How a virtual health insurance card could help doctors reduce bad debt

In an era of e-tickets, bitcoins and app-based banking, it seems pretty antiquated that we still have to fumble through our wallets for an insurance card each time we go to the doctor’s office. But a Philadelphia-based startup has a plan for making those flimsy pieces of cardboard digital — and the upside isn’t just the potential for going paper-free.

With the rise of high-deductible plans, patients are increasingly on the hook for more of their medical expenses than they’ve ever been before. For patients, that means a bigger need for tools that provide more transparency about health care costs. And for doctors, particularly independent physicians, said Medlio co-founder and CEO David Brooks, that means a growing problem with collecting payment.

According to a 2007 report from McKinsey, hospitals and providers usually only collect about 50 percent of the postinsurance balance (or the amount owed by the patient beyond what insurance covers or what they pay at the time of treatment). That’s not because patients are inherently delinquent, Brooks emphasized, it’s often because they’re either too confused about what they need to pay or they don’t believe that they were billed correctly.

Reaching patients where they are

With a virtual insurance card, Brooks believes, physicians would get a more seamless, reliable way of collecting payments and patients would get better information on how much health care costs. And, he added, it achieves the new “holy grail” of health care: greater patient engagement.

“We’re taking this very simple concept as a starting point to engage patients,” Brooks said. “A challenge most companies have is they shoot really high in the adoption curve… we’d like to meet people at the most basic level where they are today.”

The company, which is part of the new Dreamit Health startup accelerator, said the first version of its app is still a few months away. But the initial plan is a mobile app that enables patients to check in from their smartphones. Instead of handing over a physical card, patients would use the app to provide doctors with their insurance information and the app would automatically verify insurance eligibility for the provider. Medlio also intends to give patients an estimate of their treatment’s cost before they receive it, and it enables patients to initiate (and doctors to collect) payments directly through the app.

As the system evolves, Brooks said, it could store and share medical information so that patients don’t need to fill out forms every time they visit the doctor and it could deliver appointment reminders.

While they’re still working out the details of the business plan, he said, their goal is to keep it free for patients. Even if doctors don’t use the service, patients could use the app to store insurance and health information and potentially enter a doctor’s fax number to share medical information instead of filling out forms.

Privacy and security issues could be challenges

The idea is that, initially, physicians would pay for Medlio services and, ultimately, insurance companies eager to win the trust and attention of their members could also use Medlio to advertise and communicate with patients.

Digital cards are slowly taking off for car insurance – in a few states, drivers can show their insurance with apps or pdfs. But health care obviously implicates a wider range of concerns. Consumers may be wary of the security and privacy consequences of storing and sharing medical and financial information in an app and providers may be reluctant to adopt a virtual card because of HIPAA issues.

Personal.com gives consumers a secure way to store health insurance information and insurance companies are increasingly giving their members mobile apps for storing information and looking up claims. But the big difference between those apps and Medlio is that they don’t directly connect the patient to the provider. Startup Simplee also aims to give patients more transparency into their health finances and it offers an app that lets patients pay from their phones, but while Simplee has started by targeting larger hospitals with its payment product, Medlio said it plans to start by targeting independent primary care physicians.

Getting the attention of a critical mass of independent physicians could be a challenge for an upstart company. But Brooks said they believe that this is a big problem providers need to solve and, he added, because consumers can download and use the app on their own, they could help push doctors to the service.

Image by Olga Danylenko via Shutterstock.