The amounts patients owe after insurance pays continues steady rise

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The amounts that patients pay for healthcare services, after insurers settle with providers, continues to march upward, in part leading healthcare organizations to improve capabilities to handle new pressures on revenue cycle management.

A recent study of patient balances after insurance (PBAI) indicates that uncompensated care is rising as a result. The trend of rising PBAI is amplifying bad debt exposure for providers, which is contributing to the rise in uncompensated care.

An analysis by TransUnion Healthcare, released in conjunction with the annual meeting of the Healthcare Financial Management Association, found that patients in 2017 were responsible for 12.2 percent of their total healthcare bill in the first quarter of 2017, compared with only 8 percent of their bill during the same period in 2012.

Specifically, commercially insured patients experienced a PBAI increase of 67 percent from $467 to $781 over the same five-year period. This trend led to an 88 percent increase in total hospital revenue attributed to PBAI.

“Patient balances after insurance is a major factor in increases in uncompensated care at the macro level,“ said Jonathan Wiik, a researcher at TransUnion. “Higher out-of-pocket costs from cost sharing has made patients responsible for an increasing percentage of the bill. Most patients simply cannot afford that, and hospitals need to make sure they’re actively engaging their patients to ensure they have funding mechanisms for care. Tools like propensity to pay, charity scoring and others can help differentiate a patient’s willingness or ability to pay.”

Rising PBAI offers important opportunities to apply information technology to support healthcare organizations that increasingly must work with patients to ensure equitable payment plans can be developed and used, says John Yount, vice president for healthcare solutions at TransUnion Healthcare.

"The implications for IT systems are significant—current IT systems were primarily designed to document care and submit bills, versus helping patients understand their financial obligations and the financial transactions involved in paying and financing care over time,” Yount says.

A key for providers is using technology to get important financial information on care costs to patients earlier, before care is delivered.

“Hospitals need to engage patients early, to prevent revenue from leakage and optimize collection strategies. Solutions like those TransUnion Healthcare offers help determine the patient’s willingness or ability to pay and also help the providers understand the best funding mechanism for patients to pay their portions over time,” Yount adds.

“Specific actions that these IT solutions must perform well include: insurance eligibility, patient facing estimation, medical necessity, prior authorization, charity care coupling and insurance discovery,” he notes. “All of which represent the key milestones to financially clearing a patient. Additionally, it is important to ensure earned revenue is paid post discharge. Leveraging solutions for insurance discovery, transfer DRG, under payments and Medicare reimbursement optimization to offset bad debt are integral to ensure the revenue cycle is performing at its optimal level and cash is not leaking from the payer or patient.”

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