Dealing with a Surge in Uncompensated Care

Note: iProtean will observe the holidays beginning December 24 and will resume on January 7, 2015. We wish everyone a very happy holiday season!


Although there has been a drop in numbers of uninsured patients following the rollout of the Affordable Care Act, the remaining uninsured have driven up “uncompensated care” to an all time high.


Uncompensated care—the combination of bad debt and charity care—totaled $45.9 billion in 2012, or 6.1 percent of hospitals’ expenses, according to the American Hospital Association. And healthcare trends, including increased patient cost sharing, are expected to send bad debt to $200 billion by 2019, according to an analysis of 2011 Medicare and Medicaid statistics. (“Report: Payment Options, Pre-Service Could Push Back Surge in Uncompensated Care for Hospitals, HFMA Weekly News, December 5, 2014)


Hospital Strategies Highlighted


Hospitals can alleviate some of the strain from an expected 300 percent increase in uncompensated care over the next five years through better pre-service financial clearance and more consumer-friendly collection practices, according to a new report from Deloitte.


Authors of the Deloitte report suggested that hospitals should:



  • Clarify their charity care policy and implement it consistently


  • Ensure the accuracy of the community service adjustment, which reduces charges for self-pay patients by reducing mark-ups


  • Review their processes and technologies to better engage patients in financial communications prior to leaving the hospital, such as during scheduling/registration or check out


  • Implement financial clearance processes before a patient receives scheduled care to identify the correct payer, determine eligibility and benefits, and collect patients’ out-of-pocket costs for the scheduled procedure


  • Improve revenue collection after care, including communicating payment responsibility through multiple channels and offering a financing program at reasonable interest rates


Other suggestions include:


  • Self-pay policies for elective procedures that require an upfront partial or even full payment. (Many hospitals already have this in place including pre-service collections that include processing secure payments over the phone.)


  • Running patient liability estimators programs prior to each visit, or at check out when a patient hasn’t preregistered for care. Liability estimators use fee schedules and contracts to approximate patient out-of-pocket expenses.


Out-of-pocket healthcare expenses for consumers reached $672 billion by 2012. That amount is expected to increase substantially as more employers shift to high-deductible insurance and more people gain coverage through public health insurance marketplaces, which are dominated by high-deductible plans, according to Deloitte. (“Report: Payment Options, Pre-Service Could Push Back Surge in Uncompensated Care for Hospitals, HFMA Weekly News, December 5, 2014)




iProtean subscribers, Governance of Integrated Delivery Systems is in your library. Featuring noted governance experts Barry Bader and Pam Knecht, this course focuses on the changes in governance necessitated by structural changes within healthcare, specifically the move to integrated delivery/care systems. Specific topics include key changes in governance, changes in governance structure, best practices and the role of local/subsidiary boards.


In early January, look for the new advanced Quality course, Board Mindsets to Drive Value, featuring Stephen Beeson, M.D., and Larry McEvoy, M.D.



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