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 The 25-bed rural hospital in the southwest corner of the state
implemented the protocol because of mounting unpaid bills from
insured patients, a group that had previously not raised red flags.
Henry County is one of hundreds of U.S. hospitals trying to cope
with an unexpected consequence of the Affordable Care Act of 2010,
known as Obamacare: millions more Americans have health insurance,
but it requires them to spend thousands of dollars before their
insurer kicks in a dime.
Since U.S. hospitals do not want to end up footing the bill, they
are now experimenting with pre-payment strategies for patients, with
a growing number requiring payment before scheduled care and
offering no interest loans, according to interviews with more than
two dozen hospitals, doctors, patients, lenders and healthcare
experts.
“Most patients are appreciative that we’re telling them up front,”
said David Muhs, chief financial officer for the Henry County
hospital, which provides a discount for early payment. The
discussion leads some patients to skip care, others to delay it or
use a no interest loans available through the hospital, he said.
The ACA extended insurance to 20 million Americans, which initially
helped hospitals begin to shrink debt from uninsured patients who
could not pay their medical bills. But more and more, people in
Obamacare plans or in employer-based health plans are choosing
insurance that features low monthly payments. The trade-off is high
out of pocket costs when they need care. (For a graphic, click
http://tmsnrt.rs/2oCzePS)
If President Donald Trump dismantles Obamacare as promised, these
plans won't disappear. Republicans also believe high-deductible
plans curb spending, and Americans faced with medical costs that
rise faster than inflation and wages will look for premiums they can
afford.
The trend is expected to accelerate this year because unpaid bills
are creating massive bad debt for even the most prestigious medical
centers. U.S. hospitals had nearly $36 billion in uncompensated care
costs in 2015, according to the industry’s largest trade group, a
figure that is largely made up of unpaid patient bills.
The largest publicly-traded hospital chain, HCA Holdings Inc,
reported in the fourth quarter of 2016 that its ratio of bad debt to
gross revenues of more than $11 billion was 7.5 percent.
One of the first to test this new payment strategy was Novant
Health, headquartered in North Carolina with 14 medical centers and
hundreds of outpatient and physician facilities. It saw patient debt
increase when more local employers started adopting high deductible
plans, including one that made its executives pay $10,000 in
out-of-pocket expenses.
“To remain financially stable, we had to do something,” said April
York, senior director of patient finance at Novant, whose patient
default rate dropped to 12 percent from 32 percent after it started
offering no interest loans through ClearBalance.
“Patients needed longer to pay. They needed a variety of options,”
she said.
IMPACT ON PATIENTS
These prepayment strategies are being rolled out by hospitals across
the country because the financial equation has changed so much for
patients – even the insured ones.
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Almost half of Americans – 45 percent - polled by the Kaiser Family
Foundation said they would have difficulty paying an unexpected $500
medical bill. The average deductible this year for the least
expensive of the widely used Obamacare health plans is $6,000 for an
individual - an 18 percent spike since 2014 - and more than double
that for a family, according to government data.
Jessica Curtis, a senior advisor at Community Catalyst, a consumer
advocacy group in Boston, said the impact on patients stretches
beyond personal finance.
“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
Brian Sanderson, managing principal of Crowe Horwath's healthcare
services group, said communicating with patients and providing
longer repayment options is a good strategy since hospital margins
have shrunk, thanks to growing unpaid medical bills from consumers.
“A well informed patient is more likely to meet their obligations,”
he said. “It’s just good patient relations and it helps to minimize
bad debt.”
Hospitals are doing what they can to retain patients while helping
them pay medical bills that could run thousands of dollars. Many are
expanding charity eligibility, and hiring companies like
ClearBalance, AccessOne and Commerce Bank to provide loans to
patients no matter what their credit. Most carry no interest rate
for the patient, and could be extended far longer than the few
months that hospitals once required before sending a bill to
collections.
“People are more likely to pay a bank than a hospital,” said Mark
Huebner, director of Health Services Financing at Commerce Bank,
which offers its line of credit at more than 200 hospitals.
“People are aware that banks will come after them. Banks do collect
on debt, and hospitals generally have been more relaxed,” he said.
Wake Forest Baptist Medical Center in North Carolina had seen its
bad debt creep up in recent years as more patients saw out of pocket
expenses soar, with some deductibles reaching $15,000.
“We’ve seen that many patients are unaware of the increases in their
deductibles,” said CFO Chad Eckes. Wake Forest now asks for payment
before non-emergency services are provided but also offers zero
interest, longer repayment options.
“It’s a challenging position,” he said. “It’s a discussion no one
wants to be in, and none of us enjoy.”
(Editing by Caroline Humer and Edward Tobin)
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