What out-of-pocket payments mean for health plans and providers

For health plans, out-of-pocket payments create challenges in completing patient treatment histories, which may hinder effective care coordination. Understanding the nuances of out-of-pocket payments allows healthcare organizations to create billing processes targeted toward transparent pricing. 

Health plans and the limitations to data access

Health providers are allowed to disclose protected health information (PHI) through Section 164.506. Section 164.506 (c) (1) specifically states that “A covered entity may use or disclose protected health information for its own treatment, payment, or health care operations.” This provision extends to the disclosure of information to health plans for billings, claims and determining coverage. 

The process does however become complicated when patients pay for treatments out-of-pocket. A 2021 BMC Cost Effectiveness and Resource Allocation study provides that, “OOPs, include purely private transactions…official patient cost-sharing…within defined public or private benefit packages, and informal payments (payments beyond the prescriptions entitled as benefits, both in cash and in-kind).”

When this occurs, providers cannot share the PHI related to this transaction with the health plan. The restriction has effects that can hinder the maintenance of a complete record of the patient's treatment history in the health plan records. This can have particular impacts when patients pre-pay for specific portions of overall treatments, like paying for a biopsy during an exploratory laparoscopy. The result of this is discrepancies in claims processing. 

How to handle out-of-pocket payments and billing as a healthcare provider

Healthcare organizations are often faced with complicated real-life billing scenarios that can cause unnecessary disputes between patients and health plans. By creating clear and concise policies to face these challenges, organizations can ensure a clear-cut billing and claims process. 

Steps include: 

1. Provide upfront pricing for services, including estimates for out-of-pocket costs 
2. Educate patients about their payment options and any insurance implications through means like HIPAA compliant email. 
3. Offer flexible payment options such as installment plans or discounts for immediate payment.
4. Implement billing processes that include measures like clearly itemized services, costs and payments. 
5. Use billing software that can track out-of-pocket payments, generate patient statements, and remind patients of out-of-pocket payments. 
6. Remain aware of a patient's right to restrict the health plan's access to information related to treatments the patient paid for out-of-pocket. 
7. Make use of follow up systems for unpaid balances. 

Related: Top 12 HIPAA compliant email services

FAQs

What are patients' rights under HIPAA?

Access their information, request correction, receive notification, and control who can see their PHI.

What is PHI? 

Individually identifiable information that relates to a person's physical or mental health. 

What is TPO?

Treatment, payment, or operations, are categories that can be disclosed under HIPAA without patient authorization.