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Credit Checks Can Go a Long Way in Determining Consumers’ Ability to Pay

Healthcare providers are using credit checks at a higher rate to determine consumers’ ability to pay a bill and, in some cases, their overall spending activity and credit history, according to a report by Healthcare Finance Associate Editor Susan Morse.

The trend started to pick up with the Affordable Care Act in existence, a growing underinsured population and out-of-pocket costs for consumers, according to the article.  “The new self-pay accounts receivable is rising at an uncontrollable rate, creating an accounts receivable headache,” said Jordan Levitt, partner and cofounder of Payor Logic in the article. “They owe money; hospitals need a way to assess risk.”  

On the front end, a hospital can use a credit report to determine a consumers’ ability to pay their portion of a medical bill. David Esquivel, an attorney with Bass, Berry & Sims in Nashville, Tenn., said in the article that collection agencies use credit reports on the back end if they are working on accounts for a healthcare provider client.

“A credit report can show if the patient has a long history of not paying his or her bills, or whether good credit history indicates payment is worth pursuing,” according to Healthcare Finance.  A more detailed report can highlight consumers’ “lifestyle choices” and what they spend their money on in addition to how they keep up with their bills, according to the article. The cost of credit reports range from 50 cents up to $1.25, adding up to between $10,000 and $15,000 per month.

According to a 2015 study from Crowe Horwath LLP in 2015, hospitals in the U.S. are experiencing a change in their financial risk as a result of insured patients carrying more financial responsibility through their health plans, ACA International previously reported.  The study found that since the enactment of the Affordable Care Act in October 2013, overall provider collections have improved and part of their revenue has “shifted to a more reliable payer source from previously uninsured self-pay patient responsibility.”

Notably, total accounts receivable (A/R) from insured self-pay patients increased 13 percent from June 2014 to June 2015, according to the study. Total A/R over the same time period from uninsured self-pay patients decreased 22 percent, mostly as a result of high financial risk patients joining Medicaid in expansion states.  For every one uninsured self-pay patient payment dollar in the first quarter this year, there were approximately 22 insured self-pay patient payment dollars.

Lower average payments from the insured self-pay population weigh more heavily than uninsured payments on a provider’s bottom line, according to the report.  In 2015, three of the major U.S. consumer reporting agencies, Equifax, TransUnion and Experian, announced the National Consumer Assistance Plan, which includes changes to how consumers’ medical debts are listed on their credit reports, ACA reported in the May 2015 issue of Pulse.

The plan for CRAs aims to enhance their ability to collect complete and accurate consumer information and will provide consumers more transparency and a better experience interacting with credit bureaus about their consumer credit reports.  Medical debts won’t be reported until after a 180-day waiting period from the date of delinquency.

The plan will ensure medical debt information on consumers’ credit reports is accurate for healthcare providers evaluating those reports, but other details about their bill pay history and spending habits can be helpful if providers choose to access services that provide more in-depth reports.  More information:

News & Notes

Collections at Urgent Care Centers


ACA International board member Tom Gavinski spoke to Urgent Care magazine about the nuances behind outsourcing medical debt to third-party collection agencies. It’s a process that relies on timing, choosing the right partners and compliance. Tapping into a debt collection agency’s core competency and technology is sure to be a boon to an urgent care center’s bottom line.


M&A Activity Remains Strong in Second Quarter


Twenty-six hospital and health system transactions occurred in the second quarter, an increase from 23 transactions in the first quarter, according to an analysis by Kaufman Hall. Mergers and acquisitions “continue to be a critical approach to developing the capabilities needed for value-based care, reducing costs, and enhancing competitive positioning,” according to the analysis.


Prescription Drug Costs Create Financial Burden


A majority of the public surveyed by the Kaiser Family Foundation continue to report the cost of prescription drugs in the U.S. is unreasonable. Seventy-seven percent of survey respondents who are currently taking medications find prescription drug costs to be unreasonable. Twenty-four percent of respondents who take prescription drugs also report that, in the past 12 months, they or a family member did not fill a prescription because of the cost.


