According to InstaMed’s Ninth Annual Trends in Healthcare Payments report, a staggering 90% of providers continue to bill service users with paper-based systems, and 77% say they often wait more than a month to receive payment for the vital treatments they provide.

On top of this, the sector’s traditional approach to billing not only saps time and resources, but also affects the end cost of health care.

To put things into perspective, health care administration costs around $2,500 per person in America, compared to just $550 in neighboring Canada.

But it doesn’t need to be this way. Just as technology is delivering better outcomes for patients, so it can for providers. The benefits are not only reduced overhead, but the potential to create more competitive, personalized health care propositions for patients.

An alternative approach to health care payments

How would modern payments solutions change the experience of health care providers and patients? Well, the sector could look to the world of fintech, where technology and data are combining to offer an unrivalled customer experience — along with faster, more secure transactions.

Patients are also consumers, and they’re becoming less reliant on paying for goods and services with cash and checks, thanks to cards and digital wallets from the likes of Google Pay, Apple Pay, and others.

As a result of COVID-19, consumer adoption of digital payments is also accelerating.

Indeed, while many patients may have paid with cash or check for treatment before the pandemic, the switch to physically distanced video consultations with clinicians has shown many people the benefits of online health care options, including for payments.

Paying hospitals and clinics with a virtual card

Virtual cards deliver a number of attractive advantages over both traditional methods and Electronic Funds Transfers (EFTs), including the 45-year-old Automatic Clearing House (ACH) system. Sadly, while an improvement on paper, EFTs haven’t quite become embedded in the way lawmakers hoped when they drafted the 2010 Affordable Care Act (ACA).

Compared to ACH, virtual cards are simple, flexible, and fast. Like physical checks or debit card transactions, virtual card payments are processed almost instantaneously through secure digital networks, and there’s no need for laborious implementation from the health care provider.

They can be more difficult to copy than physical cards because there’s no magnetic strip or chip to clone, and they can be customized with dynamic spend controls to further ensure payments will reach the intended recipient.

As for lightening the administrative cost burden, metadata attached to each virtual card transaction allows providers to match health care payments with remittance advice, issue bills, and quickly calculate outstanding balances.

Paper-based and legacy systems continue to dominate, but thanks to COVID-driven necessity and changing consumer trends, it may be only a matter of time before digital health care payments become the primary method of transferring funds for treatment.

Read our article: Rethinking health care payments: the role of virtual cards