More Hospitals Require Patients to Pay Upfront

Every year, hospitals face the difficult task of managing patient debt – and it’s not just the debt incurred from the uninsured population. In addition to a growing segment of the population with little to no health insurance, the advent of consumer-driven health plans has resulted in more costs being passed on to employees who cannot afford the plans’ high deductibles. According to a recent study from the Kaiser Commission on Medicare and the Uninsured, the healthcare industry spends over $40 billion a year providing uninsured patients with uncompensated care. But according to Kaulkin Ginsberg’s Healthcare ARM Report 2006, bad patient debt costs hospitals an estimated $129 billion annually. In an effort to address this issue of patient debt management, more hospitals are requiring patients to pay for their services upfront.

Recently, UNC Health Care became the latest provider to ask patients to pay their share of the hospital bills upfront, including copayments for office visits as well as diagnostic services. While the new collection policy originally received criticism because it was perceived as an effort to “scare off” the financially disadvantaged, UNC Health Care representatives claim that the policy will reduce the need for costly debt collection services and prevent patients from being harassed. In addition, patients may learn they are eligible for Medicaid or even free or discounted care. Patients with financial difficulties can even set up a no-interest payment plan.

Upfront collection practices are becoming more popular with hospitals because they are significantly more effective in ensuring reimbursement than collecting patient fees after service. According to data collected by UNC Health Care, the chances of collecting payment on healthcare services drops by 60 percent if the patient is billed after the visit.

With the increasing uninsured/underinsured population and the increase of high-deductible health plans, hospitals must continue to find new ways to ease the burden of uncompensated service losses while also providing dedicated patient care. Measures such as such as upfront collections may not be popular with some patients, but they can protect hospitals from incurring further financial debt without passing it on to taxpayers.

For more information on this subject, please visit the links below:

UNC Asks Patients to Pay Upfront

Some Hospitals Seeking Fees before Surgery

TransUnion Executive Summary on Uncompensated Care

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April 11, 2008

Hill, Chesson & Woody strives to keep our clients' group decision makers abreast of trends influencing the employee benefits market. Look for Eyes on Benefits to bring you news and information affecting you and your employees.

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