Using Technology to Improve the Patient Experience

Patients in today’s world expect a positive experience when dealing with their medical providers and any other related third parties that might help them through the process.  Even though delivering a truly positive experience for the patient can be somewhat demanding, companies involved in the receivable management cycle should pay close attention to any opportunities that might arise to present such an experience for them.

One such technology that can be truly beneficial is known as inbound interactive voice response (IVR).  One of the benefits of this technology is that it gives the patient an alternative payment channel thus increasing the patient experience and better meeting their needs. 

This technology is perfect for patients who don’t want to deal with a customer service representative.  By simply answering a series of questions through the keypad, the patient can quickly pay their bill and move on.  Another key advantage to this type of technology is that it’s available 24 hours a day every day of the week and every week of the year.

IVR also provides increased security because it mitigates errors that can come from live agents entering credit and debit card information manually.  This type of system allows the patient themselves to enter their own credit card information by use of their telephone keypad.  

Fraud is also marginalized because personal financial information is never spoken or audibly provided to a live agent.  Use of this type of “self-service” technology also allows live agents to spend more of their time working with patients who are in need of someone with a personal touch or one-on-one attention.  Use of an inbound IVR system also enables the patient to make a recurring or single payment, establish a payment plan with credit card, debit card or ACH transfer or simply check their balance. 

Online bill presentment and bill pay through a payment gateway portal is also a key technology to helping a patient pay their bills, manage their account, save money and reduce stress.  This service is becoming increasingly popular with patients who want access to managing their debt by use of a personal computer, laptop or tablet computer, or even through their smartphone.  This service is technically a method of payment that allows a patient to give payment instructions electronically through use of a computer program.

One of the biggest benefits of providing a payment portal is the ease of use supplied to patients.  Rather than writing checks, filling out paperwork, and licking stamps; all of those steps are eliminated through this technology.  The cost savings of making use of a payment portal as opposed to traditional mail can be substantial when calculated annually.  This technology can be extremely convenient particularly when making use of automatic bill pay options that manage recurring payments.  Also, paying bills online through the Internet is actually considered a safer method of payment than payment by check. 

Even though some patients still prefer to use traditional mail service to pay their bills, more and more people throughout the country are making use of newer technologies for bill-pay solutions.  Many providers who are concerned with offering the highest level of customer service for their patients are now finding it a necessity that they, and their vendor partners, make these payment options readily accessible to their patients.

Trends & Challenges: A Look at the Future of Healthcare Receivables

In the last several years, the Affordable Care Act has changed how consumers access healthcare as well as how providers and the collection agencies they work with navigate the healthcare receivables landscape.  Terry Rappuhn, a leader of the Healthcare Financial Management Association’s Patient Friendly Billing® Project, and a former hospital system CFO, recently discussed some of those changes from the perspective of a healthcare provider during her presentation, “Trends & Challenges: A Look at the Future of Healthcare Receivables,” at ACA International’s Spring Forum & Expo.

Healthcare receivables in 2015 and beyond are different than they have been in the past. Patients are expected to pay more of each healthcare dollar while regulators are focusing on medical debt, price transparency and financial assistance policies.  An increase in self-pay for medical costs, high-deductible health plans as well as the final 501(r) regulations for nonprofit hospitals are some of the changes occurring as a result of the Affordable Care Act that collection agencies and providers need to work through. However, they also need to focus on the basics of meeting each other’s needs with the ultimate goal of resolving patients’ accounts.

Rappuhn said healthcare providers have several priorities when working with a collection agency to resolve patients’ accounts. “Trust and integrity are the most important things,” Rappuhn said. “They want you to match their collection philosophies and they want you to treat their patients like they do. I think in small communities this is really important because you see people you know more. It’s still important in the bigger communities because you are dealing with human beings having a medical crisis.”

Healthcare providers should clearly explain their collection expectations to their collection agency partners and the extent they would like them to connect with their patients.  Rappuhn said other healthcare providers she’s talked with have also emphasized that it’s important for collection agencies working on behalf of a hospital or physician to engage with patients in a way that meets their needs while keeping in mind what the patient may be going through.

