Hospitals increasingly employing pre-payment strategies to avoid bad debt

The increase in prevalence of high-deductible health plans under the ACA has led to more unpaid hospital bills among the insured population. To combat mounting bad debt, many hospitals have begun experimenting with pre-payment strategies, many of which require patient payment before scheduled care, according to Reuters.

In 2015 U.S. hospitals faced nearly $36 billion in uncompensated care, with much of that coming from unpaid patient bills.

Hospitals are addressing this in a variety of ways. Henry County Health Center in Mt. Pleasant, Iowa, sends patients cost estimates along with pre-surgery medical advice and information.

"Most patients are appreciative that we're telling them up front," said David Muhs, CFO of HCHC, according to the report. The hospital even provides a discount to patients for early payment. While the cost estimates help prevent surprisingly high medical bills after medical procedures, they also lead some patients to skip or delay care. Others elect to use no interest loans available through the hospital, Mr. Muhs told Reuters.

After Winston-Salem, N.C.-based Novant Health began offering no-interest loans its patient default rate dropped from 32 percent to 12 percent, according to the report.

The trend of pre-payment strategies is expected to continue this year amid increasing bad debt, according to the report. According to government data cited by Reuters, the average deductible in 2017 for the least expensive of ACA marketplace plans is $6,000 for an individual, up 18 percent from 2014. A Kaiser Family Foundation poll found that 45 percent of Americans would have difficulty paying an unplanned $500 medical bill.

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