Addressing Patients' Financial Obligations

Best Practices for Optimizing Collections and Supporting Patients with Need

Topics: Oncology, Service Lines, Billing and Collections, Revenue Cycle, Finance, Uncompensated Care, Undercompensated Care, Patient-Focused Care, Methodologies, Performance Improvement, Cost Management, Margin Performance, Access to Care, Quality

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One the most pressing challenges facing cancer programs, especially in light of the recent economic downturn, is finding the appropriate way to provide care to patients with limited ability to pay while maintaining the institution’s bottom line. This study will help oncology programs develop strategies to provide care to patients with significant financial need by:

  • Increasing understanding on both sides through patient counseling and estimating financial obligations
  • Using specialists to reduce costs through opportunities such as drug replacement
  • Expanding financial counseling to occupy a more stable and solidified part of the patient experience

Executive Summary

Increasing numbers of uninsured and underinsured patients

Over the past decade, the U.S. health care system has undergone a shift with the costs of care increasingly being transferred to patients. As employers seek to rein in benefit costs, insurers are developing new products such as high deductible and limited benefit health plans that transfer significant risk to the individual. In the case of a severe illness like cancer, these plans may saddle patients with significant expenses that exceed their ability to pay.

Concurrent with this rise in the underinsured population is an increase in uninsured patients, driven largely by job losses resulting from the current economic recession. National unemployment doubled between 2008 and 2009, and as of this writing, unemployment in some regions is approaching 18 percent. Often, losing a job and the associated health benefits leads people to forgo care. However, cancer patients facing life-threatening disease tend to pursue treatment irrespective of cost.

Straining cancer program finances

For most cancer programs, providing the best possible care to patients regardless of their ability to pay is fundamental to their mission. Yet the vast majority of organizations operate with thin profit margins limiting their ability to absorb uncompensated care. Thus the increase in uninsured and underinsured patients is placing significant strain on program finances.

This problem is compounded by the fact that, traditionally, hospitals have done a poor job collecting co-pays, coinsurance, and deductibles from patients. According to data from the Financial Leadership Council’s 2008 Survey of Revenue Cycle Operations, hospitals collect just 34 percent of the dollars patients owe for care as compared to 92 percent from Medicare and 97 percent from commercial payers. The result is that failing to collect from patients is the largest cause of lost revenue. And these losses will mount as the numbers of uninsured and underinsured patients increase.

Creating an emotional burden for patients

Unfortunately, rising medical bills are also taking a toll on patients. A recent survey conducted by the Community Oncology Alliance found that Americans fear the costs of cancer care as much as they fear dying from the disease. At first glance, these data may be surprising, but many people struggle to understand the extent and limitations of their insurance coverage. Few patients have a realistic understanding of what their out-of-pocket expenses will be for any given type of care, and most do not learn of their financial obligations until well after care is underway. This is of particular importance as a recent study indicates that 20 percent of insured cancer patients will spend their life savings on their cancer care. Thus, there is clear imperative for cancer programs to improve the way in which they communicate with patients about the cost of care.

Optimizing collections while supporting patients with need

While the need to address patients’ financial concerns is clear, there remains a great deal of variability in how cancer programs work with uninsured and underinsured patients. Based on Oncology Roundtable analysis, there is considerable opportunity for programs to implement more comprehensive and coherent processes that will not only improve services for these populations but also program margins. Best practice institutions have developed a six-step process for maximizing collections and minimizing patient burden. The steps can be grouped into three broad categories: identifying patients with need, be they uninsured or underinsured; educating patients about their post-insurance expenses, preferably by providing them with a customized estimate of their financial obligation; and, finally, working with patients to make it as easy as possible for them to pay their bills, either through a payment plan or outside assistance.

Essay - The Patient Access Opportunity