Shame On You

When it comes to healthcare providers getting paid for the services they provide for their patients, shame has become the name of the game. It doesn’t matter how appropriate and legitimate these collection efforts are, or if they’re done fairly, ethically and with compassion, all that is seen is one word – “collection.” And many will not consider the work and diligence which precedes the decision to pursue this route of action.

But you shouldn’t feel bad about collecting what you are owed! Keep reading and learn about what’s happening in healthcare debt collections and how patient financial responsibility, the media, 501(r) and new legislation are impacting your revenue.

Patient Financial Responsibility

Patient financial responsibility has become a major part of how healthcare providers are paid. According to an article on Valuepenguin.com, as recently as 2020, 52.9% of the national workforce was enrolled in a high deductible health plan. These plans have become standard in our country, even though the drawbacks often make them less than optimal, especially for families struggling to make ends meet and thus unable to properly fund their Health Savings Accounts.

Media Propagation on Medical Debt

The media is quick to jump on select parts of this issue. They rarely look at what it takes to keep the hospital doors open, choosing instead to focus on the medical debt experienced by families across the nation. They present medical debt collections as evil, conveniently omitting the reasons why hospitals are forced to resort to this last-ditch effort to recover revenue.

The number of books that paint the healthcare system in a negative light is astounding, and they try to tell patients how NOT to pay their bills instead of how to work with healthcare providers to find the best solution, such as utilizing financial assistance through 501(r) for nonprofit hospitals. They talk about how hospitals and insurance companies are working against the American citizen, not how the insurance company holds everyone else hostage by dictating rates while charging more for less.

501(r) and Financial Assistance

Nonprofit health systems and hospitals are required to comply with section 501(r) of the Internal Revenue Code. For patients, it starts with the Financial Assistance Policy (FAP) of the hospital. This is where it is determined if they qualify for assistance in paying their bills. After that, the Amount Generally Billed (AGB) comes into play, where hospitals and providers look back at what Medicare (and sometimes commercial payers) have paid historically, and what Medicare is currently paying to determine a fair amount to bill patients. Finally, only after a hospital has made all reasonable efforts to determine whether an individual is eligible for financial assistance can they then engage in extraordinary collection efforts.

Legislative Trends in Collections

The final, and possibly most concerning issue is that current legislative trends are making it harder for hospitals to receive payment for the services they provide, and in turn, remain solvent.

On a national level, the Comprehensive Debt Collection Improvement Act, could do the most damage. It would bar hospitals from “Engaging in activities to collect or attempting to collect a medical debt owed or due or asserted to be owed or due by a consumer, before the end of the 2-year period beginning on the date that the first payment with respect to such medical debt is due.” 

The primary goal of the act seems noble on the surface as it seeks to expand and enhance consumer, student, servicemember, and small business protections with respect to debt collection practices (and for other purposes). What it does not consider is the negative impact on not only future lending, but in the case of hospitals and providers, the survival of medical care in America. If H.R. 2547 were to be signed into law, it would bar hospitals and providers from sending medical debt to collections for TWO YEARS.

Forcing hospitals and providers to wait years to begin collecting payments for services which they rendered in good faith – could bring about the end of quality healthcare in the country. The healthcare industry is already forced to survive on razor thin margins and a system where many people who can afford to pay, choose not to.

Shawn Gretz, President of Americollect, and Bill Bollinger, Regional Director of Ridiculously Nice Sales are presenting on the topic of shaming hospitals at the upcoming McMahon-Illini HFMA Conference in May 2022. If you are interested in learning more and are unable to attend the conference, please contact Bill Bollinger at [email protected] to bring this presentation to your next event.