There is consensus that the issue of medical debt is widely experienced, regardless of income, race, ethnicity, age, gender or geography. There are myriad reasons for the medical debt crisis; these range from high out-of-pocket costs to a lack of savings or funds to buffer unexpected bills. In this context, how should hospitals respond to the growing concerns about medical debt? Hospitals and health systems can begin by reviewing their financial assistance policies and subsequent revenue cycle workflows to improve the early identification of people who struggle to afford their medical bills. The use of presumptive eligibility tools is an identified solution that catches people early in the process. These tools are used to estimate a patient’s income without a lengthy application; the hospital can then enroll them in financial assistance programs. Presumptive tools are necessary to avoid inadvertent billing of patients whose cannot afford to pay, greatly reducing harm.
As discussed in Part 1 of our blog series on presumptive eligibility for financial assistance, questions remain on how to use these tools effectively across the insured and the uninsured; these populations face different affordability challenges. In Part 2 of our blog series, we laid out questions and concerns about the power of algorithmic tools to produce accurate income estimates for the purposes of moving eligible patients into financial assistance programs without burdensome red tape. In this last blog in the series, we highlight cost considerations for hospitals looking to implement PE practices. A more in-depth brief will be released soon.
Income estimation tools are expensive and an important investment
Adopting income estimation tools and modifying practice to implement presumptive eligibility comes at a cost. Income estimation tools—a market that is rapidly evolving and growing—are not free. They can be part and parcel to larger medical billing software solutions (known as revenue cycle) or stand-alone products. Every time a patient is screened, there is a cost to run the data—and patient screening can occur multiple times throughout the billing process. While these ‘data pulls’ may cost pennies individually, they quickly add up as there are increasing numbers of patients who are unable to pay medical bills. This is particularly challenging for ‘self-pay’ balances after insurance, an alarming trend. For patients with high deductibles and cost-sharing obligations, these bills represent their out-of-pocket costs and are unaffordable.
Larger health systems may be better positioned to absorb these costs and see a reduction in administrative burden while smaller hospitals, namely rural hospitals may be stretched to integrate new technologies like presumptive screening into their workflow.
Despite the cost concerns with presumptive tools, the benefits still outweigh the cost and should be understood as a long-term investment. Presumptive tools ultimately make administrating financial assistance programs easier for hospital staff; further, they build trust with community members and keep patients accessing the care they need.
Presumptive tools respond to volume
The process for individual income verification does not align well with income estimation simply due to volume. The benefit of software tools is that hospitals can run hundreds of files at a time, estimating income in batches. This can mean moving people swiftly into financial assistance programs for which they are eligible without ever having to burden the patient.
States are taking note
It is worth noting that income documentation is a cornerstone of need-based programs, meaning that large numbers of people have had their income verified by the government already—whether to enroll in the food stamps program (SNAP) or to qualify for an ACA marketplace plan and subsidies. Some states are leveraging these programs as proxies for financial assistance. In Illinois, there are multiple categories that qualify for presumptive eligibility for financial assistance. The hospitals are directed to “determine if eligibility for hospital financial assistance without further scrutiny;” there is no documented standard practice, which means the way this is operationalized varies by hospital. Other states, like Oregon, are advancing more aggressive screening requirements that require hospitals to presumptively screen all patients with medical bills over $500 for financial assistance, regardless of insurance.
As always, ‘it’s complicated.’
Early indications are that presumptive eligibility tools are not a ‘drop in’ fix—instead, change will require a full review of the medical billing workflow and cultural shifts in how staff manage patient billing. Smaller hospitals and those with limited revenue may balk at the financial requirements of adopting these tools, but government funding and income verification support to operationalize a fast lane approach can help ease the burden. Additionally, nonprofits like DollarFor can offer support to pre-screen individuals, providing a low-cost and reliable approach to screening people for financial assistance.
Stay tuned for a more in-depth brief on Presumptive Eligibility.