Solutions for the No-Pay Self-Pay Patient
By Philip Betbeze
This article appears in the May 2012 issue of HealthLeaders magazine.
One of hospitals’ most vexing problems is absorbing the cost of care from the uninsured. For years, these patients have been called self-pay, but that term is a misnomer. In most cases, it’s code for non-pay. The reasons they don’t pay are numerous and complex, but some hospitals and health systems are starting to figure out there’s a better way to get reimbursed, one that is less stressful for the patient and more efficient for the provider.
Hospitals can try to help patients achieve coverage, but such efforts can be uneven because of the huge variety of assistance programs other than Medicaid, each with its own bureaucracy. There are also time limits for reimbursement dependent on the date of service, and the patient has to take some action, which is often overly burdensome.
The way some hospitals deal with this group of patients has sometimes led to embarrassing outcomes—some have been taken to task for aggressive collection efforts. Such relationships are hardly good grist for a great patient experience, either. Historically, attempts at solving this problem have proved laborious—for little tangible return.
In the emergency department, hospitals are required to provide care regardless of a patient’s ability to pay, but many hospitals also provide needed care outside the ED to those who cannot afford to pay for it. Whether the hospital or health system ultimately receives any reimbursement for that care depends on a confusing mishmash of collection efforts and patient-dependent navigation of public assistance programs, often compounded by patient embarrassment or sometimes plain indifference. But many—even a majority—of these patients qualify for some form of financial assistance, according to the Foundation for Health Coverage Education. Both hospitals and patients are left clamoring for innovative solutions to cut down on the complex, labor-intensive bureaucracy that stymies their ability to access these sources of reimbursement.
PPACA doesn’t necessarily help
Until enrollment is greatly simplified, hospitals and health systems will always be looking for better ways to find coverage for the uninsured. For hospitals and health systems, losses stemming from the uninsured can be huge. Hospitals write off millions in bad debt and provide charity care dollars for patients who can’t easily find coverage—and seem poised to continue to do so. That’s despite the looming implementation, through the Patient Protection and Affordable Care Act, of the requirement for citizens to obtain insurance, slated for 2014. Even in 2014, when the health insurance exchanges and penalties for not obtaining health insurance kick in, patients will still have to take action, and that’s exactly where the current problem lies, says Phil Lebherz, executive director of the FHCE, a nonprofit he founded in 2004 to help find already-existing coverage for uninsured in California.
“They’ve made it very difficult for people to sign up,” he says, speaking generally of programs that provide assistance to the uninsured. “It’s a big bureaucracy, with a fragmented system that’s difficult to navigate.”
FHCE started with a simple pamphlet in 2004 that listed all the available options for uninsured patients to obtain coverage. The pamphlet was simple, but the number of healthcare coverage options was extensive, and navigating from there was difficult for patients who, in addition to medical concerns, often have difficulty reading and comprehending. Add to that the waiting at the various assistance agencies. Given the huge bills hospitals generate for even the most mundane of care, for many patients it’s easier just to ignore the question of payment.
Since 2004, the FHCE, which is funded in large part via donations from a mix of foundations, companies, and individuals, has gone digital. Users navigate to the main webpage, answer five simple questions, and the site “funnels” them, Lebherz says, to programs for which they are eligible. It provides them the forms they need to fill out, instructions on where to go to file the form, and what they need to take with them (e.g., a birth certificate or a copy of a recent tax return). Anyone can use the site, and it’s free; many do come there on their own. He estimates that based on what he’s learned since the site went live, first in California and then nationwide, that up to 30 million of those counted currently as uninsured are eligible for some kind of assistance.
But depending on patients to do all of this on their own is not the idea, says Lebherz, who in his day job is founder, chairman, and CEO of LISI, a San Mateo, Calif.–based company that provides eligibility support services for employee benefits insurance brokers. Neither is it the idea to just determine whether the self-pay patient is eligible for assistance, which is all the site is able to do now.
Point-of-care enrollment is the ultimate goal, he says, and that means hospitals have to get involved.
Many, especially in California, already have.
Sharp’s case study
In 2009, Gerilynn Sevenikar, the vice president of patient financial services at Sharp Healthcare, a nonprofit integrated delivery system in San Diego, says her team started noticing a sharp decline in self-pay payments (7%) coupled with a sharp increase in self-pay volume (17%). That coincided with a sharp rise in unemployment in San Diego County, from around 5% to 12%. Looking for a way to improve payment through better navigation of federal and state payment sources, she brought in Lebherz to speak to her 25-person collection staff from all the health system’s departments. She says that’s when the idea of teaming up with FHCE came up. Starting with the ED population, which because of their short stays are particularly hard to help, Sevenikar says her team began integrating use of the site and its tools at patient registration.
“Phil designed a component of [FHCE's] website where it has the Sharp logo and a direct link from my patient registration to the website screening, so I could produce a custom matrix of those funding options they would be eligible for,” she says. “Now we have it embedded in our registration process.”
She says most self-pay patients, in her experience, don’t want to stick the hospital with the bill, but because of the laborious nature of qualifying for assistance on both the patient and hospital end, that’s the way it often ended up.
“Now, not only can I follow up with patients but I can make intelligent decisions about how to settle their balance,” she says.
Patients feel better because they’re presented with workable options for getting coverage, even if the problems with bureaucracy at the agencies providing assistance are still a big barrier. Sevenikar also says that more than 80% of Sharp’s patients classified as uninsured are eligible for some assistance if they follow through with the process.
A better relationship
That’s where the relationship between the hospital and the patient has changed markedly, she says. And it’s not just the patient’s attitude that is changing.
