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Collection Reform: Build Stronger Relationships With Self-Pay Patients

Posted on: Sunday, 18 September 2005, 03:01 CDT

Looking to avoid bad debt, complaints, and bad publicity due to poor handling of self-pay accounts? Let better training and technology help you identify and serve patients eligible for financial assistance before their accounts can become delinquent.

Does the following scenario sound familiar? After a devastating auto accident, an uninsured father of three spends several months recovering at your hospital. Somewhere between the balloons and best wishes accompanying him as he finally walks out the door, a registrar mentions that his bill will be mailed to him shortly. The patient blanches, everyone assumes from lingering pain. A month later, the bill arrives. Panicked, the patient does nothing. Three months go by and your collections department gets involved. From the patient, silence. Another six months and the case gets turned over to a collection agency. You finally hear from the patient: He's filed a complaint with a patient advocacy group.

No hospital is immune from the dilemma. Whether you call them uninsured or self-pay patients, there are nearly 44 million Americans without health insurance. Many of them end up in hospitals at some point, and many cannot afford to pay their medical bills.

Some financial officers attempt to handle these accounts internally. Others turn them over to collection agencies. When aggressive strategies backfire, as when patient advocacy groups sued a number of hospitals and medical groups last year for their efforts to collect from uninsured patients, your reputation takes a hit along with your cash flow.

There are resources available to help fund medical care of the uninsured-self-pay discounts, charity care, Medicaid, State Children's Health Insurance Program, and other public assistance programs. The problem has been identifying patients who qualify for these resources and accessing them in a timely, cost-efficient way- before that first bill goes out.

Now some financial managers are finding new ways to tackle this tough issue. Leveraging the power of new technologies, they are revamping their processes to provide up-front financial assistance guidance for the self-pay population.

Impractical Policies

Industry experts agree that a big part of the problem is that hospital front-line staff lack the necessary resources to properly categorize patients into the appropriate financial classifications (charity, public assistance, potential bad debt). The unfortunate, and avoidable, result is unnecessary bad debt. It's not that staff lack the will to do the job; they lack the time, energy, and knowhow. And the reason, in large part, is the complexity of the financial assistance identification and application process.

For example, many hospitals are unable to accurately identify the true amount of the charity services they deliver, thanks to age-old policy guidelines that often, inadvertently, work against the very people they are designed to help. Trying to prove that a patient is eligibile for financial assistance under these guidelines can be like asking an unemployed person to verify his or her income using tax returns and pay stubs-impractical.

According to standards of the Financial Accounting Standards Board and HFMA guidelines, here is what is needed to determine eligibility for charity care:

* The applicant must complete and sign the application.

* The hospital must screen to see if there are any public assistance programs such as Medicaid and SCHIP available for reimbursement.

* The applicant must fill out a financial statement.

* The applicant must sign an income attestation that his or her household's annual income is less than 200 percent of the federal poverty guidelines.

This cumbersome and document-laden process is both time- consuming and complicated for registrars to carry out. Even the first step isn't as simple and straightforward as it sounds, because registrars are sometimes unaware of the application policy and, all too often, insurance eligibility is not checked until after the services are provided. After such a delay, it can be difficult to locate or even identify the patient, who may refuse to cooperate after the fact when you finally are able to make contact. Also, determinations of eligibility for charity care are based on the patient's stated-not verified-financial condition at the time of treatment.

The challenge, then, is how to simplify the process and make it more efficient, while at the same time making it more flexible and scalable-i.e., tailored to the specific circumstances of each patient.

Training and Technology

One simple, low-cost method involves sitting down with your registrars and explaining the problem. Chances are good that, if they understood the issues facing the collections department, they would want to help. Offering monetary rewards for behavior that helps reduce bad debt can be very effective, especially in small and mid-size organizations with receptive employees.

Of course, wanting to help is not the same thing as knowing how to help. Do your registrars have the necessary training to deal with the complex financial assistance process? They need to know how to ask the probing questions necessary to determine a patient's true financial situation. Assessing staff needs for training is a vital component of reforming your collections process. Experts suggest that you supplement education programs with printed aids that registrars can reference when meeting with patients.

Simple tools and process improvements such as these may be all you need to improve your revenue cycle.

But what if your employees still are not responding? At this point, it might be worthwhile to consider some of the new technologies available to help healthcare organizations automate their revenue cycle processes. Among other things they can accomplish, technological solutions can:

* Give you real-time information on applicable financial assistance programs at the time of medical treatment

* Prioritize collectible accounts and copayments

* Proactively identify patients eligible for self-pay discounts, charity care, Medicaid, SCHIP, and other public assistance programs

* Facilitate the application process

As an example, a registrar asks an uninsured patient for standard identifying information, and then enters the data into an interface that is linked to a variety of information sources, including credit and fraud screening databases.

