Medical Debt Is Mounting: How Providers Can Respond

What’s trending: Medical Debt: What It Means for Patients and Providers

23 million Americans currently share a combined medical debt of approximately $195 billion. Medical debt has permeated credit reports and restricted patient access to things like mortgages and small business loans, despite evidence that suggests people with medical debt pay their bills at the same rate as people without medical debt. The real and perceived financial burden of healthcare also has serious implications for health—including prompting individuals to delay or forgo care.

Why It Matters:

While this medical debt crisis is not new, it is garnering a significant amount of ongoing attention as myriad players seek pathways to reduce the negative financial and health consequences for consumers. In particular, medical debt impacts certain communities more significantly than others. 16% of Black patients have medical debt, compared to only 9% of white patients. Aggressive medical debt collection practices, like lawsuits and civil arrests, can also be more damaging for Black patients.

Recently, legislation has been introduced to address the widespread medical debt problem, including The No Surprises Act, which went into effect in January, and an April executive order from President Biden . Under these new requirements, the U.S. Department of Health and Human Services (HHS) will collect data from 2,000 providers on hospital financials, including medical bill collection practices, lawsuits, debt buying practices, and more, to be considered as part of grantmaking decisions and policy recommendations. They will also share potential violations with relevant enforcement agencies.

A new Consumer Financial Protection Bureau (CFPD) crackdown institutes investigations into credit reporting companies and debt collectors that violate patients’ rights. The CFPD is also seeking to determine whether unpaid medical bills should be included in credit reports. Notably, some reporting agencies have already removed billions of dollars of debt from reports.

The increased attention on consumer debt in some cases has revealed business practices that have created meaningful financial and access challenges for the patients and communities that these same health systems and providers aim to serve and support. The reasons are varied and complex, not least of which is that these providers exist within a system that is hard to understand and even harder to navigate.

What’s Next:

As health systems seek solutions to help consumers navigate this complexity, they may still find themselves challenged to operationalize a holistic set of solutions. For some, the scrutiny of health systems and the business practices within them has fundamentally eroded patients’ trust.

Most immediately, the evolving guidance creates some very near-term demands on health systems seeking to comply. Health systems must be supported by a strong foundation comprised of robust technology, well-organized staff, and efficient processes in order to:

• Provide training and education to staff to help ensure their organization maintains compliance with the requirements of the No Surprises Act and their financial and operational results are not disrupted.
• Ensure that patients are appropriately prepared—not just clinically but financially—by providing a good faith estimate for the cost of services to patients who are uninsured, non-covered, or self-pay.
• Set up mechanisms to measure and monitor new processes that identify when patients who are insured are out of network and determine how to appropriately bill for their services.

Beyond meeting the requirements of any specific measure,?health systems will be well served to consider a strategic approach to how they deliver an improved financial experience for consumers and patients. Key areas to focus on:

• Evaluate operations across the organization. Healthcare leaders should take a close look at the way their organization is operating across the revenue cycle, including patient billing, financial assistance policies, and charity care, to name a few. They should focus on the strategic objectives of increasing patient engagement, improving patient satisfaction, enhancing communication, and creating a smooth patient billing experience.
• Ensure patients are informed. Healthcare leaders should also shape an approach to inform and educate patients early on regarding their financial options, so they are empowered with clear information that defines expectations, educates on financial responsibilities, and guides them through all available payment and assistance options throughout their entire patient-driven experience.
• Assist patients with navigating medical debt. Healthcare leaders can also take steps to help patients who have current balances. For patients who do not have valid insurance coverage, organizations can screen, identify, and help these patients with applications to alternative coverage options. Healthcare organizations can also make sure patients are aware of the availability of financial assistance, understand the program qualifications, and can easily navigate directions for applying. They can also advise patients on assistance options (including available community programs), and negotiate and approve payment arrangements based on the patient’s financial status.
• Invest in strengthening and aligning their provider networks as well as payer relationships. Healthcare leaders should understand where they are exposed related to out-of-network services that introduce surprise billing issues, which ultimately create challenges both for patients and for their organizational reputation.
• Be in the room with patients and community leaders to shape solutions and create and cultivate relationships that strengthen community trust. Healthcare leaders should listen to patient needs and work toward solutions, particularly regarding financial communication in which patients feel especially vulnerable. Health systems that have already been under public scrutiny can do the work to rebuild trust where it has been lost.

Finally, healthcare leaders should be ready for the conversation. If a health system hasn’t yet received a call from a reporter about a challenging patient financial situation, there’s a good chance that call will come. By doing the above work, health systems can mitigate reputational risk—while doing right by their patients and communities.

For more insights about hospital and health system financial viability and a breakdown of the latest trending healthcare industry news, click through to Chartis Top Reads .

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ABOUT THE CHARTIS GROUP

The Chartis Group? (Chartis) is a leading healthcare advisory services firm serving healthcare providers, payers, service organizations, and investors. Different by design, Chartis brings an unparalleled breadth and depth of expertise in strategy, performance improvement, digital and technology, clinical quality and patient safety, health equity and belonging, and strategic communications. For more information, visit www.chartis.com .

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