Some providers want their collection agency partners to be a one-stop-shop for information on resolving accounts, including balance owed after insurance and financial assistance policies, for example. Others want all patients referred back to the provider with questions about financial assistance to maintain that personal relationship. 

Nevertheless, it’s important for agencies specializing in healthcare collections to understand the requirements providers have to work with their patients when it comes to insurance, billing and payments. They should also take into account the extent medical debt has become a problem for consumers, and consider helping by offering alternative payment methods.

During Rappuhn’s presentation, an attendee said more and more of his provider clients are asking for the collection agency’s input on handling patient accounts.  Rappuhn said it’s important for collection agencies to discuss their client’s expectations with representatives in the revenue cycle department as well as leaders in other departments that interact with patients to make sure needs are met across the board—from collections to community relations.

Collection agencies working with healthcare provider clients should also be in tune with basic facts about their communities related to the Affordable Care Act and insurance plans.  For example, it’s helpful for agencies to know if a Medicaid expansion under the Affordable Care Act has occurred in their state; the general types of community employers and insurance plans they offer; and if their healthcare provider clients are in-network or out-of network under those plans.  Rappuhn recommended several resources to help providers and their collection agencies make sense of the healthcare and patient billing experience and, ultimately, better serve the patients.  These resources include:

HFMA Price Transparency Task Force Report
Clarifies basic definitions that are often misused. 
Sets forth guiding principles. 
Establishes roles for payers, providers and others. 
Reflects consensus of key stakeholders.

Patient Financial Communications
Hospitals conduct sensitive financial discussions with patients.
Now there are accepted, consistent best practices for these discussions, including:
Encourage patients to talk with a financial counselor about their concerns.
Identify additional or alternative insurance coverage.
Determine how accounts will be resolved through conversation.
Identify patients who fall under 501(r) regulations.
Benefit from a satisfied consumer vs. an unhappy consumer.

Best Practices for Resolving Patient Medical Accounts from HFMA and ACA International
Improve patient education and communication. 
Make bills patient-friendly. 
Establish policies for account resolution and ensure that they are followed. 
Report back to credit bureaus when an account is resolved. 
Track all consumer complaints. 
Use established HFMA and ACA best practices, principles and guidelines to inform your organization’s approach to medical account resolution.

More information: and



Spike in Complaints About Debt Collection Activities Creates CFPB First Quarter Record

More complaints about debt collection activities were published by the Consumer Financial Protection Bureau (CFPB) in the first quarter of 2015 than in any quarter previously.  A large surge in complaints in the month of March spurred the record quarter; and the total is thought to likely increase in the near future.

First quarter complaints about debt collection practices to the CFPB were logged at 10,411, which is a 15 percent increase over fourth quarter in 2014 and is up 1.5 percent from the first quarter of 2014.  The largest portion of the increase in the first quarter was particularly driven by more than 3,700 complaints; the most on record since the CFPB started taking complaints.  

The complaint database of the CFPB only lists complaints that companies have been given a chance to respond to, but doesn’t include complaints taken by other agencies, complaints that are currently pending with the CFPB or the individual consumer, or complaints that are incomplete.  

The previous record of complaints happened last year in the month of April when 3,691 complaints were logged.  The first two quarters of last year rose considerably but complaints receded during the second half of the year.  However, the beginning of 2015 marked a renewed increase in complaints, with the month of March sending Q1 of 2015 into record highs.

Also noteworthy is the fact that medical debt took up a large portion of the complaints logged in the first quarter of 2015, with more than 14 percent of all complaints being related to debt from healthcare services.  This number was noticeably higher than the 13.6 logged in the fourth quarter of 2014 and the 9.5 percent logged in first quarter of 2014.

Debt collection complaints stayed within the normal range for reasons consumers lodged complaints.  The most widely used complaint by consumers thus far in 2015 has been that “the debt is not mine,” which has been used every month so far.  The most common other reasons given typically are that the “debt was paid,” and “cannot verify the debt”.  


