Laboratory News

Bad Debt Climbs for Hospitals and Labs Due to High Consumer Deductibles

Bad Debt numbers are increasing for hospitals, physicians, and laboratories, particularly in regions where a growing percentage of consumers are enrolled in High-Deductible Health Care Plans (HDHPs) or are holding Health Savings Accounts (HSAs).  These forms of health insurance have been accepted by consumers because they offer lower monthly payments.  What consumers do not understand about these forms of health insurance is that they will have a greater responsibility for their personal healthcare costs. 

In one measure of success, the introduction of HDHPs to consumers has been successful.  In 2006, Kaiser Family Foundation released a national survey of consumer-driven healthcare plans (which include HDHPs) and reported that 14% of new enrollees were previously uninsured.  Thus, HDHPs were bringing uninsured consumers back into the system.  Another finding by the Kaiser researchers, however, was that 86% of consumers in HDHPs had switched away from more comprehensive healthcare insurance coverage. 

This latter fact is one contributor to the increased ratios of bad debt now being reported in regions, such as Florida, where HDHP enrollment has increased rapidly in recent years.  Many consumers in the first year or two of their HDHP enrollment don't realize that they'll have significantly higher deductibles and co-payments for doctor's visits, prescriptions, and lab work. Often, they have sizeable deductibles to meet before the insurance company will cover items like surgeries and emergency care.  Tenet Healthcare Corporation reports that, in its hospitals, 60% of patients do not pay their bills in full. According to Trevor Fetter, President and CEO of Tenet Healthcare, approximately $132 million of Tenet's bad-debt expense is related to those who have some form of insurance but do not pay the expenses for which they are responsible.

Consumers enrolled in HSAs often find that, when the need arises, their HSAs are underfunded due to a variety of factors, among them that the individual amounts contributed by either or both employer and consumer did not total as much as the allowed maximum per year.  Alternately, they may find that, even if they did contribute the maximum per year, it was simply not enough to cover what they owed for their health care expenses.  Recognizing this situation, HSA providers are going so far as to offer a "bridge loan" option-a credit vehicle available to HSA account holders when their medical bills exceed the amount in their HSAs.

It is not only hospitals that face lack of payment from consumers with HDHPs.  Laboratories are at an even greater risk for bad debt because they often never see the patient in person-or only at the time of specimen collection.  In the past, Dark Daily has stressed in the past the importance of billing patients expediently-before they've forgotten that they even had lab work done! 

Your Dark Daily Editor speaks from personal experience, as I have an HDHP and recently received a bill from a lab for lab work I had done last September.  The lab's bill didn't reflect that they had even contacted my health insurance company to try to get payment, so by the time they did that and re-billed me, an additional month had passed.  All the while, the laboratory was carrying debt on my behalf unnecessarily.  As we enter the age of HDHPs and HSAs, laboratories will need to be more diligent about billing expediently and following-up regularly with patients that do not meet the deadlines on their bills.

Your Dark Daily Editor,

Sylvia Christensen

Related Articles:

• HSAs: a risky strategy (Modern Healthcare Subscription Required)
• Employer Health Benefits 2006 Annual Survey