In addition to ensuring positive identification and residency status, algorithms can accurately predict family size, income, and federal poverty guideline levels. Some technologies can even be custom-tailored to specific charity policies. The result is a real- time, automated, objective snapshot of patients' current financial situation, which allows you to determine their ability to pay. If the patient is eligible for a financial assistance program, the matching process follows. Based on specific needs, current technologies can generate applications for available financial assistance programs. And because all of the patient's identifying information was previously entered into the system, the applications will automatically be populated with the required demographic and income information. After confirming any questionable or incomplete areas of the application with the patient, the registrar can automatically submit the application on the patient's behalf.

Software of this kind may easily be integrated at registration points. It also can be used in a batch configuration to retroactively screen bad debt receivables for reallocation to charity care, thereby allowing you to identify, in auditable form, the true extent of the "free" care your organization gives. This information may not only be of interest to your local community but may make you eligible for greater payment from the disproportionate share program.

The Results of Reform

Public, not-for-profit, and for-profit healthcare organizations of all sizes are realizing several benefits from reforming their collections processes along these lines.

First, they are able to move the complex screening process from the back end (collections) to the front end (registration and checkout). This shift can help improve accounts receivables, reduce write-offs from uncompensated care, and lower administrative costs. And it need not result in workforce reduction; instead, employees can refocus their attention on the organization's true business, patient care.

Second, because new technology enables realtime authentication of patient information while the patient is registering, the risk of identity theft can be greatly reduced. A growing problem among all sectors of business, this crime cost businesses nearly $48 billion in 2002, according to a 2003 Federal Trade Commission study. A study conducted in 2004 by the Ponemon Institute found that consumers overwhelmingly believe that hospitals and medical clinics should have strong identification and authentication safeguards in place. That patients hold this view makes it even more valuable for hospitals to be able to verify identity when someone is applying for financial assistance.

Third, access to point-of-service discount tools provides for consistencyand objectivity in handling self-pay patients, which can be reassuring to a public suspicious about how hospitals treat the uninsured.

Consider limited financial liability as a result of up-front decision making regarding payment options. Increased cash flow. Patients' welfare provided for compassionately and efficiently. Patient advocacy groups pleased. Are these familiar circumstances for your organization? Take advantage of what other hospitals have already learned about reforming self-pay collections, and they soon could be.

AT A GLANCE

New approaches and technologies are changing the collections process to make it work better for both self-pay patients and hospitals, including:

* Upfront identification of patients eligible for financial assistance

* Access to real-time financial information

* Automated matching of financial need and available assistance programs

* Computer-generated program applications

FULL DISCLOSURE

Under the new kind of verification system described in this article, communication with self-pay patients changes-for the better. When communicating with patients about the new verification process, your registrars should be prepared to answer questions such as the following:

* Why was my financial information assessed?

* How will this affect my credit?

* This information is incorrect or not up-to-date; how can it be corrected?

* How can I see the financial information you have on file for me?

Working in conjunction with your legal and/or training departments, the information source you are contracted with can assist you as you craft appropriate responses to these or similar questions.

Then, once the patient's financial situation is assessed, various scenarios will arise with respect to the patient's ability to pay. Following are sample responses the registration staff can use depending on the scenario. When developing a script for registration staff to use to respond to these various scenarios, the answers should be tailored to the circumstances of the organization, with appropriate input from legal counsel.

Records show the patient has the ability to pay.

"Payment of your hospital charges is due in full. It appears from your patient account (financial) information that you have the financial resources to allow you to pay the amount owed (account balance) in full. How will you be paying for your services today?"

Records show the patient has some ability to pay.

"Payment of your hospital charges is due in full. However, it appears from your patient account (financial) information that I may be able to approve you for a down payment and payment plan. Does this interest you?"

Records show the patient may be eligible for a discount offer.

"Payment of your hospital charges is due in full. However, it appears from your patient account (financial) information that I may be able to approve you for a discount plan that (hospital name) has implemented for uninsured patients."

Records show the patient has no ability to pay.

"Payment for your hospital charges is due in full. However, it appears from your patient account (financial) information that you may qualify for a financial assistance program. In order for us to best assist you, you will need to meet with a patient advocate to assess your eligibility for these programs."

About the author

Geoffrey J. Hakel is vice president, vertical markets, TransUnion, Chicago, and a member of HFMA's North Carolina Chapter. Questions or comments about this article may be sent to him at ghakel@transunion.com.

Copyright Healthcare Financial Management Association Sep 2005

Source: Healthcare Financial Management

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