On this week’s episode Blake Walker and Jeff Hillam break down what “deductible season” means and share some of the financial challenges physicians face at the start of a new year.

Blake Walker: I’m Blake Walker. I am the CEO and co-founder of a company called Inbox Health. We build technology that helps providers better communicate and collect balances for patients, and better manage patient support as patients have questions about those balances.

I’ve been working in this field related to patient payments for 15 years. Pretty much my whole career has been dedicated to it, so I’m pretty excited to be talking about deductible resets and what our good friend and longtime client Jeff Hillam has coined “deductible season.” Jeff, do you want to introduce yourself as well?

Jeff Hillam: Absolutely. I am the CEO and a co-founder of Red House Medical Billing. As it says in the name, we are an RCM company and we focus on a lot of automation work, RPA, AI integrations, payer and patient relationships, and technology integrations.

We have been collaborating with Inbox Health on this part of the revenue cycle probably for six or seven years. It’s been quite a while. It’s definitely pre-pandemic, and nobody can remember how time works before the pandemic, so I’m going to stick with six years. But you’re right, it was a number of years ago that I started using the phrase “deductible season” to talk about this.

Walker: Yeah, I asked you before this, where did that term come from? You only see it on Inbox Health’s blog, and I feel like you just came up with the term years ago at some point.

Hillam: That is totally accurate. I invented that term as a way to have some verbiage around the season, a way to talk about and define it so that we can help our practices and facilities address it. In the absence of good verbiage, it was hard to talk about.

When we do talk about it with our providers, with our facilities, it’s always a conversation about what their cashflow is going to look like, mostly between January and March. That’s because when deductible reset happens in January with all the patient healthcare plans, it has an immediate impact on the way the cashflow operations work with these doctors and with these bigger facilities.

Walker: I always think about it as, what is my payer mix from January through April? It’s different than what it is for the rest of the year.

You have your commercial payers and government payers, and that mix might be relatively consistent, but your government payers are going to be proportionately more significant January through March because their deductibles are not as meaningful. But if you think about patients as one of your payers in the first quarter, and to some degree, in the second quarter, the patient as a payer is your top payer, if not second or at worst third if you’re talking Medicaid, right?

Hillam: Yes. That is a really interesting mix. We’re talking to such a broad audience today, and it’s very specialty-specific, but in some specialties—especially an urgent care or an emergency department, somewhere like that where the patients are less consistent—you could see them having up to 20% or 30% of their revenue in those first 8 to 12 weeks of the year coming from their patients.

And, Blake, if you look at it as though the patients were a payer, that is a massively complex payer to be dealing with because you’re chasing hundreds of individual bills rather than all claims going through one channel. It is both complicated and impactful to live through and hopefully prepare for, if you’re thinking about it with enough time.

Walker: That’s why we want to talk about it. I think people don’t prepare as much as you might think you would when you’re thinking about a massive shift in your payer mix going from Q4 into Q1. Q4 is preparation time.

This has changed dramatically over 20 years. A lot of the change has happened over the last 10 years. But before that, go back to 2004, and deductibles weren’t a big factor. The average patient deductible was $300 or so at that time. By 2014, there was a massive jump, a 250% increase in the average patient deductible over that 10-year span.

The shift started happening and that’s when we started the company. We started to see a real need for providers to be thinking more about how they billed patients, how they communicated with patients about balances, and how they talked about it at the front desk. It’s only accelerated from there.

At this point, patients owe thousands of dollars out of pocket before they have coverage if they’re on commercial insurance. A lot of people are on high-deductible healthcare plans; 50% of people who have employer-provided insurance have high-deductible health plans at this point. It’s a massive need for providers to be thinking about that and thinking about what it does to their business, every March especially.

Hillam: That’s a very salient point, and I think even more is the idea that with all these changes decade over decade, challenges have mounted for physician’s offices, hospitals, any kind of clinic, anywhere, in any healthcare service delivery area.

As a doctor, you grow up in the industry, focused on the healthcare delivery, your bedside manner, and how to make patients comfortable. Increasingly, there is this parallel relationship that the office and doctor have to manage: that’s the financial relationship between the patient and the practice, alongside that bedside manner.

