Contributor: How 10 Years of Trends in Health Care Payments Can Help During the Pandemic

August 2, 2020

Deirdre Ruttle, chief marketing officer, InstaMed and head of Wholesale Payments Healthcare Marketing, J.P. Morgan, discusses streamlined payment options in a post COVID-19 world.

When the Trends in Healthcare Payments Annual Report was first published 10 years ago, the tidal wave of consumer health care payment responsibility was beginning to take shape. At that time, the data from the report pointed towards growing payment responsibility for patients and showed the beginning shift in preferences for payment options to streamlined and electronic options.

The findings in this year’s report confirm that patients once again owe more for medical bills and health plan premiums, and at the same time, want a more streamlined payments experience in health care. Yet, the industry as a whole has not embraced streamlined payment options that patients overwhelmingly demand at a scale. Instead, most payment processes in health care depend on manual tasks and paper-based tools across various disparate systems.

However, in a post COVID-19 world, these trends only stand to accelerate and will include widespread adoption of contactless payments, meaningful expansion of telemedicine and an overall shift to digital experiences in health care. The negative experiences already caused by increasing payment responsibility and outdated payment tools are only exacerbated by social distancing and stay-at-home orders across the country. In a COVID-19 pandemic, where patients are more educated on their personal role in preventing the spread of disease, legacy approaches like touching shared devices and relying on mailed correspondence and payments, are likely to be met with intense resistance. Health care payments are rife with opportunity to utilize technology and electronic payments to achieve contactless payments at scale.

Impacts of COVID-19 on Health Care

Health care industry stakeholders are adapting to the new normal presented by social distancing guidelines and regional stay-at-home orders instituted as a result of the COVID-19 pandemic. In particular, provider organizations have turned towards virtual options to connect with and treat patients for care that does not necessarily require an in-person appointment. In the first couple months of the pandemic, 16.5 million consumers started using telehealth options with 80% saying they would use it again, according to PwC Health Research Institute.

The surge in telehealth usage reflects the ability for the industry to react and adapt to change in the industry, as well as patients’ appetite for digital in health care. The increased options to connect with patients will be crucial for the future of many organizations as the pandemic continues. More than a third of consumers have changed or plan to change spending on health care visits due to COVID-19 with the majority of those consumers skipping non-essential appointments such as a well visit or recommended screening, according to PwC Health Research Institute.

How Payment Responsibility Has Increased

The COVID-19 pandemic and its effects on the industry only magnify challenges that patients already faced due to increased payment responsibility, which has grown considerably in the last 2 decades. In 2019, families covered a third of health care costs, including premiums and out-of-pocket costs, estimated at $28,386, according to the 2019 Milliman Medical Index.

Deductibles continue to be a main driver of increased payment responsibility for patients. Significantly more consumers have health plans with a deductible that must be met before most services are covered and the amounts of those deductibles have also increased considerably. In 2019, according to the 2019 benchmark KFF Employer Health Benefits Survey:

  • 82% of covered workers have a deductible in their plan, up from 63% a decade ago
  • $1655 was the average deductible for covered workers, up from $826 a decade ago

Over the last decade, deductibles have contributed to both the number of consumers who owe more and the increasing amounts of those balances, representing a 162% increase in the total burden of deductibles.

The reality of these increases in consumer responsibility go far beyond industry payment trends and were already felt deeply by patients before COVID-19. Many patients struggle to balance their health, medical costs and overall financial outlook. Some even put off medical care or avoid it all together due to health care costs. In fact, there has a 50% increase in patients avoiding care due to the ability to pay since 2001, according to Gallup.

It remains to be seen how record unemployment during the COVID-19 pandemic and any resulting changes in health plan enrollment will shape payment responsibility in the near term. However, chances are that payment responsibility will not dramatically decrease any time soon for patients.

The Reality of Payment Experiences in Health care

The traditional processes associated with healthcare payments do little to improve an already fraught situation. Typically, patients leave provider encounters with little understanding of possible payment responsibility or payment channels available to them. When patients do have a balance, they are often mailed an explanation of benefits (EOB) from the health plan and a medical bill from the provider—both of which confuse the majority of patients, according to InstaMed data. In addition to the confusion, 91% of patients are often surprised in some way by their medical bills, such as receiving unexpected bills or balances higher than anticipated.

There are multiple opportunities to improve the payment experiences with options available in other industries. For example, 84% of consumers pay their household bills for things such as utilities, cable and cell phones. In addition, a growing portion of consumers, 18% in 2019 compared with 12% in 2018, pay their monthly bills through a mobile app, according to InstaMed. However, digital payment options are not widely offered by health care organizations.

However, the option to simply receive statements electronically is only available to 23% of patients, though 77% want to enroll in e-statements from providers. The demand for e-statements is almost universal among younger generations, as 90% of millennials want e-statements, according to InstaMed.

The lack of digital payment channels available in health care is surprising considering the vast reach of digital options in other industries. However, the trends repeatedly demonstrate that consumers want this in healthcare too. In particular, 85% of consumers want to make all of their health care payments in one place.

Change Is Needed Now to Help Patients Adapt

Providers no longer have the luxury of waiting to see how trends in health care payments may play out as they did a decade ago. The shifts in payment responsibility have almost completely changed how patients interface with providers and that experience has not always been for the better. Providers must help reduce the friction from the current patient experience in health care payments.

The long-term impacts of COVID-19 are predicted to bring additional spotlight to eradicating manual, paper-based, human-dependent approaches to health care payments. Stakeholders are being conditioned to rethink ways to avoid unnecessary human contact in all aspects of health care. Social distancing and a focus on contactless interactions will put even more pressure on legacy approaches to health care payments that accelerate the shift to digital.


About Deidre Ruttle, chief marketing officer, InstaMed and head of Wholesale Payments Healthcare Marketing, J.P. Morgan
Deirdre leads healthcare marketing activities as chief marketing officer at InstaMed and head of Wholesale Payments Healthcare Marketing at J.P. Morgan. Deirdre’s experience and expertise include a deep focus in healthcare payment research. For the last 8 years, she has led the delivery of the Trends in Healthcare Payments Annual Report to educate and inform the industry about the impacts of healthcare payments for all stakeholders: providers, payers and consumers. Deirdre was featured by Becker’s Hospital Review as a female health IT leader to know and was previously highlighted by HealthcareITNews in their Women Who Get IT column.