Communication Key to Patient Experience

Helping someone to understand the portion of a medical bill that will become their “patient responsibility” can be challenging and time consuming for healthcare providers.  Even though, on the surface, it doesn’t appear that this should be much of a concern to the provider; the reality is that it concerns them a great deal.  Why is that?

As a patient is moved along through the provider’s accounts receivable process, they often become aggravated with a system they do not understand.  The unfortunate reality is that frustrations with the health insurance industry are often taken out on the provider.  Recent surveys showed as much as 85 percent of those dissatisfied with the payment and billing process also gave healthcare providers low “satisfaction scores”.

That being the case, healthcare providers want to do anything they can to help the patient through the accounts receivable process.  This can mean explaining a patient’s deductible and co-insurance to them and how this will impact them financially; or, it could mean helping a patient to locate an insurance plan that is beneficial to them.  This standard of helpfulness can drastically improve the chances that the patient will say they had a satisfactory experience.

Obamacare has been a source of confusion for many since its inception.  Although the most recent open enrollment is said to have gone more smoothly than the previous year, it appears likely that the newly insured will have many questions for providers.  In 2006, after Massachusetts enacted healthcare reform, many hospitals doubled their staffing level for these departments and kept them at that level for at least a few years.

But locating, hiring and training staff members to fit the provider’s culture can be extremely time-consuming and costly.  Some look within their organizations for individuals that have the right skill set to work with patients at that level, however, others have successfully used business process outsourcing for this function and have reported high degrees of patient satisfaction.

“Mnet Financial acts as an extension of the provider’s billing department” said CEO of Mnet Financial David Hamilton.  “Our call center representatives are extremely well trained regarding health insurance.  They understand how healthcare insurance works, so they are ready, willing and able to help the patient understand as well” said Hamilton.  

“Because we only work within the healthcare world, our reps are well known for their ‘patient friendly’ approach to customer service” said Stacy Vink, Collection Manager of Mnet Financial.  “Our first priority with patients is to work with them to help them understand where they stand regarding their medical bill and how the amount they owe was calculated” said Vink.  

“Communication is the key to a positive patient experience” said Hamilton.  “Once our reps are able to fully explain where the patient stands, we can move forward with solutions for resolving their medical debt” Hamilton stated.  Accessibility and the encouragement of two-way communication clearly create a situation where both the patient and the provider find a greater level of satisfaction.

Finance: CFPB Releases Research on Impact of Medical Debt

Recent research released by the Consumer Financial Protection Bureau shows that consumers’ credit may be overly penalized for medical debt that goes into collection and shows up on their credit report.  According to the study, credit scoring models may underestimate the creditworthiness of consumers who owe medical debt in collections. 

The scoring models also may not be crediting consumers who repay medical debt that has gone to collections.

Medical debt is the largest focus of debt collection activity in the U.S., according to the CFPB.  The CFPB’s study considered five million anonymized credit records from September 2011 to September 2013 to assess how well a common credit score predicted a consumer’s future likelihood of paying back debt.

The study found that credit scoring models have not been weighing medical debt very well. It found that if the credit scoring models accounted differently for medical debt in collection and medical debt that is repaid by the borrower, the models could be more precise. 

As the CFPB develops rules for the debt collection industry, questions about inclusion of medical debt in the process remain unanswered. The CFPB has excluded medical debts from much of its work to date. There also remains some question about whether medical debt falls within the bureau’s scope under the Dodd-Frank Act. There are bills in Congress currently that seek to address medical debt credit reporting.

More information:


Mnet Financial Welcomes Tricia Restrepo

Aliso Viejo, California (March 14, 2014)-Mnet Financial, the leader in receivable management solutions in the field of healthcare, is proud to welcome new team member Tricia Restrepo as Revenue Cycle Specialist Liaison working principally within the surgical hospital space; and based out of their new Addison, Texas branch.  With more than fourteen years in leadership roles, nine of them specifically working in the healthcare field, Restrepo will be spearheading the company’s client relations efforts within the Dallas-Fort Worth area and throughout the region.

