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The top 3 challenges of international healthcare payments and how to solve them

Brad Loder June 28, 2018

In an increasingly global economy health insurers and third-party administrators (TPA’s) are expanding their global reach to offer their customers and insured members more comprehensive policies. However this can create a new set of challenges as making cross-border payments carries an extra layer of complexity.

We look at the top three challenges when making international healthcare payments and what you can do about them…

Challenge 1: Invalid beneficiary bank details

International healthcare payments are often time sensitive and therefore payment accuracy is a high priority for most health insurance companies and TPA’s. One of the biggest challenges when obtaining bank details for healthcare providers and members from your customers is the accuracy of the information provided.

There are a number of potential points of failure:

If incorrect details are entered, the payment is likely to go missing somewhere in the payment network. You may not find out until your customer starts chasing you for the status of the payment to a healthcare provider or member – and it could be a lengthy process to investigate and retrieve the payment.

If the payment required a currency conversion you could incur foreign exchange (FX) losses when it is returned, as there may be multiple FX margins applied and possibly unfavourable currency volatility.

For more information, see our blog on hidden charges in international payments

What’s the solution?

Auto verification and payment file upload are two possible solutions.

Auto verification

Choosing a provider with payment auto verification can save your business time and money. Auto verification works by matching the bank details against a live database to ensure they are correct before the payment is released. Establishing potential errors prior to payment release gives you the opportunity to go back to your customer and obtain the correct details so you can avoid the payment going missing.

Payment file upload

Once you have received bank details from your beneficiary (i.e. healthcare provider or member) you can eliminate manual entry using payment file upload. Exporting a payment file from your claims management system and importing it into your banking system reduces manual entry and is less likely to result in payment failure. In addition it will save your payments and claims management teams time and resource.

Challenge 2: Heavy intermediary bank fees

International healthcare payments sent via the SWIFT network often need to pass through intermediary banks en route to the final beneficiary. Each intermediary bank may charge a fee for holding and forwarding the payment as it passes through their infrastructure. This means your beneficiaries could receive less than they were expecting.

All this is likely to create extra work for your business, as further payments will need to be sent in order to make up the shortfall. You will also incur the cost of additional payment fees and FX margin.

What’s the solution?

Make sure your payments are sent “Charges OURS” where available. This shows you are happy to pay any intermediary bank fees so your customers or healthcare providers/insured members are not affected. Whilst your bank charges will be higher, the cost to your business will be much less than dealing with disgruntled claimants.

It’s also worth checking with your international payments provider, as some cover the cost of intermediary bank charges within their fee, which removes the issue entirely.

Challenge 3: Foreign currency risk

Dealing with global healthcare payments will inevitably require you to make claims payments in foreign currencies. Most claimants or beneficiaries will expect to be paid in their local currency and not to be subject to exchange rates.

The foreign exchange market can be volatile. As a result, depending on the exchange rate, you may find payments costing more at the point between the claim being made and the payment being sent. As an example, if you are paying £100,000 worth of claims, a 1% move in the market between claim and payment could cost your business an extra £1,000.

What’s the solution?

There are many different ways you can reduce foreign currency risk using hedging instruments including forward contracts and options contracts.  These products allow you to fix the exchange rate on a pre-determined sum of currency over a set time period.

The alternative could be to hold currency accounts in your key currencies. Funds could be transferred into the currency accounts at the point of claim approval, thereby fixing the exchange rate on the sum of currency.

An international payments provider with expertise and industry knowledge can help deal with any challenges before your customers find out about them. For more on how to reduce the cost of international payments, download our free guide to international payments.

To talk to us about international healthcare payments, get in touch