Medical bills accounted for the majority of personal bankruptcies in 2013 — 57 percent. That was the conclusion of price comparison website Nerd Wallet’s Health channel. Even for people with insurance, long-term illnesses can have a huge impact on their finances. An entrepreneur and healthcare lawyer teamed up to develop an educational program to help patients and their caregivers negotiate their bills with hospitals before they get passed on to bill collectors.
CutMedicalBills.com sounds a bit like a company you’d expect to see on an informercial in the wee hours of the morning. It was founded by David Dubé (the entrepreneur) and David Holt (the attorney). Although they originally met at a networking event in Minneapolis-St Paul where they’re based, Holt advised Dubé on how to manage his mother’s medical bills for treating her endometrial cancer.
The program offers a series of videos by Holt that users can watch on computers or mobile devices. The idea is to develop an app for iOS and Android networks.
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Holt said the majority of people he has worked with on negotiating medical bills are insured, but a combination of high deductible plans and restrictive networks led them to incur big bills. He noted that one of the changes he’s seen since the Affordable Care Act was passed is a shift in responsibility for healthcare decisions. For people who have been sheltered by their employer plans, they are becoming aware that they face additional costs aside from their monthly premiums. They are having to learn the hard way the impact of going out of network and the impact of high deductible plans.
Asked what kind of assumptions people make when it comes to medical bills Holt said, “People assume they have to pay their medical debt no matter what.” He notes that one of the biggest problems especially for the stoic residents of his home state of Minnesota is that people don’t like to talk about debt. So they take out high interest loans and often default on them.
Dubé and Holt said the earlier people can address their medical bills, the easier it is to negotiate a payment plan that doesn’t necessarily require payment of the entire bill. Hospitals want to be able to write off these debts within two years. If patients and caregivers can negotiate a plan within 120 days before it gets kicked over to a bill collector, they stand a better chance of getting a better deal.
“The system we are using has been around for decades,” Dubé said. “Medical billing advocates have been around ever since medical bills. We are putting it into an online platform so it’s user friendly.”
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Dubé said the program is still in beta, although he and Holt expect to launch it by the end of March. So far, beta testers have fallen into two categories — relatives of the patients and patients themselves. Beta testers have received huge discounts on the program’s cost but the launch price will be $97.
Although it has been talking to credit unions as potential strategic partners, they haven’t ruled out talking to hospitals, too. “They will come away with more money if individuals have a better understanding of what is covered and what isn’t covered,” Dubé said. He added that it could help hospitals build a more sustainable relationship with their patient community.
Another interesting trend Holt and Dubé are seeing is hospitals offering medical credits. They would give patients or caregivers a medical credit card with 8 percent interest. It would add banking onto the evolving roles of the hospital.
It will be interesting to see how effective Dubé and Holt will be at reaching their core audience and the kind of impact it has on reducing bankruptcy. It’s intriguing that insurers don’t seem to be part of their equation.
[Photo credit: Flickr user jazbeck]
