Top Financial Terms Your Health and Wellness Team Should Know

Your practice team members are experts in running your office, keeping appointments moving along and discussing care options with patients or clients. But when it comes to financial conversations, things can sometimes feel a bit clunky. Not everyone speaks financial-ese or knows how to articulate payment options with patients. Plus, patients and clients have varying levels of financial literacy and sometimes language barriers.

Ensuring that your staff knows how to break down complex health insurance concepts and explain payment processes like financing can help patients and clients to make decisions about their health and wellness care — and the best financial decisions for their budget. In fact, according to a Synchrony study on the impact of out-of-pocket costs, 61% of patients surveyed prefer to learn about payment methods directly from their provider.¹

One way to equip your teams to better assist patients and clients with education and support during payment discussions is to ensure that their own financial literacy is on point. Start with this checklist of patient financing definitions, health insurance terms and billing and collections phrases to know.

Patient Financing Definitions

Out-of-pocket costs can be a deterrent for patients and clients who are hesitant about getting the health and wellness care they want or need. Synchrony's Lifetime of Healthcare Costs Research study found that more than 1 in 4 respondents have delayed getting a recommended procedure due to cost.² Being able to explain financing options can help your patients or clients understand how they work and they could help them pay for the care they want or need.

These are key terms to know when offering a patient financing solution like the CareCredit health and wellness credit card.

APR

A credit card's interest rate is the price an individual pays for borrowing money. For credit cards, interest rates are typically stated as a yearly rate called the annual percentage rate (APR).

Revolving credit line

A revolving credit line is an agreement by a bank to lend a specific amount to a borrower and to allow that amount to be borrowed again once it has been repaid. A credit card typically has a revolving credit line.

Finance charges

This is an interest fee charged on revolving credit accounts. Finance charges are calculated using the APR and the balance.

Special financing

A credit arrangement with temporary or non-standard terms, designed to make borrowing more appealing or affordable for a limited time.

Standard terms

This refers to the regular terms that apply when a promotional financing offer is not available. For example, CareCredit standard terms are in effect for smaller purchases that are under $200. In those cases, interest accrues on the unpaid balance according to the terms of the borrower's credit card agreement.

Promotional period

This is a predetermined, set period of time during which special financing terms apply. In the case of a CareCredit account, patients or clients may be offered a promotional financing period of 6, 12, 18 or 24 months, with no interest if the promotional balance is paid in full within the promotional period, or a reduced APR with fixed monthly payments for 24, 36, 48 or 60 months.

Deferred interest financing

With deferred interest financing, which may be advertised as "No Interest if Paid in Full Within X Months," interest accrues on the promotional purchase amount but is deferred. To avoid paying the accrued interest, the entire promotional purchase balance must be paid in full before that promotional period ends.

Minimum monthly payment

This is the minimum dollar amount a borrower must pay each month to keep an account in good standing. Paying more than the minimum monthly payment due can help pay off the debt faster and will usually reduce the total cost of borrowing. For promotional financing offers, making only the minimum monthly payment may or may not allow the borrower to pay off their promotional purchase before the promotional period ends.

Equal monthly payments

Paying an equal amount each month throughout the promotional period allows borrowers to pay off their balance before it ends. This amount is determined by dividing the borrowed amount by the number of months in the promotional period. The equal monthly payment amount may be higher than the minimum required monthly payment shown on their billing statement.

Fixed payment

This is the amount due every month from a borrower to a lender under a reduced rate, such as the CareCredit Reduced APR and Fixed Monthly Payments Required Until Paid in Full promotional financing option. The fixed monthly payments are equal payments that will pay off the loan principal plus interest, in full, by the end of the loan term.

Learn More: Share CareCredit's glossary with your patients to help prep them for financing discussions.

Health Insurance Definitions

Depending on the type of practice, some services and products you offer may be covered by health insurance. Presenting health insurance information in an understandable way when going over costs and financial options can be helpful to patients. Here are some key health insurance concepts:

Copay

A copayment, or copay, refers to a specific dollar amount that a patient with health insurance is responsible for paying out of pocket for a covered health service. For example, someone might have a $15 copay when they see a provider and a $30 copay to see a specialist.³

Coinsurance

Some healthcare insurance policies require that the patient pay a percentage of the cost. This is called coinsurance. For example, a plan might pay 80% of the cost, while the patient is responsible for the remaining 20%.⁴

Covered service

A type of service, treatment or procedure that a health insurance plan agrees to pay for in full or partially is called a covered service.

