Rukavina said the effect of these payment plans on patients' credit scores will vary by vendor. For patients, the relevant question is at what point the account will be turned over to collection agencies.
“The majority of lenders really don't report to credit reporting agencies if the individual is working with them,” said Sainsbury-Wong at Health Law Advocates. “It's at the discretion of that provider when they do report to collection agencies.”
Garnier said providers historically have not felt pressure to be aggressive about pursuing delinquent balances because the bulk of their revenue came from insurers. “Now the providers can't afford to ignore the self-pay patients,” she added.
Two years ago, Memorial Healthcare, a 134-bed facility in Owosso, Mich., added a financing program through CarePayment as part of its broader effort to match patients who need financial assistance to programs that can help them. That includes helping uninsured patients enroll in an Obamacare exchange plan or sign up for Medicaid.
The no-interest financing program helped fill the gap for underinsured patients—those whose plans don't cover a particular service or that feature high cost-sharing. “It does an awful lot to help patients with a desire to pay,” said Memorial President and CEO Brian Long.
While Memorial runs a credit check on all patients who apply for financing, Long said the payment plan does not affect patients' credit scores because the hospital underwrites the liability for nonpayment. What the credit score determines is whether CarePayment will pay Memorial the full billing amount upfront, based on a strong credit score, or pay the hospital as the patient's payment installments arrive each month.
If a patient defaults, then the hospital pursues its normal process for adjudicating the account, Long said.
As a result of the program, even as Memorial's volume of self-pay patients has grown, bad debt has declined by $500,000, or 7.5%. “I think we've done a good job of helping patients by offering a number of tools,” Long said.
Follow Beth Kutscher on Twitter: @MHbkutscher