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Health plans lead to more hospital pre-pays

Grace Schneider
The Courier-Journal

Before Mark Edwards ever reclined on a hospital operating table in September, he'd received two bills for his outpatient procedure and was asked to remit $500.

After he left the hospital, the Paducah businessman paid $2,000 more, the rest of his insurance deductible. "Luckily, I could take out a credit card and pay. A lot of people can't," Edwards said.

His experience, being asked to pay a sum upfront for surgery, has become increasingly common as doctors' practices and hospitals navigate the world of employer-provided high-deductible health plans and the launch of the federal Affordable Care Act.

Hospital executives say they're struggling to keep their mountains of bad debt in check when patients frequently can't pay the share required under insurance plans for non-emergency tests, procedures and services.

RELATED: Small Kentucky hospitals struggle to stay open

"The bad debts are just going through the roof. That's been a trend," said Nancy Galvagni, senior vice president of the Kentucky Hospital Association, an industry trade and advocacy group that represents the state's hospitals and health systems.

In 2008, the bad debt total for Kentucky hospitals was $334 million, followed by $436 million in 2010. Then it soared $659 million in 2012, the latest period for which figures are available.

That doesn't include the millions of dollars hospitals say go unpaid by Medicare and Medicaid and from caring for indigent people who had no insurance and aren't covered under any commercial or government insurance program, according to the association.

If people have high-deductible insurance, "we always encourage them to try to pay something in advance," said Donna Ghobadi, assistant vice president of managed care and revenue cycle for Baptist Health, which includes seven hospitals. But "we won't turn anybody away."

When her staff talks about a bill with patients, it's clear "they're not prepared for the sticker shock," even though they're getting a dose of reality about health-care costs, said Dr. Marianne Cowley, a retinal specialist with a Hikes Point office.

Increasingly, U.S. workers, including thousands in Kentucky and Indiana, have been shifted to high-deductible health care plans that require the employee to spend thousands of dollars on doctors and prescriptions before insurance kicks in.


Health-care reform also is shifting the burden for patients to come up with cash for their care in many instances. Of the 7.3 million people enrolled in federal and state exchanges under the Affordable Care Act this year, roughly a fifth nationwide and in Kentucky selected bronze-tier plans, which carry deductibles exceeding $5,500 per person.


Hospital staffs have reported recently that many bronze-plan patients are confused about their obligations when asked for payment. They present their insurance card and expect that will cover all expenses, Galvagni said.

"They don't realize that they owe anything. We're hearing that a lot."

Hospital executives and some doctors said they've had to focus on increased training for their workers at the counter to be assertive in discussing the costs of care and what people will need to pay. When making appointments, schedulers and receptionists are urged to remind patients about what they'll be expected to pay during their visit.

Before scheduling tests, radiology screenings and other services, hospitals routinely verify coverage electronically and inform patients on the spot of how much they'll need to pay in advance. If a patient says they don't have money, more doctors and hospitals are asking for the amount a person can remit and putting clients on payment plans.

Some use a sliding scale to set fees based on the level of need and other factors.

"As long as they're paying, we try to work with them," said Linda Parsons, financial counseling manager at Baptist Health. "We do find that people want to pay."

Take the recent case of a woman whose husband's fees totaled $1,800, money the couple said they didn't have. Baptist placed the couple on a payment plan for $75 a month without interest charges, Parsons said.

Before KentuckyOne Health places a patient on such a plan, the staff reviews the household income, poverty guidelines and depending on the circumstances, may allow a person with a $1,000 bill to pay $500, said Lynn Tanner, the company's vice president of managed care and payer strategy and operations.

"We expect payment for those who can pay," Tanner said.


The plans offer a lump sum payment, which is frequently larger than an individual's deductible, to help cover expenses in catastrophic incidents, said Bringardner, who works with businesses in Kentucky, Ohio and Indiana.

(Under federal law, hospitals that accept payment from Medicare, which is nearly all of them, can't deny emergency treatment regardless of citizenship, legal status or ability to pay. They also can't discharge a patient needing emergency care unless they consent.)

Zac Stillerman, executive director of revenue cycle solutions at The Advisory Board Co. a healthcare technology, research and consulting firm based in Washington, D.C., said it's absolutely crucial for hospitals and care centers to have a strong system in place to secure fees and payments in advance or before patients get out the door because research shows that they are 50 percent to 70 percent less likely to pay a bill once they leave the facility.

Stillerman and others, Dr. Cowley included, said payment plans are worthless because patients tend to put medical bills toward the bottom of their list of priorities. "People will make an agreement," Cowley said, "(with) the best of intentions, then they don't pay."

Providers "always are at a disadvantage to try to collect after the fact," Stillerman said, adding that employing collection agencies is expensive and patients also feel less urgency about settling the debt once they've received care.

"If you haven't paid, they can't come take the stent out of your heart," he said.

Edwards, who had surgery in September and owns Credit Bureau Systems, a company that handles billing and debt collections for 20 Kentucky hospitals, said he sees firsthand how much bad debt hospitals are racking up.

But the blow in the last year or so has been cushioned by Medicaid expansion, which has allowed hospitals and providers to get government reimbursement for serving low-income people.

Edwards predicted that one day soon — "and it always happens" — reimbursements will drop and more people will be on Obamacare. That will mean more people will be asked to pay larger out-of-pocket costs, Edwards said. "We haven't seen the worst of this yet."
