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Get surging bad debt under control with these turnaround strategies
Be proactive to avoid problems
Uncollectible funds, or "bad debt," is a problem your patient access department can't afford to ignore. With increasing numbers of self-pay, uninsured, and underinsured patients access managers should revamp processes sooner rather than later.
"Too much bad debt means you probably have faulty operations," says Joseph Ianelli, senior financial manager of Boston-based Massachusetts General Hospital's admitting department. "Getting it under control really starts at registration. Making sure that your registrars are well trained and doing lots of QA on registration is your first line of defense."
Tallahassee (FL) Memorial Hospital has seen a surge in bad debt dating back to the onset of the recession. "At that time, we decided to do some proactive work," says Joan S. Braveman, director of patient access and financial services.
The first step was to develop a sliding-fee scale for uninsured patients, based on current income and family size only. In many cases, these patients weren't qualifying for public benefits because the criteria looked at their assets and yearly income to date. In contrast, the hospital's sliding-fee schedule guidelines consider only current income.
Based on that criterion, many newly unemployed individuals can be offered a cash discount of up to 90%. Even if patients don't qualify for any discount, they can still be given a prompt-payment discount of 10%.
Another important realization for patient access, says Braveman, is that "the cash that we let walk out the door really diminishes in value. While at some point in the history of health care we could have counted on 85% of that being collected, we're now collecting only about 30% of that." For this reason, the department set out to improve its processes for upfront collections with these steps:
Price estimation software was implemented, so registrars can tell patients their liability at the time of scheduling.
"That's been a huge culture change. We do continue to hear from a lot of people, 'They just always billed me,'" says Braveman. "But there are no surprises any more. We're able to ask them to bring the money with them when they come in."
Registrars use scripting to direct patients' focus to their insurance coverage.
If a patient is confused by a copay or co-insurance, staff try not to get in a position of arguing with the patient. Instead, they just tell patients exactly what their benefits handbook says about their coverage.
"We quote back to them where it clearly states they are responsible for whatever their copay and co-insurance is. One of the HMOs even goes so far [as] to say that payment is due at the time of service," says Braveman. "We explain that this is not about the hospital being money-hungry, as some people may want to believe, but about the contract between the patient and the insurance company."
To bring this point home, staff use wording such as, "Your insurance company has notified us that your liability for this visit is X number of dollars."
"That is helping, but it takes awhile to change a culture that was 60 years in the making," says Braveman. "Since Oct. 1, 2009, which is when our fiscal year started, we have increased front-end cash collections by 50%. It's been a slow, steady rise every month. And a lot of those dollars would have been bad debt."
Determination of eligibility for charity happens sooner.
"Given a choice of charity or bad debt, I'll take charity," says Braveman. "If we've got a patient in-house who looks like a potential charity patient, we start the process right there. If family members can bring in tax returns or W-2s, we can have a really good sense what this will look like at the end of the day."
A newly unemployed person's assets are often too high to qualify for Medicaid. However, if one hospital bill exceeds 25% of the patient's annual income, then the hospital's charity guidelines are met. For this reason, an effort is made to identify patients who may qualify for charity sooner in the process.
Until four years ago, the charity application process began after the patient was discharged and the final bill was produced. "Now, we begin the charity process as soon as we identify an uninsured person who may qualify," says Braveman. Usually, this occurs at the time of admission, although some patients have qualified prior to service delivery.
"Oftentimes, we'll send an account to bad debt because the patient is just not working with us. Then a year later, they see it on their credit report and claim they never heard about it," says Braveman. "There are times when we end up going back to the point in time when they incurred the bill, and they in fact would have qualified for charity."
Scripting is used by Tallahassee Memorial's registrars to emphasize that staff are there to help the patient. "There is a difference between our recently uninsured and long-term uninsured," notes Braveman. "The newly unemployed, at least in this community, tend to be almost embarrassed to be asking for help. They are more than happy to do anything we ask of them. This is very different from a patient with a credit score of 400 who is not concerned about the credit score impact."
Don't overlook follow-up
Patient access staff at Massachusetts General have many options to help patients with financial problems, due to a generous public benefits program including expanded Medicaid. However, none of this helps a patient unless he or she is deemed eligible.
"Some states may not have as developed a network of public benefit programs as we might have, but most hospitals do have discounting and payment plan arrangements," says Ianelli. "Getting the uninsured and underinsured as engaged as early as possible in the relationship will minimize bad debt."
In order to do this, though, financial counselors need to be able to navigate complex insurance and public benefits requirements. "Whoever is doing that really needs to know how to access public benefits. And I think that they need to be held accountable for following through," says Ianelli. While in many hospitals the financial counselors take more of an administrative role of filling out paperwork, he feels strongly that a more hands-on approach is needed.
"They have to understand how to really access programs and get patients on. Otherwise it's just too hard for the patient," says Ianelli. "The bureaucracies are really tough. It's hard enough to navigate a hospital system, let alone any sort of Medicaid system. So financial counselors really need to elevate their game."
Instead of having financial counselors report up through the back end and billing, at Massachusetts General, they report up through the admitting and access departments. "We really take the philosophy of getting people as much access to medical care as possible," says Ianelli. "I understand that we are in a lucky position compared to many other states, but a lot of states have different variations of free care programs. There are lots of things that people can do."
If financial counselors wait until the service has already happened, an opportunity may be lost. "We try to engage patients right at the point of scheduling and not wait for the patient to actually arrive," says Ianelli. "If folks are aligned with bringing in as many people as possible, rather than keeping them out of the doors, it's better for everybody involved."
A profit-sharing program at Tallahassee Memorial rewards all colleagues when specified goals are met for the organization as a whole and for each individual department. For the patient access and financial services departments, total collections, both patient and insurance, are used to measure achievement and participation in profit sharing. "That is our carrot. Last year, payment was significant," says Braveman. "Our staff are well aware that cash collections is one of our measures. Receiving that incentive becomes a group motivator."
In the emergency department, the supervisor posts the amount collected by each staff person the previous week. "So it's become a very public number," says Braveman. "If a minimum amount is not collected, she meets with that person one on one. At this point, we are not taking any corrective actions for failure to achieve the goal. We do understand that we've got a whole community to educate."
[For more information, contact:
Joan S. Braveman, Director, Patient Access and Financial Services, Tallahassee Memorial Hospital. 1300 Miccosukee Road, Tallahassee, FL 32308. Phone: (850) 431-6202. E-mail: Joan.Braveman@tmh.org.
Joseph Ianelli, Manager, Financial Access Unit, Massachusetts General Hospital, 55 Fruit Street, Boston, MA 02114. Phone:(617) 724-2099. E-mail: email@example.com.]