How Hospitals Can Help Prevent Medical Debt

 

Local governments around the country are using Covid relief funds to eliminate medical debt for their communities. And that’s great: medical debt is a huge problem. It’s bad for hospitals and patients alike, and it’s the leading cause of bankruptcy for families in the United States.

But using Covid funds to pay off existing medical debt – while helpful in the short-run – does not address the root cause of the problem.

The Affordable Care Act mandates nonprofit hospitals to provide financial assistance programs. These programs, when used effectively, can significantly mitigate the burden of medical debt for patients grappling with healthcare affordability. However, these programs often go underused, leading unpaid hospital bills to become the primary contributor to medical debt.

A considerable number of individuals who find themselves in debt due to hospital care might have qualified for such financial assistance. Unfortunately, lack of knowledge about these programs or difficulty navigating the application process often stands in their way.

Drawing from my experience as a former debt collector, I can attest that the vast majority of patients I was collecting from likely met the eligibility criteria for hospital financial assistance. By my estimation, 50 to 70 percent of hospital debt in collections would qualify. This is based on a comparison of average incomes nationwide and average hospital Financial Assistance Policy eligibility criteria.

If we want to deliver affordable access to care, we need to make sustainable change. We need simplified standards for financial assistance and a streamlined process for getting it into the hands of patients who need it. Legislation on the local level to address medical debt has been gaining momentum in recent years, but there is so much more hospitals can do.

Simplify the application process

The Affordable Care Act requires nonprofit hospitals to offer income-based financial assistance programs, but it doesn’t specify eligibility criteria or an application process for these programs. One result is that the criteria are different from hospital to hospital, and in many cases the application requirements are unnecessarily burdensome and complicated.

Many patients find the application process confusing and time-consuming. There are too many hurdles: the forms are too long, the documents required by the hospitals are tough to produce, or the language is hard to understand. The process is simply not patient-friendly.

Applying for financial assistance can be as easy as signing a consent-to-treat form, which every patient does at check-in. Consider offering a convenient digital application for patients to complete themselves. Provide user-friendly instructions and ensure that your staff is trained to assist when needed.

The guidance to patients can be as simple as this: “A lot of our patients qualify for income-based discounts on their hospital bills. If you share what your household income is and how many people are in your family, we can verify that information and automatically apply any discounts you qualify for prior to sending you a bill.”

Many hospitals have a great opportunity to simplify and streamline the patient experience with their own financial assistance applications themselves as well – only requesting information that is relevant in determining financial assistance eligibility. This includes: household size; gross income; residency status; and liquid assets. These four factors determine eligibility in most cases.

Spread awareness

Many underinsured patients assume that they wouldn’t qualify for financial assistance or that there’s shame in applying for these discounts. That is not the case. Households with moderate incomes and those with health insurance can often qualify for discounts on care, but the eligibility requirements and applications are not easily accessible at most hospitals.

Financial assistance programs can only be effective if patients know about them. Hospitals can promote their programs on multiple channels, including their website, social media and community events, to raise awareness.

Another helpful tool is an automated text-message campaign hospitals can use, triggered when a bill is issued, to let patients know they might qualify for financial assistance (“click here to see if you qualify”).

Patient-centered communication is key. Provide training to your teams on how to communicate with patients to make it clear that financial assistance is available and encourage those who may qualify to apply. Spreading the word within your community that your financial assistance program is there to help make care affordable is a tremendous service to your patients.

Billing practices are part of the picture as well. Patients often receive large bills and often find themselves dealing with collections agencies, without ever being directed towards the hospital financial assistance program. This needs to change. Eligibility for financial assistance should be determined before a bill is issued.

Making these changes isn’t as simple as paying off medical debt with a sudden surplus of Covid relief funds, and the results might not be immediate. But if we want to address the enormous problem of medical debt in this country, we need to make lasting changes to the system.

Photo: adventtr, Getty Images

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