Patient Payment Responsibility up 13% in One Year
TransUnion Healthcare Report shows more than 50% of patients owe more than $1,000
A new TransUnion Healthcare (NYSE:TRU) analysis found that patients continue to face an increased financial burden as their healthcare costs rise and revolving credit lines decline. TransUnion’s latest Healthcare Report was released today at the 2016 Healthcare Financial Management Association's Annual National Institute in Las Vegas.
The Healthcare Report demonstrated how payment responsibility for medical costs continues to shift from employers to patients. Between 2014 and 2015, patients experienced a 13% increase in both deductible and out-of-pocket maximum costs. The average deductible for consumers in 2015 was $1,278 while out-of-pocket costs rose to $3,470. Medical procedures with the highest out-of-pocket costs for patients, included: Dermatology ($2,451), Orthopedics ($2,405) and General Surgery ($2,264).
“It’s clear that patients are becoming the new payer – a major source for payments to hospitals at both the time of service and after procedures. As hospitals navigate this new era of patient payments, we expect to see them provide more financing options to help patients meet their financial obligations. Healthcare providers also will evaluate resources, such as a patient’s propensity to pay, and engage with patients much earlier regarding financial discussions to ensure the patient is well educated to the cost of their care. This will help the patient keep their focus on getting better versus the worry about paying a large bill.”
Higher medical costs are likely impacting how consumers pay their medical bills. As of Q1 2016, approximately 51% of patients owe more than $1000 to their healthcare providers. Nearly eight in 10 patients (77%) owe more than $500.
TransUnion Healthcare’s proprietary ratio comparing available revolving credit to select healthcare costs reinforces this, as the ratio declined to 17.2 to 1 in Q1 2016. The ratio means that for every $100 in healthcare costs, consumers had $1,720 in revolving credit to potentially make those payments at the end of March 2016. Just one year prior, consumers had $2,250 in revolving credit for medical costs as the ratio stood at 22.5 to 1 in Q1 2015.
TransUnion’s analysis found that patients in the subprime risk tier, generally the highest-risk consumers with a VantageScore 3.0 of 600 or below, are in an even more perilous position. As of Q1 2016, these patients only had $420 in revolving credit for every $100 in healthcare costs. In Q1 2015, these same patients had $600.
TransUnion Healthcare Cost Ratio (Q1 2014 – Q1 2016)
For Every $100 in Healthcare Costs, Consumers Had the Following Revolving Credit to Potentially Make Those Payments
“Our findings emphatically demonstrate that despite the advent of the Affordable Care Act, more patients are struggling to pay their healthcare costs. In fact, patient payment responsibility continues to rise even as they have less available credit to make their healthcare payments. It’s a precarious position for consumers and healthcare providers alike, but fortunately many hospitals are beginning to implement new technologies that can help alleviate some of these issues now and in the future.”
With millions of dollars of unpaid medical bills, many hospitals are instituting new processes to recover monies owed to them. TransUnion Healthcare’s insurance discovery solution, eScan, has helped hospitals, health systems and physician offices recover more than $1.2 billion in insurance payments. Previously, hospitals would have categorized this money as bad debt or charity care, which are known as uncompensated care. “An indication that healthcare providers are beginning to implement new, innovative processes to receive healthcare payments can be observed by the fact that $700 million of the $1.2 billon recovered dollars has occurred in just the last three years,” added McCarthy.
Transunion Healthcare also is working with hospitals to stratify their bad debt portfolio through its Financial Clearinghouse suite of solutions, which determine charity eligibility, ability (propensity) to pay, as well as community or full credit analyses.
“Employing these solutions at the front of the revenue cycle is an industry best practice,” said Wiik. “Given the increased payment risk to providers and the dilution of available credit, differentiating between a patients’ ability versus willingness to pay will become increasingly important for hospitals. Having processes and tools in place to establish funding mechanisms will benefit the patient and provider.”
The TransUnion Healthcare Report includes anonymous data estimates from thousands of providers, including hospitals and healthcare clinics from across the nation. The data points focus on patient payment responsibilities for key, commonly administered procedures. That information was, in turn, compared with financial data gathered from TransUnion’s proprietary Industry Insights Report, powered by PramaSM analytics. The TransUnion Healthcare Report looks at available revolving credit as an indicator for how consumers might cover out-of-pocket medical costs.
For more information about the TransUnion Healthcare Report, please visit http://www.transunioninsights.com/studies/healthcare. Attendees of the 2016 HFMA ANI can learn more about TransUnion Healthcare at Booth #830.
About TransUnion Healthcare
TransUnion Healthcare, a wholly owned subsidiary of credit and information management company TransUnion, empowers providers with Intelligence in an Instant® by providing data and analytics at the point of need. TransUnion offers a series of data solutions designed to provide greater ease of use, accuracy and transparency in the revenue cycle process thereby assisting providers in lowering their uncompensated care. TransUnion Healthcare was recently rated the highest performing vendor by the KLAS 2014 Patient Access Report for its patient payment estimation and propensity to pay solutions. www.transunionhealthcare.com
About TransUnion (NYSE:TRU)
Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.
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