February 11, 2004
Recent negative publicity about hospital collection practices has ignited much debate about hospital charging, collections, and charity-care policies. The media coverage depicts hospitals as overcharging the uninsured and using overly aggressive methods to collect from patients with limited ability to pay. However, the situation is far more complex. Ultimately, the problems related to hospital charging and collection practices are symptoms of the vast complexities of administering the U.S. healthcare system.
To address the current controversies regarding charging and payment, HFMA's CFO Forum asked three experts to share their insights on this topic. Here is an excerpt from their discussion, published in the winter, 2004, issue of HFMA CFO Forum Quarterly Insights.
How can hospitals mitigate the negative public perception of hospitals' charging and collection practices for self-pay patients?
Day Egusquiza, president of AR Systems, Inc., Twin Falls, Idaho: One of the best tools to mitigate negative perceptions is to develop a consistent pricing methodology that is based on cost with a defensible markup. Charging $4 for an aspirin is indefensible to any patient or payer group. Basic costing can be done in any size of organization -- with basic direct and indirect costs identified and factored in when determining charges.
Another excellent tool is expanded pre-admission that focuses on developing estimates along with defined payment plans. Financial counseling prior to the service can outline expectations and evaluate ability to meet payment obligations while closely working through financial hardship considerations. This process reinforces the community focus of self-pay financial counseling rather than treating the group punitively. Automatic referring to bad debt without any personal intervention guarantees poor public perception.
Ray Lefton, CFO of Temple University Health System in Philadelphia: I would like to think that educating the public and the politicians would be sufficient. However, I'm doubtful we will gain a sympathetic ear when we explain that we must cost shift to compensate for health plans (most notably Medicaid) that don't pay their fair share or for large numbers of uninsured, no-pay patients. Hospitals need to establish a charity-care and self-pay payment policy. Hospitals should work with self-pay patients and price services at a fair and consistent rate (for example, Medicare or full costs plus 10 to 25 percent).
Marty Manning, vice president of finance at Advocate Health Care, Oak Brook, Illinois: Earlier this year, the American Hospital Association advised all hospitals to review their current policies and procedures related to charity-care and debt collection practices. I cannot emphasize enough the importance of undertaking such a review -- from the perspective of those (such as the uninsured) who are most likely to benefit from a compassionate and socially responsible program, or suffer from a program that is poorly administered.
Aside from getting their own houses in order relative to charity-care and debt-collection practices, hospitals and their professional organizations should reassess their role in clarifying the public debate over the issue of the uninsured. Certain private interest groups have been all too successful lately in hijacking the issue of the uninsured and, in effect, blaming the issue on the hospitals. In effect, they are saying, "If the hospitals would only provide care for free as they're supposed to, then there wouldn't be a problem." This is like blaming the problem of hunger on the grocery stores.
Hospitals know only too well that the industry cannot afford to absorb the cost for caring for the nation's uninsured and still remain financially viable, and that the ultimate solution lies with the government to ensure affordable health care access and funding is available to all. In the context of these recent campaigns to blame the problem of the uninsured on the provider community, hospitals are not doing enough to get the correct message across to legislators and opinion leaders in the communities they serve.
SOURCE:
"Hospital Charging and Collection Practices: What Hospitals Can Do, and What Government Should Do," HFMA CFO Forum Quarterly Insights, Winter 2004. Full text available to CFO Forum members only.
Additional Resources
- "From the President: Charging and Collection Concerns," by Richard L. Clarke, FHFMA, hfm, August 2003
- "Healthcare Complexities Work Against All of Us," Richard L. Clarke's letter to the editor, published in the November 28, 2003, Wall Street Journal.
- Uninsured Patients: Comprehensive listing of HFMA products and services
- The PATIENT FRIENDLY BILLING® project
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume III, Issue 3. Copyright 2004, Healthcare Financial Management Association. All rights reserved.