Owhile the goal of the US healthcare system is to improve health and well-being, it causes financial hardship for many people. One in five U.S. households has a medical debt, making it the most common form of unpaid bill that consumers are contacted by debt collectors about, and a reason many people forgo seeking health care. what they need.
Existing strategies — such as stopping lawsuits, negotiating repayment terms, buying debt out of charities, and even removing medical debt from credit reports — are laudable and helping some consumers manage their debt. The Biden-Harris administration’s recent executive order will offer further assistance by minimizing the financial implications of medical debt, such as consumer credit reports.
But these efforts don’t go far enough to prevent medical debt from happening in the first place. In fact, the administration’s executive order includes holding health care providers accountable for harmful practices that lead to medical debt. New solutions are needed to prevent medical debt and its adverse effects on the financial situation, health and general well-being of consumers.
The Financial Health Network, the organization I work for, has published a series of reports on preventing medical debt, with support from the Robert Wood Johnson Foundation and input from various health care stakeholders. Reports show that healthcare players – hospitals, insurers, insurance-sponsoring employers and others – can all intervene earlier to reduce the risk of debilitating medical debt. The reports, which are referenced in the executive order, outline specific steps and strategies that various healthcare actors can take to prevent this type of debt in their patients.
This essay focuses only on what hospitals and health systems can do. Recommendations for other health actors are available here.
Medical debt is a social determinant of health and a driver of health inequalities
As hospitals and health systems seek strategies to improve equity, addressing medical debt should be a top priority. Most consumers can’t afford an unexpected expense of $400 or more, and health insurance doesn’t always protect consumers against unexpected out-of-pocket payments and copayments that can lead to debt. About two-thirds of people with medical debt or problems paying medical bills say they or the household member who incurred the bill were insured. Additionally, research shows that debt-related stress is associated with a threefold incidence of mental health issues such as anxiety, stress, or depression.
Medical debt also has significant implications for the financial stability of an individual or a family. This forces trade-offs between paying off debt and buying other items needed to manage daily needs and build wealth. This includes basic necessities like food and housing and other living costs like paying for education, investing in career advancement, building up savings, and repayment or avoidance. other debts, such as credit card debts.
The burden of medical debt and its harmful consequences disproportionately affect those in poorer health, people with disabilities and people of color. In fact, 28% of black households and 21% of Hispanic households have medical debt compared to 17% of white households. Additionally, communities of color tend to experience higher median amounts of medical debt and are more likely to experience overall financial hardship, which the pandemic has compounded.
How hospitals and health systems can intervene before patients go into debt
Medical debt is often the byproduct of opaque health care prices, high out-of-pocket costs, misunderstandings about what insurance will pay, limited provider options or networks, unexpected health care events, and lack of awareness or eligibility for charitable care programs. And while policy solutions are needed to address the “upstream” drivers of medical debt, including rising costs of care, increasing healthcare cost sharing, and structural factors at the origin of inequalities, hospitals and health systems shape patient care experiences that can ultimately lead to medical problems. debt and its devastating effects.
Our reports identify three key areas of opportunity for hospitals and health systems to help patients prevent medical debt, and outline specific, actionable strategies they can adopt:
Improve financial assistance and reimbursement programs. In particular, hospitals and health systems can prevent medical debt by expanding, simplifying and innovating both financial assistance and flexible repayment options, and ensuring that they are widely and easily accessible to all, including including insureds. Quick action in this area can be a quick win for hospitals and health systems, and can make more financial sense than pursuing debt collection.
Kaiser Permanente, for example, provides financial assistance to uninsured and underinsured patients who earn up to 400% of the federal poverty level; patients with high medical expenses relative to their income may also be eligible. Kaiser also created a Financial Assistance Policy Council with representatives from various health system departments, such as financial and community health, which meets regularly to evaluate and adjust the company’s financial assistance program. This board reports to an accountable executive at the executive level.
Financial Health Network reports also strongly recommend assuming financial aid eligibility and meaningful voter participation in setting financial aid policies. Nor should hospitals and health systems charge uninsured, underinsured, and out-of-network patients prices higher than those paid by in-network insurers.
Support patients in making informed decisions. Hospitals and health systems need to help patients make informed decisions about planning and paying for their care. This includes using – and improving – price transparency tools, ensuring patients understand their out-of-pocket expenses, integrating cost-of-care conversations into provider-patient interactions, helping patients to navigate their options and ensuring they feel supported in making those decisions. . Clinicians, navigators, revenue cycle staff, and other care team members and staff play a role.
Providence St. Joseph Health exemplifies this approach with its pilot of a software solution designed to improve access to care for uninsured and underinsured patients, optimize financial navigators and cost-of-care conversations, and better target investments in community benefits. This data-driven approach helps Providence streamline benefit investigation, estimating out-of-pocket expenses, and enrolling and managing approved financial aid programs.
Proactively identify and support patients at risk of medical debt. Hospitals and health systems can reduce patient medical debt by becoming more proactive in identifying equity gaps, using patient-centered approaches to access ability to pay, and directly connecting patients to financial assistance and repayment options. For example, community health needs assessments should proactively explore the extent to which community members are struggling to pay medical bills, medical debts, and ability to afford unexpected health care costs.
By working to prevent medical debt, hospitals and health systems, in collaboration with insurers and employers, can not only improve patient well-being, but also improve patient care experiences, increase value for patients, build patient trust and loyalty, and signal a commitment to patients and community equity and well-being.
Michelle Proser is Senior Director of Healthcare Markets for the Financial Health Network and former Director of Research at the National Association of Community Health Centers.