Deductible

Before a patient’s health insurance coverage kicks in for the year, they may have to reach an out-of-pocket threshold called a deductible. Once the deductible is reached, regular insurance coverage will resume for the remainder of the year.

Health Savings Account (HSA)

An HSA is a type of savings account that offers tax advantages and can be used to pay for qualified healthcare expenses. This can include out-of-pocket costs like copays.

Network

Some insurance companies partner with select healthcare providers and hospitals to provide care at a discounted rate. If a patient uses an in-network provider, the costs will be reduced. In contrast, out-of-network providers typically have higher out-of-pocket costs (e.g., a higher deductible, copay or coinsurance).⁴

Out-of-pocket maximum

Most insurance policies have an out-of-pocket maximum, which is the most that a patient is responsible for paying within a one-year period. When they reach that amount, the health plan pays 100% of healthcare costs for the remainder of the year.³

Preferred provider

A healthcare provider that is under contract with a particular health insurance company or plan is a preferred provider. These providers agree to offer their services to plan members at a reduced rate.

Healthcare Billing and Collection Definitions

Practice staff members also need to be familiar with terminology that they may encounter as part of their administrative operations. Here are some terms related to healthcare billing and collection to add to your team’s vocabulary.

Charge capture

Charge capture is the process of documenting all the services provided to a patient and converting them into billable items. This is one of the key steps in the revenue cycle management process since an accurate charge capture can help ensure that the provider is appropriately reimbursed.

CPT® (Current Procedural Terminology) codes

The American Medical Association (AMA) developed this system of five-digit codes for use in healthcare billing.⁵ Each code represents a specific healthcare procedure or service.

Denial management

When a claim is denied or rejected, practices have to follow a denial management process to determine the cause and then, if applicable, file an appeal to try to correct the error and recover their payment.

Explanation of benefits (EOB)

Patients who have health insurance and visit providers will receive an EOB. It is a detailed line-item breakdown of the care received and the corresponding costs. It also includes what the health plan will cover and how much the patient may be responsible for paying out of pocket.

Fee schedule

A fee schedule is a full price list of your practice’s various services for patients paying in cash. It can also refer to the list of allowed amounts that an insurance company will pay practices for each type of service.

Revenue cycle management

Revenue cycle management, or RCM, refers to the financial process that's used to manage your practice’s billing and collections. It includes steps like patient registration, insurance verification, charge capture, claims submission and patient collections.

Additional Resources for Financial Conversations With Patients

Financial literacy means being conversant about patient financing and healthcare billing. And that starts with training staff on how to educate patients and clients and engage them in these important discussions. Follow these best practices:

• Create cost conversation scripts for staff members to use with patients and clients. Having a template or reference document on how to discuss flexible financing options at the pre-appointment, check-in and post-appointment stages can set your staff up for success.
• Encourage practice team members to go the extra mile in financial communication. This may involve helping patients and clients understand their financial responsibility, providing a clear breakdown of payment options, repeating and rephrasing information to make sure the information is clear and more.
• Have a plan for how to discuss the annual deductible reset. In the early part of the year, one of the things that can trip patients and clients up is forgetting that their deductibles reset, typically on January 1. Proactively communicating about how this might impact their cost can help educate them about costs and increase patient trust.

What each of these strategies has in common is the importance of transparent communication. Empowering patients with the right information at every touchpoint can improve the patient and client financial journey.

Offer Flexible Financing at Your Practice

If you are looking for a way to connect your patients or clients with flexible financing that empowers them to pay for the care they want and need, consider offering CareCredit as a financing solution. CareCredit allows cardholders to pay for out-of-pocket health and wellness expenses over time while helping enhance the payments process for your practice or business.

When you accept CareCredit, patients or clients can see if they prequalify with no impact to their credit score, and those who apply, if approved, can take advantage of special financing on qualifying purchases.* Additionally, you will be paid directly within two business days.

Learn more about the CareCredit credit card as a financing solution or start the provider enrollment process by filling out this form.

Author Bio

Dawn Papandrea is a journalist with more than two decades of experience covering personal finance and consumer issues. She has written for leading financial publications and organizations, including U.S. News & World Report, Investopedia, Bankrate and others.

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