According to the United States Consumer Financial Protection Bureaumedical debt was filed on approximately 43 million credit reports last year, affecting 1 in 5 households and totaling $88 billion.
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Texas has one of the highest levels of medical debt in the country. According to Medical Debt Policy Dashboardthe Lone Star State ranks 48th in the nation for consumer protection against medical debt.
Based on 2018 data, Texas also had the highest uninsured rate (17.7%), the 5th highest number of adults with unpaid medical bills (6.2 million), the 9th highest median medical debt in collection ($829 per person) and 15th highest. percentage of adults in fair or poor health (18.2%) in the country.
A recent white paper from Health Management Associates (HMA) and Leavitt Partners, an HMA company, explains how policymakers, providers and payers can help reduce the medical debt of their patients, many of whom must pay directly for their medical care, despite being insured, due to the cost-sharing requirements of insurance
The report says these “underinsured” people are often required to pay more for their care than they can afford and amounts higher than the rate negotiated between their insurance and the provider. This is a major contributor to medical debt, according to the document.
The report recommends adopting a payment model that only charges the negotiated price, whether the insurer or the patient pays the bill.
“…it doesn’t cost a provider more to provide services just because the patient pays the bill,” the paper read. “This best practice can be encouraged by requiring nonprofit hospitals to report related policies on their IRS Form 990 or a schedule to it.”
Bill Snyder, director of Leavitt Partners who co-authored the guidelines, said another potential solution for states interested in reducing medical debt is to adopt automatic enrollment policies for residents already eligible for programs. such as Medicaid and the Children’s Health Insurance Program.
Another major policy recommendation presented in the white paper is the adoption of a proposal by the Healthcare Financial Management Association’s Medical Debt Task Force regarding the recalculation of base charges for acute hospital services, which are a major contributor to medical debt.
According to the task force, fees set by Medicare for services hinder hospitals’ ability to rebase fees for their services and make them less expensive for patients. In order to redefine how much they charge for services, acute care hospitals currently must also work with the CMS to ensure that Medicare payments align with any changes and ensure budget neutrality. The Task Force identifies the incorporation of Medicare charges into the new determination of hospital charges as a significant impediment to meaningful service cost reform.
The task force recommends eliminating the use of these Medicare-billed fees and adopting rebased fees derived from acute care hospitalization data.
“CMS’s adoption of [this] The proposal that has been developed by more than 500 hospitals would make it possible and rational for hospitals to voluntarily base the prices they charge self-paid patients on their costs rather than sometimes arbitrary chargemaster rates,” Snyder said. “This is a solution that has already been proposed and that would provide medical debt relief in many cases.”
The document also recommends that stakeholders give patients and families more resources and time to deal with difficult medical issues so they can focus on their terminally ill loved ones before facing medical bills.