Hospitals seek patient collection strategies: Cash upfront, payment plans

Hospitals and physician groups--expecting a rise in the number of patients with high-deductible health insurance plans--are coming up with strategies to ensure they receive payment for providing services for scheduled or elective surgeries.

Among the most popular options: Collecting cash upfront and enrolling patients in payment plans, according to the Chicago Tribune.

More patients will now have plans that require them to pay a larger portion of their bills for hospital care and physician services, in exchange for lower monthly premiums. But that puts hospitals and physician practices in the uncomfortable position of insisting on payment even though they have legal and ethical obligations to treat critically ill patients regardless of their ability to pay, the paper reports.

"It's a dramatic change in collection practices," Andy Scianimanico, vice president of revenue cycle for Northwestern Memorial Healthcare, told the Tribune. "The biggest challenge for us is to move conversations (with prospective patients) as far up in the process as possible. It's not about strong-arming patients to pay. It's about getting information into the hands of patients so they can make better-informed decisions."

Hospitals expect more patients will have greater out-of-pocket costs under high-deductible plans offered through the new health insurance exchanges under the Affordable Care Act. In addition, 54 percent of employers report they are shifting workers to those types of coverage plans, according to a 2013 employer survey conducted by the Deloitte Center for Health Solutions.

But collecting money from patients is an ongoing problem for hospitals, which historically have collected approximately 20 percent of a patient's portion of the charges within 120 days of sending the first bill, the Tribune reported. Those poor collection rates, combined with the patient's larger responsibility for medical bills, are contributing to mounting bad debt levels.

"It's such a big deal because it makes [hospital] financial planning and revenue projections difficult," Kip Piper, a former state Medicaid official and White House budget officer, said in the article.

As a result many Chicago hospitals are offering patients low- to no-interest payment plans. For example, the newspaper reports that Loyola University Health System is working with a firm to offer patients three- to five-year payback plans with a 4 percent interest rate. But Loyola is also asking more patients to pay for their costs upfront, prior to receiving treatment, according to the article. However, the hospital says it won't cancel or postpone a procedure if the patient is unable to pay the bill in advance.

And Northwestern Memorial Hospital administrators are trying to better estimate a patient's portion of his or her medical bill, based on insurance information and projected hospital charges, the article said. They are calling patients in advance to discuss payment options so there are no surprises after discharge. The greater pricing transparency, the Tribune reports, will help patient's understand their financial responsibility in advance and put the hospital is a better position of collecting as much of the bill as possible.

Pricing transparency is one of the Healthcare Financial Management Association's missions and earlier this year it set up a task force to address the issue for hospitals, physicians, employer groups and patients, FierceHealthFinance previously reported.

The association has also released draft patient financial interaction guidelines for hospitals. The guidelines provide information on when and how to communicate information about patient insurance coverage, financial counseling, patient financial responsibility for service, and any existing balance the patient may have.

To learn more:
- read the Chicago Tribune article
- here's the Deloitte survey (.pdf)