Written by Natalie Moore on Dec 17, 2014
Americans, Medical Debt, and Why Cost Transparency Matters
42.9 million Americans have medical debt that hasn’t been paid. The jaw-dropping figure is attributed to consumers being confused about their medical bills in a new report by the Consumer Financial Bureau (CFPB).
What Does American Healthcare Debt Look Like?
More than half of debt reported to collections agencies is related to Healthcare, the CFPB said. The associated press explained that most patients are unaware that they have an obligation to make a payment.
Moreover, the totals owed are important. The average healthcare debt owed is $1,766, and that covers half of all debt on individual reports, according to the CFPB.
If a patient with medical debt has other obligations as well, the average is more than $5,600. Although more than half of those Americans with only healthcare debt aren’t showing other signs of financial duress. And just a $100 debt can strip 100 points off the credit score of someone who already has a perfect payment history.
Study Makes a Strong Case for Cost Transparency
Another study by the consumer firm NerdWallet reported that nearly two-thirds of those polled said they had received a medical bill larger than what they had expected at the time they received care.
“A single treatment at a hospital can result in multiple bills from multiple providers. For example, after a surgery, a consumer can receive a bill from the surgeon, the anesthesiologist and the surgery facility,” the report shares. “A health insurance policy may cover some providers and some procedures, but not others. And it may cover all or part of a bill. Some consumers may find it difficult to know what they owe, to whom or for what.”
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The results of these studies show how important patient education pre-treatment and price transparency are to lowering debt.
1. Hospitals Should be More Proactive and Educate Patients
Earlier his year, the HFMA urged hospitals to be more proactive. “Every day that goes by, that dollar is less collectible,” said Terry Rappuhn, who leads the HFMA initiative. She spoke at HFMA’s annual national institute on Monday with Mark Rukavina, a principal of Community Health Advisers.
Educating patients on what amount to expect, when they will receive their bill and how they can pay can help.
2. Price Transparency Can Save Providers Billions
A 2014 study showed that expanding consumer access to cost information can save healthcare providers billions, (a cool $100 billion to be exact).
“While healthcare transparency is typically viewed through the lens of patient-facing transparency tools to drive comparison shopping, our analysis suggests even greater impact could be achieved by expanding the audience for such information,” writes Joseph Smith, chairman of the West Health Policy Center Board of Directors, in a statement. “We’ve found that providing price information to three key stakeholders–physicians, employers and policymakers–may have a far greater impact.”