“It’s actually changing the mindset of my team that collects from self-pay patients,” she says. “We work with them, hear their story, and do what’s right as opposed to pushing patients into situations that make them feel uncomfortable. I changed the tone in all my self-pay letters from ‘This is a collection effort’ to a more of an approach of ‘We’re here to help you. You’re eligible for a discount. Please call us.’”
It turns out that patients are a lot more receptive to the idea of people helping them “versus just trying to get their credit card information,” she says. “The more important thing for my team is—because they’re asking the five key questions on the eligibility quiz—they go into a really informed discussion with the patient instead of not knowing where they’re starting from.”
Perhaps best of all, given Sevenikar’s position, is that over the three years that Sharp has been partnering with FHCE and through other internal initiatives, it’s recovered $4.7 million in revenue that would not have been available otherwise.
“Had we done nothing, I would’ve expected our self-pay to decline or stay flat,” she says. FCHE has done similar work with Catholic Healthcare West and the Daughters of Charity Health System in California, and is a referral resource for patients who contact the American Cancer Society, the American Diabetes Association, the American Lung Association, and the American Heart Association seeking assistance
Lebherz says what’s happening now is great, but a real revolution will occur if agencies begin to allow point-of-care enrollment in public assistance programs. Though it’s a nonprofit, FHCE is considering making the software available to hospitals. The software will allow hospitals to assess eligibility through a predictive-modeling structure at the point of care, improve work flow efficiencies by identifying all health coverage options available, and interfacing in a cloud delivery model with the hospital’s electronic medical record system.
Self-pay as your profit margin
Hospitals and health systems, generally, operate on such thin margins that a small percentage of revenue either way makes the different between profit and loss on an annual basis. Given Sharp’s example, and that of countless other hospitals nationwide, getting coverage for the uninsured can mean the difference between a year in the red or in the black.
T. Ulrich Brechbühl, CEO of Chamberlin Edmonds, now part of Emdeon, and senior vice president of Emdeon Revenue Cycle Solutions, says the number of uninsured has grown in the United States by about 15%–18% since 2008. Chamberlin Edmonds, an Atlanta-based for-profit company, has helped hospitals with eligibility services for the uninsured for 25 years. It focuses on optimizing institutions’ eligibility and enrollment activities without creating a burden on public agencies, as Brechbühl says many of them are dealing with a huge workload due to the increase in outpatient assistance requests.
For example, he says, the average outpatient visit is only worth a fraction of the inpatient visit.
“If the average inpatient reimbursement is $20,000, the average outpatient reimbursement is less than $1,000,” he says. “All these applications get submitted to the same agencies. The problem becomes when you flood the agencies with a bunch of low-dollar visits, the agency is obligated to process them in order.”
That can be a problem for a hospital looking to maximize its return on investment for patient eligibility work, especially with the dramatic increase in outpatient demand, he says, adding that five years ago, less than half the patients referred to his company for eligibility work were outpatient based. Now, he says, it’s two to one in favor of outpatient, yet the payment disparity obviously remains.
“At the end of the day, the basic situation hospitals find themselves in is being mandated to give care long before they know whether they will be compensated,” says Brechbühl. “Time has proven that the best approach is to be very proactive—ideally before the patient receives treatment.”
Carol McDonald, the vice president of patient financial services at 651-staffed-bed Albany (NY) Medical Center, an academic, urban, Level I trauma center, has spent a lot of time and effort trying to figure out such proactive, tailored solutions—difficult given the variety of uninsured patients that are her responsibility, as well as the variety of public assistance programs and their unique eligibility rules.
“We’ve had a fairly large indigent population for many years. If you’ve got it, you tend to figure out how to mitigate it very quickly,” she says, adding that “There are significant resources going toward meeting the needs of this population.”
One option is to refer patients to the hospital’s self-funded charity care program. But with limited resources, she and her team have to make every effort to exhaust other payment opportunities from social service agencies as well as the state Medicaid program.
“We really have a very broad group of players with an algorithm about how we identify and roll out the right program to the patient,” she says.
A lot of effort is spent as early as possible. Especially with nonemergent cases, AMC seeks to get patients eligible prior to their procedure and makes an effort to educate patients about the financial process, ease their minds about how their care will be paid for, and explain their responsibilities, if any, in the process. Plus, it makes the billing process a lot smoother to have a patient prequalified.
“The last thing you want to do is send a patient a bill and say, ‘Three months ago, you could’ve applied for this or that program. Too bad, now you owe me all this money.’ That’s just not going to work.”
McDonald and her team have arrived at a variety of solutions that funnel patients to the proper person who can help.
For instance, AMC worked out agreements with three local social services departments and has been designated in nine primary counties to administer financial aid and charity care. A combination of staff, which includes a senior Medicaid examiner, a contract with Chamberlin Edmonds, and AMC case management personnel makes sure the proper applications are filed so that patients can receive aid after discharge and will be eligible if they have to come back to the hospital or any community entity. It’s all part of a broader strategy of working on the continuum of care for all patients, but it results in a more cohesive patient payment and care strategy as well.
This method of segmenting the population for tailored payment interventions has paid off. In 2011, AMC collected more than $12.5 million that would likely have been classified as uncompensated care. That resulted from segmenting probable qualified patients to get those consultations. Of 1,427 patients receiving care who were referred to the program, 477 were accepted for both federal and state coverage for their care. Many of those not approved due to eligibility issues received some assistance from the hospital or other sources.
Some of the internal application programs have also helped in less tangible ways, McDonald explains, in improving the hospital’s relationship with the patient.
“It’s a more friendly environment. Many of our patients, certainly over the past few years, were folks who have always been able to fend for themselves,” she says. “There’s a certain sense of pride when one does not have to stand in line at the department of social services.”