April 19, 2017

To avoid unpaid medical bills, more hospitals ask for payment upfront

Daily Briefing

To curb uncompensated care, hospitals throughout the United States are experimenting with pre-payment policies that require patients to pay for scheduled care before it is provided, Jilian Mincer reports for Reuters.

Reuters identified the trend via interviews with more than 24 health care experts, hospitals, lenders, patients, and physicians. According to Reuters, the trend comes as hospitals face growing uncompensated care costs from insured patients with high-deductible health plans. Such plans can require enrollees to pay for thousands of dollars' worth of care before their coverage takes effect.

About pre-payment policies

As a way to help patients pre-pay for care and reduce uncompensated care costs, some hospitals are offering no-interest loans that patients can pay over time, and the full payment deadline can be extended beyond the few months hospitals usually wait before sending unpaid bills to collections agencies, Reuters reports.

For instance, North Carolina-based Novant Health, one of the first health systems to test pre-payment policies and offer no-interest loans to patients, saw its patient default rate decrease from 32 percent to 12 percent after it began offering the loans. "To remain financially stable, we had to do something," said April York, senior director of patient finance at Novant. "Patients needed longer to pay. They needed a variety of options."

Hospitals are also working with companies such as ClearBalance, AccessOne, and Commerce Bank to provide loans to patients regardless of their credit history, and many of the loans are no interest. Mark Huebner, director of health services financing at Commerce Bank, said people are more likely to pay hospital loans through a bank than they are to pay regular bills to a hospital because they "are aware that banks will come after them." He explained, "Banks do collect on debt, and hospitals generally have been more relaxed."

Increased transparency could lead to delayed care

David Muhs—CFO at Henry County Health Center in Iowa, which has implemented a pre-payment policy—said, "Most patients are appreciative that we're telling them [the costs] up front."

However, he noted that while some patients who receive upfront cost estimates for surgical treatments opt to use no interest loans offered by the health center, others may choose to delay or skip care because of the cost.

According to a Kaiser Family Foundation poll, 45 percent of U.S. residents said they would have difficulty paying an unexpected $500 medical bill.

Jessica Curtis, a senior advisor at the consumer advocacy group Community Catalyst, said the delays in care could increase out-of-pocket payments in the long run. "They delay procedures, they don't follow advice on prescription drugs, and when they see care, they usually are for more expensive procedures because they've waited," she said.

Still, several experts said the shift to having cost discussions before treatment is beneficial overall.  Brian Sanderson, managing principal at Crowe Horwath's health care services group, said, "A well informed patient is more likely to meet their obligations," he said, adding, 'It's just good patient relations and it helps to minimize bad debt" (Mincer, Reuters, 4/13).

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