JThese days, healthcare providers face a tricky financial challenge: how to help patients meet the high cost of services while ensuring the business remains economically viable.
That challenge is getting tougher, say area hospital billing experts, as insurance plans move to larger deductibles and copayments, with more fine print and less education. the patient about what is covered and what is not.
“There are more and more of these high-deductible plans. We and the patient are carrying a lot more debt than before,” said Melanie Wilson, senior vice president of revenue services at Essentia Health. Healthcare has a small margin, she said, especially compared to other industries. “We’re running very low, single-digit margins.”
And even though more than 90% of the U.S. population has some form of health insurance, medical debt remains a persistent problem, according to an analysis by the Peterson Center on Healthcare and the Kaiser Family Foundation, two nonprofits focused on national health issues. High deductibles and other forms of cost sharing can contribute to people receiving medical bills that they are unable to pay, despite being insured. A Census Bureau analysis of medical debt at the household level found that 17% of households owed money in 2019. Twenty-three million people (nearly one in 10 adults) have significant medical debt. It occurs in all demographic groups, although people with disabilities, those in poorer health, and poor or near-poor adults are more likely to owe large sums. Black Americans and people living in the South or in states without Medicaid expansion were more likely to have large medical debt.
To help patients in this situation, St. Luke’s recently introduced a new option to help them pay off their debt over time without incurring interest. In October, they began offering Clear Balance Healthcare, a national third-party patient financing program. The program is a zero-interest revolving credit account with flexible payment terms, offered by Umpqua Bank. It requires no credit checks and there are no patient fees.
When their accounts are approved for loan and the first payment is made, Clear Balance then pays the full balance to the hospital. St. Luke’s pays all loan fees to Clear Balance on behalf of the patient. At that time, the patient’s balance with St. Luke’s is fully paid off, unless the patient repays the loan, in which case the debt is repaid to St. Luke’s.
“It really is a win-win situation,” said Theresa Noponen, director of outpatient business services at St. Luke’s. “Patients, they have free funding, no interest for them. We get our money immediately and don’t have to wait. In the previous model, the patient paid the bank and the interest, and we received the payments on a monthly basis. It could take years for us to be fully paid.
Patients have up to five years to repay the debt to Clear Balance.
Patients who wish to avoid a third party can still reimburse the hospital directly, although the hospital has tightened its direct payment schedule. It once offered up to 18 months to pay off a medical debt to the hospital without interest, after which the hospital would send the debt back to a bank, where the patient would have to pay interest on the loan. Now, St. Luke’s will hold the debt internally for six months before returning it to an outside bank.
Essentia Health also offers Clear Balance as one of its interest-free options for paying off medical debt. He’s been offering the service for more than five years with good results, Wilson said.
Essentia recently launched an interest-free secondary program, “Care Credit”, which patients can enroll in prior to treatment. (Clear Balance is for services rendered only.) It works like a credit card and is accepted at participating healthcare organizations, including some veterinary and dental practices. As with Clear Balance, Essentia pays the interest and charges incurred on the credit card so that the patient only pays off the debt.
Patients can also reimburse Essentia directly in less than six months.
Essentia offers two options for patients who cannot repay all of their debt. Its charitable patient care policy is based on the current federal rating system but expands beyond these limitations. It also offers catastrophic discounts for people who have health insurance but were unaware of the lack of coverage or a large deductible.
“Any medical debt over 20% of household income is substantial,” Wilson said. “We never want patients to go bankrupt, so we give them options.”
Essentia pays a third party to help eligible patients enroll in Medicaid, in part because it provides additional patient benefits, such as discounts on over-the-counter medications.
“A lot of our patients who are uninsured can avoid or delay care if they’re late, but if they’re on Medicaid, they can get real time,” Wilson said.
The hospital has found that despite the complexity of running these programs and the fees and interest the hospital pays on behalf of the patient, these programs benefit its bottom line. The number of patients who default on their debt is much lower using a third party, Wilson said.
Whichever course a patient decides to take, both billing experts agree that contacting the hospital and communicating reimbursement plans is essential.