Welcome... your bill is ready

Hospitals are increasingly contacting patients with scheduled procedures about their medical bills—and when the patients will be able to pay them—before or during a hospital visit.

Estimating what patients may owe for a scheduled surgery or procedure has grown more common and sophisticated as employers and insurance plans shift a greater share of medical costs to patients through higher deductibles or other out-of-pocket costs. The practice, hospital executives say, allows patients with scheduled procedures to comparison-shop and consider their options. It also can help prevent sticker shock after treatment and allows hospitals to more quickly identify patients who qualify for financial assistance, they say.

But the practice, which does not include urgent or emergent care, also relies on estimates that can change significantly once patients receive treatment, which can leave patients and their families irate.

Efforts to collect some or all of those estimated bills in advance of scheduled treatment have also increased.

Hospital executives say collecting bills before a patient arrives or before they go home has proven more successful and less expensive than sending a bill after the fact.

“We can always collect on the way in or the way out,” says Barbara Tapscott, vice president of revenue management at Geisinger Health System, which began five years ago to give patients an estimated bill ahead of a hospital stay.

Geisinger, based in Danville, Pa., contacts scheduled patients about estimated out-of-pocket costs before they arrive at the hospital, but also approaches hospitalized patients about their medical bills. Not all hospitalized patients, because of their condition, are able to meet with Geisinger's billing staff, but patients might be approached with physician approval, she says.

Some hospitals seek to reschedule patients who do not pay. That leaves patients' doctors to make the final call whether the procedure can be put off until the patient pays.

Hospital billing, a political flash point for years, was recently back in the news after Minnesota's attorney general released an investigation of a billing and collection company hired by a Twin Cities health system. The report, and a subsequent lawsuit, alleged the company violated patient privacy and consumer protection laws. Accretive Health, which settled with the attorney general and agreed not to do business in Minnesota for two years, denies the allegations.

Fairview Health Services risked losing its contract with Medicare at one hospital over billing violations that primarily focused on patients in the emergency room, where federal law requires hospitals to screen and stabilize patients before seeking payment. But two of the violations that threatened the University of Minnesota Medical Center-Fairview's Medicare contract were related to a patient with a scheduled surgery in 2011 who was asked before his operation to pay coinsurance of $10,000.

Fairview successfully addressed the violations—one for failure to follow its grievance procedure and another for failure to ensure patients are free from all forms of harassment—but the system declined to say how. “Fairview is not answering questions about specific patients,” a spokeswoman says in an e-mail. Fairview provides estimates for certain scheduled surgery and radiology patients, but does not always require pre-payment; the uninsured may be required to make a deposit, she says. Patients can request an estimate for any procedure.

Patients' rising financial burden has prompted more conversations between the billing office and physicians at Banner Health.

Jeni Erikson, Arizona senior director for patient financial services for Phoenix-based Banner, says the system consults doctors and the hospital chief medical officer to determine if a patient's condition is elective or emergent. Elective procedures may be rescheduled for patients who don't make an upfront payment.

“We don't determine it based solely on their ability to pay,” she says.

The size of deductibles has increased in recent years, and a larger percentage of patients are seeing those higher deductibles.

Health plans with deductibles of $1,000 or more have grown increasingly common. More than one-quarter of those insured with single coverage through their workplaces this year now have plans with a deductible at least that high, according to data from Kaiser Family Foundation and the Health Research & Educational Trust. That's compared with 6% of workers six years ago (see chart, at left).

The share of the workforce covered by high-deductible plans with a savings option has also increased during that time to 19% from 4%. The average deductible for single coverage this year totaled $2,086, an increase of 22% from 2006, according to the Kaiser/HRET survey.

Erikson says patients who have more time to respond to a payment request are more likely to pay. “They have time to think about it,” she says. So Banner Health seeks to contact patients, when possible, at least five days ahead of a scheduled procedure.

“We do not want to reschedule a patient,” she says. “It's part of patient satisfaction. We want to make sure they have the test that their physicians order for them.”

Executives at the Laurens County Health Care System, which has a 73-bed hospital in Clinton, S.C., started to ask doctors two years ago to consider whether procedures could be rescheduled when patients refuse to provide upfront payment.

Gary Morris, director of patient financial services for the rural hospital, said in a May interview that the hospital did so as more patients arrived at the facility without insurance. The government-owned hospital is in a county heavily dependent on the auto industry, according to records provided to bond investors.

Morris says the hospital asks all scheduled patients, uninsured and insured, for a deposit on their out-of-pocket costs. If doctors determine treatment is elective, not urgent, Morris says the hospital approaches a patient about rescheduling until they can make the deposit.

Hospital staff carefully distinguish that it's the patient's choice—not the hospital or doctor—to postpone treatment until they have the means to pay. “It's kind of a soft sell,” he says. Patients are not forced to reschedule, he says.

