Payers are shifting liability to patient
Executive Summary
Hospitals’ bad debt is expected to increase due to such factors as higher out-of-pocket costs and failure of patients to pay plan premiums. Patient access can minimize bad debt by doing the following:
• Clear patients financially prior to scheduled services.
• Automate eligibility verification and financial screening.
• Offer online options for bill payment and financial assistance applications.
Changes under the ACA are `call to action’
Many hospital leaders expect that the Affordable Care Act (ACA) will increase bad debt, but "it is early in the game to know the extent of bad debt increases," says Katherine H. Murphy, CHAM, vice president of revenue cycle consulting in the Oakbrook Terrace, IL, office of Passport, part of Experian, a provider of technology for hospitals and healthcare providers. Murphy is seeing these trends in patient access areas:
• High-deductible plans and patients’ increased out-of-pocket costs are increasing the potential for bad debt.
"As patient balances rise, so does bad debt," says Murphy. "As bad debt grows, so does the cost to collect."
• Payers aren’t consistently providing Health Insurance Exchange Marketplace information in their electronic eligibility transactions.
"This makes identification of these patients more difficult at the onset," says Murphy.
• Payers often are slow to divulge information on whether patients have their premium paid up to an end date or whether a patient is in the "grace period" with coverage pending the patient’s payment of premiums.
"Hospitals have received conflicting information as to whether premium payments can be made by providers on behalf of the patient," says Murphy.
Some patients receiving services during the "grace period" will never pay another premium. "Therefore, the hospital will ultimately have to refund the payer and try to collect from a patient who is not likely to pay them either," says Murphy.
Hospitals are giving patients deep discounts for self-pay portions, she adds. However, these might not be enough to deter the account balance from getting classified as bad debt.
Create "collections culture"
Once service is provided to a patient, "the cost to collect goes up, and the likelihood of collecting it goes down," says Paul Shorrosh, CHAM, founder and CEO of AccuReg Front-End Revenue Cycle Solutions in Mobile, AL.
Patient access must be "empowered with systems, processes, and people to create a collections culture,’" he urges. "This does not mean sacrificing the patient experience."
In fact, patients appreciate knowing what their liability will be and having a plan for how they are going to pay for it, says Shorrosh. "We must consider the ACA’s impact on our patient population," he adds. "Liability is shifting to the patient."
More uninsured patients have insurance, he explains, but most patients are now underinsured and face higher deductibles, coinsurance, and co-pays. Whereas in the past, hospitals collected 80% of expected reimbursement from payers and the remaining 20% from patients, "now they collect 60% from payers and 40% from patients," says Shorrosh. "And that ratio may turn out to be 50/50 in the near future." (See related story, below, on how patient access can decrease bad debt.)