Tricia has a Master's degree in Business Administration (MBA) and is a Certified Medical Coding & Billing Instructor.  She also has experience in managed care contracting, negotiations, management, credentialing, and insurance paneling for all insurances including Medicare, Medicaid, and Tri Care.  Her technical experience includes a working knowledge of AdvantX and Medi-Tech systems and Tricia has previously been tasked with auditing the policies and procedures of the business offices of surgical hospitals in the DFW area as well.

Prior to working at Mnet Financial, Restrepo spent the last several years holding multiple positions concurrently.  At Crescent Medical Group, Restrepo worked in the central billing office with a focus on HIM, Revenue Cycle Management, and Coding and Credentialing.  Since 2005, she has worked as a healthcare business office consultant.  In addition, Tricia also played a critical leadership role in her position as the Chief Executive Officer for a local Dallas area municipality.  Tricia has also taken the lead in her role of Business Office Manager and Director at multiple healthcare providers and services.

“We are very pleased and excited to be welcoming Tricia Restrepo to the Mnet Financial team,” said company founder and CEO, David Hamilton.  “Ms. Restrepo’s extensive knowledge of the healthcare field from working for healthcare providers as well as the knowledge she gained from working for healthcare services and in leadership roles will be beneficial to Mnet Financial,” said Hamilton.  “The fact that Tricia has been able to take on so many diverse assignments; is a certified Coding & Billing Instructor, and is proficient with healthcare specific software has given her an outstanding level of experience that will be very valuable to Mnet Financial and our clients as well,” said Hamilton.

Prior to her work with Crescent Medical Group, Restrepo has served as a consultant at Oasis Innovative Solutions, CEO at the City of Frisco, Director of Managed Care at Topcare Medical, Client Financial Services at LifePath Systems, Director of Patient Financial Services at Spine Team Texas, and gained additional experience at MMP, and HCA.

HFMA & ACA Present New Billing Guidelines to Provide Patient Support

An increasingly large amount of patients are finding themselves facing an insurmountable and overwhelming pile of debt following a battle with a serious injury or illness.  This scenario eventually results in repeated phone calls and mailers from debt collectors for many of these patients. 

Financial distress or even ruin can be avoided by patients, though, as long as they are willing to pay close attention to the details of their health insurance policy and have a candid discussion with their medical provider or hospital concerning payment options, financial assistance, and available discounts.  A change in guidelines coming from the bill collection and hospital industries as well as the government have been designed to make paying bills easier for patients; a necessary move as consumers are confronted with ever growing medical bills.

In 1990, the average health care spending per person was just $2854, but by 2012, the price per person had jumped to more than $8900 according to data supplied by the Centers for Medicare and Medicaid Services. 

The latest trend is for employers to offload the costs for healthcare coverage onto employees, by offering plans with less employer contribution, greater monthly premiums, higher co-payments, reduced co-insurance, and larger deductibles which results in the patient inheriting a greater portion of their medical responsibility.  Depending on the details of the health plan and employer contribution, the patient portion of a medical bill could skyrocket to more than ten thousand dollars for each event; but the news is still much worse for the uninsured.

A recent survey suggests that the number of working- age citizens who are having difficulty in paying their medical bills has exceeded 75 million, which, no doubt, contributes to medical debt topping the list of reasons for personal bankruptcy in America.

“Many people are surprised at what portion of their medical bill they will be responsible for paying” said Stacy Vink, Collection Manager at Mnet Financial.  “That’s why it’s so crucial that the patient speaks with their provider or hospital before a procedure or surgery so they can fully understand what their costs will be and the payment options that are available to them” said Vink. 

New industry standards pertaining to the resolution of disputes regarding medical debt have been designed to help patients who are facing financial difficulty.  Even though these standards are voluntary, they are expected to be widely accepted because they were developed by the HFMA, which represents financial officers at healthcare facilities and insurance companies, and the ACA, an association of collection agencies.

These new guidelines recommend, among other things, making bills easier to understand; notifying credit reporting agencies when billing disputes are resolved so patient credit reports can be updated; and ensuring that providers and collection agencies are not sending bills to patients at the same time to avoid confusion. 

