HFMA eyes adoption of medical debt-collection guidelines

In 2012, when the Minnesota attorney general sued Chicago-based healthcare consulting company Accretive Health for its aggressive debt-collection practices, the case laid bare what many in healthcare already knew: There were no industrywide standards for medical-debt resolution.

“Medical billing was like the Wild West,” said Mark Rukavina, principal at Community Health Advisors, Chestnut Hill, Mass., and former head of a consumer advocacy group. “If you asked, 'What is the timeframe after which a medical bill is sent to collection?' the answer would have been, 'It depends.' ”

And it wasn't just whether or when bills were sent to collection agencies. Hospitals and other healthcare organizations had varying policies about how to communicate with patients about their bills and identify patients who were eligible for financial assistance.

With state and federal scrutiny intensifying, the time was right for the industry to issue its own set of standards, said Robert Mueller, vice president of revenue cycle at St. Luke's Health System, Boise, Idaho. “We knew we had to influence ourselves or someone else was going to do it for us,” he said.

Mueller served on a 15-member medical-debt collection task force convened over a year ago by the Healthcare Financial Management Association, tasked with drafting guidance related to medical account resolution. The task force, composed of representatives from provider organizations, collection agencies, patient advocates and credit firms such as Experian, released its recommendations in January.

“We realized this was becoming a bigger and bigger issue and we needed to address it, especially because of the growth of high-deductible plans and higher out-of-pocket costs,” said Joe Fifer, the HFMA's CEO.

The task force report called for the use of clear, concise and easy-to-read bills, thorough communication with patients about their share of expenses, and consistency in areas such as billing disputes. Reporting an account to a credit bureau should occur no earlier than 120 days from the first statement, the task force recommended. And when unpaid bills are reported to credit bureaus, providers must notify the bureaus when those accounts are resolved.

The report's guidelines were designed to align with the more stringent medical-debt collection rules in the Patient Protection and Affordable Care Act, which require hospitals to have written financial assistance policies and to make attempts to identify patients who qualify for assistance.

The report urged providers to make financial assistance policies easily accessible to patients and to check in regularly with collection agencies and other affiliates to ensure balances are accurate. The task force included a workflow diagram showing the steps of account resolution. “Many of these are pretty common-sense practices, but they were not necessarily widespread,” said Rukavina.

Fifer said it's hard to gauge how much provider practices have actually changed in the 11 months since the task force released its recommendations. But industry response to the debt-resolution report—and to two earlier HFMA reports on price transparency and communicating with patients about financial matters—has been positive, he said.

“These guidelines are not an exact recipe, but they are a blueprint that can be adapted for each organization,” Fifer said.

Diane Watkins, vice president of revenue cycle at nine-hospital St. Luke's Health System, Kansas City, Mo., who served on the task force, said her system has worked to refine its revenue-cycle practices over the past decade. It has implemented simplified billing processes and provided patients with out-of-pocket cost estimates for scheduled services. The system does not allow collection agencies to report patient debt to credit bureaus.

“We stopped doing that a long time ago,” Watkins said. “We felt like it was more fair to patients and it also makes it easier to collect debt.”

Mueller, of St. Luke's in Boise, said that in June his system launched an online portal that allows patients to pay bills and set up payment plans.

There is still work to be done, Rukavina said, but the report was an important first step to rein in outliers and provide guidance.

“It's a work in progress, but there are some best practices now and that was not the case before,” he said. “They are voluntary, but they lay out what the healthcare industry and the collection industry think are reasonable. These were not developed by outsiders and there's credibility in that.”

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