That shows up somewhat statistically in Google reviews on doctor’s offices, where they’ll sit there and say, “Oh, Dr. X is so nice,” and then later they’ll say, “This front desk is totally scammy. They’re just here for a buck.” You can see the complexity of high-deductible plans. You see that all pile on.

One of the challenges that they face as these changes have come is that they happen slowly. And so physicians and hospitals are not watching the fact that people get comfortable throughout the year. They’re not updating these insurance plans. They’re not ready for the fact that every single patient that walks in their door might have a different insurance plan today than they had last week. They’re not sitting there, wondering to themselves, which plan or payer is this patient coming on with and what does that mean for how much I will be collecting from this patient?

The amount of analysis to be able to communicate well with patients, to be able to create a good financial experience for the patient, has gotten complicated and isn’t something that everybody has been ready to tackle. That, I think, presents us with the challenge and insight that our two companies bring together toward what doctors and facilities can do as they try to overcome this season where cashflow and patients complicate.

Walker: You’ve been working on this idea of deductible season with us for four years, and on your own well before that, you had come up with strategies that you felt like your providers needed to be enacting to best meet the challenges of deductible season. Is that something that you’re talking about now with your providers, their front desk teams, and the financial leadership? What are those conversations? What steps are you pushing them to take now, in November and December, to start preparing for the resets that happen in January?

Hillam: Yeah, we are having those conversations now as we look at the end of the year. We push to try to understand what our clients are going to be doing next year. As part of that account management, we try to make sure that they’re ready for it.

As a billing company—and anyone who’s listening to this that may be working with billing companies—we care how much these practices make. It affects us, too. It’s part of our own preparation to make sure that our practices and facilities are ready for the year.

Over the last five, six, seven years, we have tried to train our clients to be ready to employ a few very specific tactics, and Blake, to your point earlier, it’s not something that they should be doing in January and February and March. It’s something that they should be preparing for in October and November and December so that when January starts, they’re done.

These are things like:

• checking for insurance eligibility;
• making sure that front desk teams and patient facing teams scan every insurance card every time;
• making sure that they understand the technology experience that the patient is being confronted with;
• making payments convenient;
• collecting money before you see a patient;
• updating your website;
• preparing good communication;
• understanding the plans; and
• supporting patients with clear communication channels.

Although that maybe feels like an overwhelming list (and maybe it is), the doctors have the opportunity just to take a couple hours out of their weeks and months preparing for the new year to talk to their staff and renew this training.

It’s a little bit evergreen, right? We have to make sure that front desks understand this because in the end, those frontline workers, the people who are face-to-face with patients, are the ones that ultimately execute a clean deductible season. Having the business side of the practice preparing, ensuring that the front desks know what needs to be done and how to think about it, and preparing them to have the emotional fortitude to talk to patients about money—that is all something that should be happening right now so that they’re ready for it. Because three weeks from now, everything resets.

Walker: It’s a big thing. I think the responsibility and the potential that the front desk staff has to move the needle on. Outpatient collections play out after the patient needs the office. There’s so much you can do. Obviously, there’s “card on file” strategies that you can put in place. A lot of that can require technology. It can require thinking about whether that’s the kind of policy you want to have as a provider, as a practice, and whether it’s a good fit for your specialty.

But setting aside the “card on file” strategy, I think even having conversations with patients about costs at the front desk is often not done. If you do do it, the patients are thinking about it and understanding that they’re coming in January and February with a deductible. It’s not something that’s going to come out of the blue, where two to three weeks later, they’re going to get a bill once the reimbursement comes back, it’s full deductible, nothing was covered, and it’s going to be out of pocket for this visit. They had that conversation at the front desk.

That just doesn’t happen more often than not. The front desk doesn’t view it as their role, necessarily. I think having that training in place makes a huge difference to change the conversation and the thought process of that patient going to the visit and then leaving the office.