Morris says he received no complaints over the policy, however a few patients have walked out. Doctors have adapted to the policy by preemptively marking procedures as urgent, he says. The rescheduling policy applies only to services that are deemed nonurgent or nonemergencies.

“We are not trying to run people off,” Morris says. “We want their business, but we want also to be paid for our business.”

Centura Health in 2009 overhauled its efforts to give patients an estimate of costs and collect some of the amount ahead of their hospital stay.

“We knew where the market was headed,” says Colette Pierz, Centura's director of business operations and revenue management. Rising deductibles and patients' higher out-of-pocket costs prompted the move, she says. Patients are now better informed, and the hospital system, based in Englewood, Colo., has a better chance of collecting ahead of treatment rather than after the fact, she says.

Centura will seek to increase its upfront collections in 2013 to total 1.5% of its net patient revenue, up from 1% in 2010, she says.

The system seeks to collect at least half of patients' estimated costs ahead of treatment and offers payment plans for patients unable to pay, she says. Whether to reschedule treatment for patients who do not pay is made by each hospital after consultation with the patient's physician.

In New York City, NYU Langone Medical Center first began more than a decade ago to estimate medical bills for patients ahead of a scheduled hospital visit.

Debra Menaker, the hospital's senior director of revenue cycle operations, says the practice may not always be perceived as a service, but patients often do not fully understand their insurance benefits—and financial liabilities—until they are contacted by the hospital.

“It's kind of a reality check,” she says. An upfront estimate helps to avoid surprises, she adds. “None of us like a menu with no prices. That makes people uncomfortable.”

Early bill estimates also allow patients who need an elective procedure to consider their options “about where to go or what to do,” she says.

NYU Langone provides an estimate to expecting parents one month prior to their due date. Patients with a scheduled surgery or admission will get a bill within days of scheduling; how much time in advance of the visit depends on how far out the surgery or hospital stay is scheduled.

“We make every effort to work with the patient to make sure that it's manageable and so there are no surprises,” she says.

Meanwhile, the system spends less on bill collection and boosts its cash flow by providing patients with early estimates.

Menaker says patients who pay in advance no longer have to worry about the bill as they recover or as they care for a newborn. “It's one less thing you have to worry about,” she says.

The system will not turn away expectant parents who cannot pay, she says. Once a woman goes into labor, her condition is considered emergent. Delivery is “scheduled, but not elective,” Menaker says.

Holland (Mich.) Hospital provides the amount it will charge for a procedure to patients who request the information within 24 hours.

The 130-bed hospital has begun to adopt electronic insurance verification that will eventually include its scheduled services, says Julie Zukowski, director of patient financial affairs for the hospital.

When that happens, Zukowski says, the hospital will start contacting scheduled patients with an out-of-pocket estimate ahead of their visit. Zukowski says Holland Hospital will also seek to collect the amount, but won't reschedule if patients do not pay upfront.

Holland Hospital officials are aware that consumers who are now shouldering more of their medical costs are looking for price information, and other hospitals have, for example, made estimates available online.

“I know the industry is going that way,” she says.

Hospitals that do provide a price quote often struggle to convey to patients that the cost might change, says James Logsdon, vice president of revenue-cycle operations and strategic revenue services for Texas Health Resources, based in Arlington.

“We're trying to make something a science that just isn't a science,” he says. Unlike buying a lawn mower, the price for medical care can change by checkout.

The health system, which includes 14 hospitals, contracted with a company in January 2011 to replace a request for a deposit based on patients' insurance benefits with a more sophisticated estimate of out-of-pocket costs.

Logsdon called the deposit figure “crude” and says the new estimates are better, but still limited by the timeliness and accuracy of patients' insurance information and the unpredictable nature of medical care. Doctors may perform additional or alternative procedures compared with the services the estimate was based on, he says.

In 1 in 3 cases at Texas Health Resources, doctors perform the same services included in the original order and price estimate, he says. In those cases, estimates are 98% accurate, he says. For the remaining two-thirds of patients, the final bill varies from the estimate by at least 10%, he says.

And patients who may be pleased to be informed upfront about costs can be hugely dissatisfied when the final bills are significantly higher, Logsdon says. Many in the industry are interested in how to improve estimates, he says. “Everybody is struggling with this.”

Nonetheless, as more patients are grappling with higher out-of-pocket costs, they have begun to shop around for the best price, he says.

“The market kind of drove us there,” he says.

Health systems also are promoting more engaged patients and consumers. “We're trying to encourage patients to be better shoppers, to be better consumers, to take responsibility for their health and their health dollars,” he says.

Texas Health Resources is seeking to be competitive in that marketplace. The system's average charges for common inpatient services are listed online by the Texas Hospital Association. “We want them to have resources to do shopping.”

TAKEAWAY: Hospital policies vary widely on how much payment is expected upfront from patients scheduling nonurgent procedures and what the consequences might be if payment isn't made.