Communication is key when it comes to addressing a patient's financial responsibility for medical bills. To help with those uncomfortable conversations, the Healthcare Financial Management Association (HFMA) recently released Best Practices for the Fair Resolution of Patients' Medical Bills.
Designed to be used by providers, their business affiliates and credit bureaus, the best practices were jointly published with the Association for Credit Collection Professionals. The 28-page report updates guidance originally released in 2014. The HFMA Medical Debt Collection Task Force, which includes providers, consumer advocates, collections agencies and credit bureaus, reconvened in 2020 to update and add best practices, particularly financial assistance response to COVID-19 and future health emergencies.
"Strains from the pandemic, changes in collection laws, increased transparency expectations and available tools made it the right time to update the guidance," said HFMA Senior Vice President for Content & Professional Practice Guidance Richard Gundling, FHFMA, CMA.
The release coincided with the upheaval surrounding the pandemic. "We saw a spike in unemployment and a loss of insurance," Gundling said. "Hospitals were backing away from collection policies because communities were hurting. Yet, that's the time to have solid processes in place. A job loss should serve as a trigger for providers to discuss options the patient might not know are available, including Medicaid eligibility, ACA Marketplace plans and financial assistance programs."
The updated guidance provides detailed information on each step in the accounts receivable process from recommendations for pre-service financial communications and best practices for resolution of medical debt post-discharge to working with account resolution business affiliates and accounts sent to a collection agency.
"The best opportunity to avoid difficult conversations down the line is to outline financial responsibility and collection procedures up front, whenever possible" Gundling said. "It's about communication. Everybody has such variable coverage and costs. Patients should be able to get a good estimate of what the cost will be. Can they afford it? If the answer is 'no,' then ask why.
"It's not a matter of just giving them a laundry list of prices. You have to explain the costs. This pre-service conversation provides a natural opportunity to discuss other coverage options, interest free medical financing, and financial assistance programs from pharmaceutical companies, manufacturers and provider entities. Even with coverage in place, provider participation changes over time, so it might warrant a discussion about finding an in-network provider. Timing for elective procedures or the course of treatment are also topics to be considered. Do two drugs work equally well with one being less expensive or covered on the patient's plan? Those are options that can be explored on the front end."
Even when there isn't much opportunity to reduce pricing, Gundling said setting expectations is valuable. "It's better to know up front than to get home and have a bill you didn't anticipate," he said. "Of course, emergency situations often don't allow for pre-service conversations. In those cases, discussing financial responsibility has to come later. You want the conversation as soon as possible in the course of treatment, but if the patient is not ready, then follow up when they are."
To that end, provider entities should review their bills to ensure they are as clear and concise as possible without a lot of medical jargon. That said, bills should provide necessary information on treatment costs, patient's financial responsibility and a contact number to call for clarification. "A patient is much more likely to pay a bill they understand and were expecting," Gundling said.
The HFMA best practices report notes that all account resolution efforts should follow the formally documented provider collection policies that have been approved by the board or other authorizing body. This is also true for all business affiliates under contract with providers. Additionally, affiliates need timely and accurate information to service accounts, making regular reconciliations between the provider's system and affiliate's system critical to ensure balances are accurate and in sync.
For accounts deemed a bad debt risk, those outstanding balances are often turned over to a collections agency after other steps have failed. "Work with collection agencies to make sure those agencies are also following best practices and the mission of the hospital," Gundling said.
Providers should have a formal policy established regarding the use of extraordinary collection actions (ECAs) as defined by the IRS. These ECAs could include a lien on property, wage garnishment or lawsuits. However, HFMA's best practice document notes using ECAs is optional and must be weighed in light of potential negative impacts. The report includes a checklist of internal controls to consider before moving to this step.
"There is always a balance with collections," Gundling said. "Providers need resources to run, but also want to make sure patients receive the care they need. Providers need to have people who are empathetic explain financial policies to patients up front."
Best Practices for Resolution of Medical Accounts is freely accessible on the HFMA website. From the hfma.org homepage, click on the Industry Initiatives tab and then select Healthcare Dollars and Sense for the report and additional resources. A direct link to the page is also available in the online version of this article on our site at BirminghamMedicalNews.com.