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Apr 2017

Fear and Loathing of the Medical Bill

Perhaps a classic line from the Paul Newman film Cool Hand Luke best sums up  the Patient-Provider financial relationship. “What we’ve got here is a failure to communicate,” said the prison captain to the prisoner Luke.

In the 21st century, the nation’s hospitals are examining ways to capture more dollars in order to financially succeed in the current challenging economic conditions. Complicating the revenue cycle is the fact that many patients are being hit with unexpected medical bills as well as having trouble paying for their medical care.

In sports, it is often said by coaches the best defense is a good offense. Translation for healthcare is today’s providers need to be even more proactive in working with the patients’ in explaining the financial side of medical care. Not only is transparency of medical charges helpful, but an education on how the billing process works may be worth the time/cost investment to hospitals.

There is no question medical bills can be confusing to understand if not darn overwhelming when it comes to being financially prepared to pay. According to a Kaiser Family Foundation/New York Times survey, nearly 20 percent of insured Americans ages 18 to 64 reported struggling to pay medical bills in the past year. That struggling number leaps to 53 percent for the uninsured patients per the same survey.

Studies have shown the No. 2 fear in life is death with the No. 1 fear being public speaking. Comedians have joked for years that most Americans would rather be lying in the casket at a funeral then at the pulpit delivering the eulogy. Reports show  the provider’s billing process produces nearly the same fear. Roughly 53 percent of Americans believe receiving a large, unaffordable medical bill is as bad as being diagnosed with a serious illness. Even worst, 10 percent of Americans believe a large medical bill is worse than a diagnosis, according to an Amino & Ipsos report. So some Americans would rather hear they have cancer then see the bill for the diagnosis and treatment of the disease.

With all the technology and the education powers of the internet, medical bills continue to confuse most patients.  According to a Mad*Pow report released in 2016, 60.5 percent of patients said the medical bills they received were either “confusing” or “very confusing.” It should be noted  the report was based on survey responses from 355 patients, which is a small sample size. However, the large percentage unable to understand a bill is a bit disturbing.

An even bigger head scratcher is the providers clinging to 20th Century billing practices when the client base is far more technologically savvy. Patients said they most often received medical bills in the mail (43.8 percent) or at the point of service (30 percent). Surprisingly, only 17.4 percent said they receive their bills through email with just 6.6 percent stating they got their bill via a patient portal, according to the Mad*Pow report.

States are being aggressive in providing legal protection to patients, with most state legislatures taking action on balance billing, The practice of balance billing refers to a hospital’s or physician’s ability to bill patients for outstanding balances after the health plan submits a portion of the bill. Out-of-network hospitals and physicians, not bound by in-network contract rates, may bill patients for the remaining balance. This practice leads to patients receiving surprise medical bills when they thought their health insurance covered the bulk of the charges with the exception of the co-pay and/or deductible.

Further complicating the billing scenario is the patient going to an in-network hospital but receiving services from at least one out-of-network doctor. Many patients receive surprise out-of-network bills for a visit to an in-network hospital’s emergency room, according to research published in The New England Journal of Medicine last November.

Researchers conducting this study looked at billing data from a large health insurer for people less than 65 years old. The data covered 2.2 million emergency room visits from all 50 states. The study revealed  patients who went to an in-network hospital’s ER received a surprise out-of-network bill 22 percent of the time.

Federal law does not protect consumers from balance billing, which leaves the issue to the states. About one-fourth of all states have policies to address at least some of the scenarios that typically result in unexpected charges being passed on to the patient. Legislators from seven states proposed legislation in the first few months of 2017 to mitigate the practice of surprise medical billing.

Most troubling to hospital CFO’s is the Amino & Ipsos report showing  37 percent of Americans said they could not pay for an unexpected medical bill that exceeded $100 without going into debt. Compounding the interest is  only 23 percent said they would be able to cover an unexpected medical bill of more than $2,000.

One more old saying for providers to remember: there are no bad students, only bad teachers. While hospitals and physicians have made incredible medical advancements in the past 20 years, the recent studies continue to underscore the providers’ need to deliver better education and communication regarding the dollars and sense of a person paying for care.

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