“If patients will just have a frank financial discussion with their medical caregiver prior to treatment, the provider can offer a wealth of knowledge” said Vink.  “Our clients know that Mnet Financial has numerous services available to the patient to help them, such as our MedDraft payment plan management service.  We work tirelessly to help patients resolve their medical debt so they won’t be faced with a financial catastrophe” said Vink.

Survey: Employers Give Health Care System Average Grades

Only about a third of U.S. employers gave the country’s health care system a favorable “A” or “B” grade, according to a recent survey from Deloitte.  By contrast, nearly four in 10 (38percent) gave a “C” grade, while 29 percent awarded a “D” or “F” grade. Deloitte polled 500 randomly selected U.S. employers with 50 or more workers offering health benefits.

Separate Deloitte surveys of physicians and consumers showed similar results—most respondents gave the current U.S. health care system either average or poor grades.  Many employers said high costs prompted their average grades. According to the survey, 80 percent of employers said their health-care costs have risen over the last three years, estimating 30-percent growth during that period.

Employers cited hospital costs, prescription costs and inefficiencies in billing as the largest drivers of overall health care cost increases.  When asked what is likely to improve the system, the leading response was “increased transparency around the prices of specific medical products, services and procedures (52 percent)” followed by “clear, accessible information about the performance of care provided by doctors (46 percent).”

Additionally, the survey found that only 33 percent of employers are “completely prepared” for changes to the health care system, including full implementation of the Affordable Care Act.

The full study is available at


Small Business Owners Pay More for Employee Health Insurance

Most small business owners said they paid more for insurance premiums per employee in 2013 than they did in 2012, according to a recent survey from the National Federation of Independent Business.

In the survey of 921 U.S. small business owners and operators, 64 percent said they paid more for premiums.  Deductibles for beneficiaries of small business health insurance products also rose in 2013. While 67 percent of plans maintained deductibles at the prior year’s level, another 28 percent increased deductibles; only 4 percent lowered deductibles in their plans.

The average health insurance premium cost incurred by small businesses (employer and employee shares) in 2013 was $6,721 a month ($80,652 a year). The median cost was about $3,500 every 30 days. The survey also found that the net proportion of small businesses expected to offer health insurance in 2014 was projected to increase, which would break a decade-old trend.

Among small employers that don’t offer health insurance, 14 percent provide reimbursement or a direct payment to employees for the purchase of health insurance.  The full survey is available at

Out-of-Pocket Health Care Costs Up, Purchasing Power Down for Consumers

Out-of-pocket costs for health care patients increased more than 25 percent in the first half of 2013 and it’s likely they will increase even more this year, according to a recent report from TransUnion.  While out-of-pocket costs (average patient payment responsibility) on key medical procedures continued to grow at a faster rate, the available revolving credit for consumers declined nearly $1,000 in the last year.

Average patient payment costs increased nearly 38 percent in the past year, from $1,862 in the second quarter of 2012 to $2,568 in the second quarter of 2013. Since the beginning of 2013, patient payment costs have risen more than $500. 

“The trend of growing consumer health care costs continued during the first six months of (2013), and we suspect they may expand even more with the recent one-year grace period granted to some insurers for out-of-pocket expenses,” said Milton Silva-Craig, president of TransUnion Healthcare.

At the same time, the average consumer’s total revolving credit line on products such as bank-issued credit cards, store credit cards and home equity loans dropped from $34,855 in the second quarter of 2012 to $33,884 in the second quarter of 2013.

As a result, consumers have seen their health care purchasing power decrease. In the second quarter of 2012, consumers had $1,870 in revolving credit for every $100 in health care costs. In the second quarter of 2013, consumers had $1,320 in revolving credit for every $100 in health care costs.

“A 30 percent decline in health care purchasing power is quite significant, especially when this takes place in one year’s time. More and more, health care costs are pushing the consumer to their financial limits where they may need to prioritize which bills to pay first,” said Silva-Craig. The full report is available at

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