Hospital bad debt: 10 trends to know

With the increasing popularity of high-deductible health plans, hospitals and health systems are struggling to recover payment from patients. This leaves many healthcare organizations with debt they won't be able to recuperate.

Here are 10 bad debt trends.

1. Although the ACA increased the number of insured Americans, hospitals still face bad debt due to lack of payment from uninsured patients.

2. A study from consumer transparency company Amino and global market and opinion research firm Ipsos found 55 percent of respondents have received a medical bill they could not afford.

3. The same study found 37 percent of Americans could not pay for an unexpected medical bill that exceeded $100 without going into debt, and only 23 percent of Americans are able to cover an unexpected medical bill for more than $2,000.

4. Patients failing to pay their bills isn't the only factor contributing to rising bad debt levels at hospitals and health systems. GE Healthcare, a medical technologies and services provider, projects avoidable claim denials written off to bad debt account for between 2 percent and 5 percent of net patient revenue lost by hospitals.

5. When it comes to bad debt, most healthcare organizations write off revenue they lost due to lack of payment for care, according to James Green, a national partner with Advisory Board's revenue cycle management division.

6. Write-offs may also be reversed, notes Amy Floria, CFO of Goshen (Ind.) Health. She says a healthcare organization may initially turn a patient account over to a collection agency, but if the patient requests financial assistance, the facility must pull the account back from collections and follow its financial assistance policy to help the patient.

7. The reversal of write-offs is in line with Internal Revenue Service rules for nonprofit hospitals' collection practices, which were released in December 2014. Under the rules, nonprofit hospitals must "establish written financial assistance and emergency medical care policies," and "limit amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital's financial assistance policy." Additionally, they must reasonably try to identify patients who are eligible for financial assistance "before engaging in extraordinary collection actions."

8. Many hospitals are trying to curb bad debt using pre-payment strategies. For Mt. Pleasant, Iowa-based Henry County Health Center, this means providing patients with cost estimates along with pre-surgery medical advice and information, according to Reuters. Additionally, Winston-Salem, N.C.-based Novant Health began offering no-interest loans, which resulted in a 20 percent drop in its patient default rate, the report states.

9. Hospitals also may try to curb bad debt by identifying whether self-pay patients have hidden health coverage. A recent Crowe Horwath analysis found true self-pay patients generally pay 6.06 percent of what they're billed, while self-pay after insurance patients generally pay 15.51 percent of their total bill.

10. Nonprofit hospitals in states that expanded Medicaid under the ACA initially saw reimbursement benefits, which resulted in decreased charity care and bad debt, according to Fitch Ratings. The agency predicts the same would happen initially for nonprofit hospitals in states that expand the program in the future.

 

More articles on healthcare finance:

The $12M patient who drove insurance rates higher in Iowa
Georgia hospital to close after years of financial troubles
Adeptus Health files for bankruptcy

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Articles We Think You'll Like

 

Featured Whitepapers

Featured Webinars