By Scott Krah, Senior Vice President, Treasury Management Product Segment Manager and Lucia Sprungle, Director, at Huntington Commercial Bank
Key takeaways
- Digitizing patient refunds and reimbursements can deliver immediate cost and compliance benefits.
- Paper-based payment workflows are increasingly costly and out of step with regulatory demands.
- Digital disbursements strengthen margin control, audit readiness, and cash flow visibility.
- Providers can modernize outbound payments without replacing core billing or EHR systems.
Healthcare leaders are under growing pressure to identify controllable cost centers that can deliver meaningful financial and operational returns. In a compressed-margin environment, the challenge is reducing costs without disrupting patient services or regulatory compliance. Outbound payments represent one area with measurable impact that is often overlooked.
Patient refunds, overpayment reimbursements, and other disbursements can carry hidden costs. These processes aren’t often prioritized within the revenue cycle despite their direct influence on margin performance. This is beginning to shift. With changing patient expectations, increased fraud exposure, and persistent escheatment risk, modernizing outbound payment strategies is becoming a higher priority for many providers. Reexamining how disbursements are executed, and understanding the implications of modernizing practices, can be practical starting points.
Repositioning disbursements as a source of control and efficiency
Adopting digital options for disbursements is emerging as a practical way for healthcare providers to improve cost control and reduce manual processing, as well as gain greater visibility into cash flow. Shifting refunds, reimbursements, and other outbound payments to digital channels—such as ACH, prepaid credit cards, direct deposit, gift cards, or mobile platforms—can drive measurable savings and support more consistent, auditable workflows.
- Reducing Paper Costs and Escheatment Risk: Most organizations can expect a noticeable drop in manual processing expenses. Issuing a paper check typically costs $2.01 to $4.00 on average1, which may or may not include printing, mailing, reconciliation, and reissuance. Compounding these costs is the issue of escheatment, especially for small-dollar refunds. Nearly half of checks under $40 go uncashed, leaving providers with unclaimed property obligations2. And with the federal government phasing out paper checks for disbursements, legacy systems dependent on mailed payments are increasingly misaligned with regulatory and risk priorities.
- Improved Visibility for Better Financial Decisions: Digital disbursements provide real-time insight into payment flows, which can be integrated into liquidity planning and revenue cycle management. This visibility becomes more valuable during periods of reimbursement volatility and policy transition.
- Less Manual Compliance Work: Electronic payment platforms support stronger compliance practices. Proposed HIPAA security rules, for example, call for internal audits every 12 months3. Unlike paper checks, digital payment platforms create automated audit trails, reducing the need for manual documentation and lowering the risk of sensitive data exposure. This helps support both No Surprises Act refund rules with greater accuracy and efficiency. With policy shifts that could result in more strenuous manual eligibility tracking, any reduction in manual processing in other areas could relieve pressure on already strained back-office teams.
- Lowering Fraud and Cyber Risk: Healthcare accounted for 23% of all U.S. data breaches in 2024, more than any other sector4. As cyber attacks escalate (as seen by recent high-profile attacks), providers are scrambling to address vulnerabilities. Payment security is one such vulnerability. Transitioning away from riskier payment methods to digital systems with built-in safeguards can reduce exposure to phishing and fraud by limiting the attack surface.
- Supporting Unbanked and Underbanked Patients: Approximately 5.6 million U.S. households do not have a checking or savings account at a bank or credit union, according to the latest FDIC data5. These populations instead rely on cash, prepaid cards, or nonbank services. Sending refunds by check often results in unclaimed property as a result. Offering disbursement options that don’t require a bank account helps ensure patients receive payments they’re owed and reduce escheatment and administrative overhead for back-office teams.
- Meeting Patient Expectations: Younger generations are most likely to gravitate toward digital options, but older generations are following close behind. Recent research shows that 70% of adults surveyed age 50 and older use financial technology for basic tasks, including paying bills6. People across age groups and demographics are adopting these technologies due to their convenience and speed – offering these options can help meet patient expectations and drive satisfaction.
Where to start with modernizing refunds
A full tech overhaul may be out of reach for many providers. But teams can consider beginning with targeted updates, starting where workflows are most manual and compliance pressure is highest.
Initial steps could focus on identifying pain points in the revenue cycle, evaluating disbursement options that integrate with existing EHR or billing systems, and ensuring payment channels support patient preferences.
Providers should consider the following as early-stage priorities:
- Replacing paper checks for refunds with electronic payment options.
- Ensuring disbursement systems support compliance with proposed HIPAA updates and new No Surprises Act requirements.
- Reducing escheatment risk by shortening refund timelines and offering patients flexible payment methods.
Reframing disbursements as a strategic finance function
Outbound payments may not be the most visible part of a provider’s financial model, but they’re becoming one of the most consequential. As financial and regulatory pressures mount, healthcare providers are recognizing that outdated disbursement practices can increase risk and strain resources.
Modernizing refund and reimbursement processes with tools like ChoicePay® can help providers reduce exposure and strengthen liquidity. To explore how your organization can address refund and revenue cycle challenges in today’s regulatory environment, contact Huntington’s Healthcare Banking team.