Hillam: It absolutely does, and it helps to be able to implement some technologies before the patient even gets there. So make sure that you’re using a modern EMR system, something where the patient can enter their demographic and payment information, so they’re in a place where they come to the office already prepared and registered. This is not a “clipboard and pen, filling things out in triplicate” era anymore. We ought to have technology in place upfront so we can collect upfront, and that should definitely be tied with good communication.

The people at the front desk—and this is a tough one—make sure they understand the plans just enough so that they have some conversant ability and talk about, “This insurance does this and this insurance does that.” Because the frontend is where it all starts getting clean.

We have a lot of stuff on the backend also, but I feel I’m the wrong one of us to be talking about that. Like you said, for 10 years plus, you’ve been working on how to make patient payments efficient and easy. We’re talking about patient experiences and technologies in the frontend, but the way that you and I have collaborated over the years is always on the backend with technology. Where is it now and where do you think it’s going, when we’re talking about integrating technology to payment processes?

Walker: Well, I think it’s important that after the patient leaves the office, you’re able to meet that patient on the channel that works best for them—being able to communicate with patients across email, text message, or paper mail for patients where that works best. You have to get to that patient on a medium that works well for them quickly, and it has to be quick.

You can’t have these monthly batches of statements going out 30 to 60 days after the patient left the office. The further it gets from that visit, the lower the likelihood they’re going to pay right away and the higher the likelihood they’re going to forget what happened. They’re going to forget that they came in at all. They’re going to feel like something went wrong with the billing and there was some sort of mistake because it took so long. And that’s going to lead to more questions coming into the office and delays in payments, so get quick statements out on the channel that works best for that patient and in a format that’s clear and makes it obvious to the patient why they owe money.

There’s so many of these statements that go out. They’re mostly paper still. They don’t have clear explanations from payers with the reason saying, “Hey, this wasn’t paid. This wasn’t reimbursed by insurance because of the deductible, because of co-insurance,” and helping the patient understand what that means. All of that is so important.

Also, how responsive are you to the patients’ questions? You should expect that, especially in Q1 and Q2, you’re going to have a ton of patients asking questions. They’re getting these bills; they’re surprised. Inevitably, no matter what we do, they’re going to be surprised and want to ask questions.

They want to understand and make sure that it’s right—and that’s fair. It’s a lot of money for patients to be paying out of pocket. They pay a lot of money for premiums—more and more. They want to understand.

How well are you able to answer those questions? How quickly can you answer those questions? Or is it your billing company answering those questions, and how equipped are they to answer them? Are they doing it quickly? Are they responding right away? Can the patient ask questions over email or text or using real-time chat and get faster, more responsive support?

We find that’s one of the biggest areas where things break down. We might put in email billing, right? Great, we checked the box. But then the patient has questions, and whether those questions get answered well and in a timely manner is what the whole thing hinges on. Whether they pay hinges on that question being resolved well and in a timely manner. That may be the difference between good and bad cashflow in the end, so we’ve focused quite a lot on that.

But, going back, all of that works better if the front desk has prepared the patient for it in some way, whether it was showing them what their benefits were, explaining to them that they have a deductible when they came in, estimating their cost and collecting something upfront (at the very least a copay or maybe some of the deductible if that’s possible), maybe getting a card on file and talking to the patient about the expected costs and that they might auto-charge it. All of those are things you can do.

Even if you didn’t do any of that and you just said, “Hey, we ran your eligibility. You have commercial insurance and you have a $4,000 deductible. You haven’t met it yet so far as we can tell, so I just wanted to let you know that you’ll probably get a bill for this, just so you’re not surprised.” Even if you just did that, your payment rates will go through the roof. That doesn’t take a lot of effort time on the part of the staff.

But it does take some effort, and some time, and some training and discussion as an organization or physician’s group. Prepare to do that early in the year as a habit, just so that when the patients get those bills later, they’re emotionally prepared for them. No one likes surprises.

Tune into next week’s episode to hear the second part of Blake and Jeff’s conversation.

Thanks for listening. Stay tuned for next week’s episode. To hear more, follow PeerPOV: The Pulse on Medicine on Apple Podcasts, Spotify, or Amazon Music.

This transcript has been edited for readability.