Flagging economy makes collecting hospital bills a challenge
Hospitals have always wrestled with collecting money from patients who lacked insurance, but a prolonged economic downturn and a growing trend of higher deductibles and co-pays appears to have exacerbated the problem in Central Pennsylvania.
Representatives of PinnacleHealth System in Harrisburg, Holy Spirit Health System in East Pennsboro Township, WellSpan in York and Carlisle Regional Medical Center have all said they have experienced an increase in unpaid hospital bills and charity costs related to uncompensated care within the last year.
A similar situation is plaguing hospitals throughout the state. A report released this spring by the Pennsylvania Health Care Cost Containment Council revealed that 168 general-acute-care hospitals in Pennsylvania saw an 11 percent increase in uncompensated care. That amounts to about $990 million, up $99 million from the previous year, according to the council study. Most of the unpaid hospital bills stem from emergency room visits.
For many Central Pennsylvania hospitals, once a hospital bill goes uncollected, little can be done. The hospitals generally turn uncollected bills over to a third party, but that is about the extent of most hospitals' ability to recover bad debts.
"Sending a bill to an outside collection agency is the last option," said Barry Sparks, spokesman for WellSpan. "This usually occurs when a patient has been uncommunicative or fails to provide requested information to apply for appropriate assistance programs. WellSpan has an obligation to resolve all outstanding bills."
PinnacleHealth, a nonprofit hospital, also uses third-party agencies in an effort to collect, but legal action is never taken, said Patrice Taleff, PinnacleHealth's director of financial operations.
Eventually, the unpaid bills will be a black mark on a patient's credit report. For everybody else, those unpaid bills mean higher costs the next time they visit those hospitals.
The hospitals have to make up the bad debt somewhere, and that means recouping the lost revenue from those who do have the means to pay.
"Because the reimbursement from the government payers, Medicare and Medicaid, are fixed, the only source for the shortfall is from the commercial insurance companies through our contractual rates," Taleff said.
The higher rates paid by commercial insurance companies are then passed on to consumers and employers in the form of higher health insurance premiums and higher out-of-pocket costs for insured members, Taleff said.
Carlisle Regional Medical Center is one of the few for-profit hospitals in central Pennsylvania. Like other hospitals in the region, it has seen its uncompensated care costs grow since the economy soured.
The hospital provides patients with an estimate of their responsibility prior to service, said hospital spokeswoman Tara Mead. Patients also are offered options such as monthly payments, prompt-pay discounts and online payment options. The hospital also has a Pennsylvania Medicaid screening vendor onsite.
Before the hospital contacts a collection agency, it has a vendor that attempts to contact patients to arrange payments, Mead said.
For some midstate hospitals, it makes more sense to focus efforts on preventing patients from being unable to pay their bills in the first place.
PinnacleHealth, for example, is working with patients to collect payment before they receive elective and nonemergency procedures. The hospital has started using new technology that screens patients based on their ability to pay. The technology enables the hospital to determine how much patients will owe after their insurance benefit has been applied.
"With this technology, we are able to offer our patients a 25 percent discount in many of our service departments if they pay for their higher out-of-pocket portion prior to receiving the elective/nonemergent care," Taleff said.
About two years ago, Holy Spirit Hospital made changes to its financial assistance program to help alleviate the problem of uncompensated care. The program is based on a patient's household size and income. If eligible, patients can receive partial to full forgiveness of their hospital bills, said Jim Jones, director of Holy Spirit Hospital's Patient Financial Services.
Holy Spirit Hospital also offers discounts on patient balances for time-of-service payments and payments made within 30 days. The hospital also offers interest-free payment plans over an extended period of time, Jones said.
WellSpan has placed financial counselors in each of its emergency departments to assist with applying for Medicaid and collecting co-pays, Sparks said. The hospital also takes lower balance accounts and screens them for charity through an automated system.
"The system queries many publicly held databases for estimated income, assets, family size and other factors," Sparks said. "So even if the patient does not respond to our effort for assistance, we can still screen for possible charity."
While many hospitals wrestle with rising uncompensated care costs, some hospitals see potential in the Patient Protection and Affordable Care Act to stem the increase in patients' bad debt.
"As we know, the Patient Protection and Affordable Care Act intends to provide insurance coverage to millions of currently uninsured Americans," Jones said. "When this provision becomes effective in 2014, hospitals, at least in theory, should start to see reductions in bad debt and charity care."