Here’s a well-known, unfortunate fact: a greater portion of the out-of-pocket healthcare costs consumers face are the result of insurance plans with high deductibles, co-payments, and co-insurance. Here’s something that is not as well known: when patients with these unaffordable co-payments, co-insurance, and high-deductibles receive care, they often can’t pay their expenses and the hospital treating them is left with unpaid debt.
Once that happens, the current system is set up so that healthcare providers are responsible for trying to collect the relevant co-insurance, deductibles, and co-payments that patients owe after claims have been adjudicated and paid by insurance companies. But what happens after a hospital makes a good-faith, but unsuccessful, effort to get payment for its services from the patient? If the unfortunate patient just can’t pay because he or she is stuck with a financially debilitating policy that a health insurer has created and sold, should that be the end of the story? Or does the insurance company bear any responsibility for the expensive, impractical policies they are selling?
Proposed legislation before the Joint Committee on Financial Services addresses those questions. HB976, An Act Relative to Uncollected Co-pays, Co-insurance and Deductibles, requires providers to continue making the effort to collect what they are owed. But if the collection efforts are unsuccessful, the provider may submit a request to the patient’s insurer for reimbursement of 65% of the uncollected amount. This percentage is the same amount that the Medicare program reimburses hospitals for patients’ uncollected out-of-pocket expenses.
“Health insurance companies determine which products are created and sold and they establish the rules for those products,” said MHA’s Senior Vice President of Government Advocacy Mike Sroczynski. “However, healthcare providers alone must deal with patient confusion and anxiety about their financial responsibilities, bear the brunt of patient anger, expend considerable time and money attempting to collect patient liability after insurance, and write-off millions of dollars in bad debt annually when patients cannot, or choose not, to pay the amounts owed.”
The Center for Health Information and Analysis (CHIA) has documented the insurer-to-consumer shift in healthcare expenses. According to CHIA’s September 2019 annual report, membership in high-deductible plans grew from 24.5% in 2016, to 31.5%, representing 1.2 million Massachusetts members. According to CHIA, the majority of high-deductible plan members were enrolled through larger employers. However, 80% of unsubsidized individual purchasers and more than half of members covered through small and mid-size employers also enrolled in high-deductible plans in 2018. This is a significant increase from 2012, when only 14% of insurance company members were in high-deductible plans.
“As health insurers promote products that require ever-increasing and unaffordable co-payments, co-insurance, and deductibles, those insurers must take greater responsibility for the resulting bad debt that falls on those that provide care,” Sroczynski said. “HB976 levels the playing field, giving providers additional financial security for uncollectable debt without unduly burdening insurers.”