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Life Health > Long-Term Care Planning

Hospitals face gap in collections from insured patients

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U.S. hospitals may get less than half of what they think the patients are responsible for paying out of their own pockets for outpatient care, and less than one-third of the amount owed for inpatient care.

Analysts at Chicago-based Crowe Horwath LLP, an accounting firm, have reported that finding in a look at how commercial health plan efforts to shift more responsibility for payments to patients have affected U.S. hospital revenue.

Insurers describe that approach as “increasing patients’ out-of-pocket costs.” Health policy specialists also refer to that approach as “giving patients more skin in the game.”

Crowe Horwath analysts measured how much of the out-of-pocket cost total hospitals really get by reviewing bills for commercially insured patients at 660 hospitals in 42 states.

Related: Health plan coverage gaps give hospitals sunburn

Hospitals develop “chargemaster” rates, or list prices, that few insured patients actually pay. Health plans usually use provider network agreements and other mechanisms to set the actual reimbursement rates. The Crowe Horwath analysts based their work on the actual allowable rates for insured patients, not the chargemaster rates.

In theory, patients’ responsibility for allowable inpatient bills increased to 12.1 percent of the total in the third quarter, from 10.2 percent in the third quarter of 2015.

The patients’ responsibility for allowable outpatient bills rose to 26.9 percent, up from 23.3 percent.

But, in the third quarter, when the hospitals in the study billed insured patients, they collected only 41 percent of the patient responsibility amounts for outpatient care, and only 31 percent of the patient responsibility amounts for inpatient care.

Insurers, self-insured employer plans and other commercial payers paid about 95 percent of their share of what hospitals believed to be the allowable inpatient and outpatient charges.

Hospitals succeeded at increasing the patient responsibility collections rate in the latest quarter: Hospitals collected 10.9 percent of the allowed amount for outpatient care and 3.8 percent of the allowed amount for inpatient care.

That was up from 9.5 percent of the allowed amount for outpatient care and 3.2 percent of the allowed amount for inpatient care in the third quarter of 2015.

Crowe Horwarth says hospitals might be able to improve the collections rate by working to collect more of the payments when patients come in for care. 

Clarification: The original version of this story described patients’ role in patient responsibility collections in a different way. Crowe Horwath says collection rates may reflect a variety of factors in addition to patients’ propensity to pay the billed amounts.


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