Study Finds Two-Thirds of Healthcare Bad Debt Caused by Insured Patients

Contrary to popular belief, the healthcare industry’s bad debt problem can’t be blamed solely on the uninsured, according to a just-published national study conducted by nTelagent, Inc. nTelagent’s aged trial balance (ATB) analyses of healthcare service providers across the country show that approximately 65% of all bad debt is the result of insured patients, not uninsured patients. This is due to the frequent non-collection of upfront payments such as co-pays, co-insurance, deductibles and other out-of-pocket costs. The average outstanding insured patient portion ranges from $700-$1,100, depending on geography.

To help the healthcare industry combat bad debt, nTelagent has developed The Retail Application for the healthcare industry, called the Self-Pay Management System (SPMS). Similar to applications used in the retail industry at the point of sale, SPMS tells healthcare registrars and financial counselors exactly what to do and what to say to each patient at the point of service regarding financial responsibilities. For patients, nTelagent’s system ensures that appropriate discounts are provided based on capacity to pay and a provider’s unique business rules, as well as automatically screens patients for charity care and social services eligibility. The system also helps patients and providers work together to craft payment plans that are within patients’ personal budgets.

“The findings of the study show that, in terms of bad debt, it’s not just the $10,000 bills that are causing the problem. The real issue is the many thousands of smaller uncollected balances, those in the $500 to $1,000 range, belonging to insured patients. It’s the sheer volume of these instances that is causing a big problem, because payments are not being collected at the time of service,” said Earl T. Winter, chairman and CEO of nTelagent.

In the past, the primary payors in the healthcare industry were either private or public insurance organizations, and healthcare providers’ systems were built specifically to bill and accept payments from these payors. Today, the industry has shifted to a retail model, as the patient-responsible portion of the bill has increased dramatically, thanks to trends such as consumer-driven healthcare; higher co-pays, co-insurance and deductibles for traditional insurance plans; and the growing uninsured population.

Winter continued: “Healthcare service providers must adapt to the fact that the industry has moved to a retail model, with consumers taking on more and more financial responsibility for their care. Determining and initiating collections from patients at the point of service is critical, as the likelihood of collecting from patients after discharge is far less. Also essential is that those patients eligible for charity care and social services assistance are identified and signed up as soon as possible.”

By moving workflow to the front end of the revenue cycle, nTelagent’s SPMS helps providers to improve upfront and overall collections and reduce bad debt. Instantaneous, interactive scripts, generated by integrating patient demographic information with each provider’s business policies and rules, instruct patient access staff on the exact steps to take regarding pricing of services, discounting, payment terms, and charity and government programs, if appropriate. With SPMS implemented, providers are able to better serve their patients by giving them a clearer picture of their healthcare costs, their specific financial responsibility and their payment options.

About nTelagent, Inc.
nTelagent, Inc. has developed The Retail Application for the healthcare industry, called the Self-Pay Management System (SPMS). Similar to applications used in the retail industry at the point of sale, the company’s proprietary, automated system tells healthcare registrars and financial counselors exactly what to do and what to say to each patient at the point of service regarding financial responsibilities. Moving workflow to the front end of the revenue cycle, nTelagent helps providers ensure a better patient experience through clearer communication and better handling of patient accounts, while improving upfront and overall cash flow, receivables and profitability by reducing bad debt. Using non-credit scoring data, SPMS provides interactive scripts that integrate patient demographic information with each provider’s business policies and rules. The system allows for price transparency and automatically identifies discounting options, social services eligibility and charity care options when applicable, ensuring that patient financial accounting — for both insured and uninsured patients — is handled appropriately and consistently. Visit www.ntelagent.com for more information.