From the Field: Patient Payments Part 2

Last issue I mentioned that a social worker commented to me that she wishes providers would stop trying to collect from patients. She said providers “make enough money” and wondered why they feel the need to collect from patients who cannot afford their large coinsurances and deductibles. She pointed out that increasing pressure on patients to pay for coinsurances and deductibles for renal services can cause them to discontinue needed treatments.

While providers might appear to be the bad guys for trying to collect from patients, there were three major changes over the past 11 years that put great pressure on providers to pursue payments from patients. The changes consisted of plummeting reimbursement, significant changes in government regulations, and public ownership of renal companies. Lower reimbursement was covered in the last issue so this month’s column will focus on the remaining issues.

Medicare Bad Debt

While several government policies have influenced renal providers to apply greater pressure on patients for payment, the primary culprit from my perspective was the change in Medicare Bad Debt regulations in the latter portion of 2007. Prior to the change, a dialysis facility was required to bill patients for unpaid Medicare deductibles and coinsurances, but if patients did not pay, the facility was not required to press the patients for payment. If sending bills did not result in full payment, facilities could claim the unpaid amounts on their annual cost report as bad debt. Up to 100% of the amount claimed would be reimbursed to the provider by Medicare.

In an effort to curb Medicare costs, providers were required to make more than a “token collection effort” to collect out-of-pocket amounts from patients. Under the revised regulations, in addition to billing the patient, providers were required to take “other actions such as subsequent billings, collection letters and telephone calls or personal contacts…which constitute a genuine…collection effort.” (CMS PBM 15 1 03)

Medicare contractors began earnestly enforcing these requirements beginning with the 2007 and 2008 cost reports. Millions of dollars in bad debt that would have been reimbursed under the old regulations were now lost to dialysis providers. Even with the loss of reimbursement, most providers remained extremely reluctant to pressure patients for payment. However, the federal government also decided to reduce their reimbursement for qualifying bad debt from 100% to 65%. Thus, even the bad debts that still qualified under the new regulations were reduced by approximately one-third. Coupled with declining reimbursement from commercial and other government payers, facility owners eventually decided they would have to comply with the revised bad debt regulation and apply more pressure on patients to pay for their unpaid Medicare coinsurance and deductible.

Without exception, dialysis providers were extremely concerned about how their patients would respond to the increased pressure to pay. No one in the ESRD industry wanted a patient to stop dialyzing because they felt pressure to pay more out of their own pockets.  To minimize patients’ distress, many independent facilities assigned their social workers to speak with patients about paying for out-of-pocket liabilities. However, social workers understandably balked at such an assignment and eventually most facilities decided to place the burden of collection on those in their back office. Small facilities without a back office had to rely on a secretary, receptionist, or administrator to try and collect from patients. Of course, this was also awkward and, over time, the burden and discomfort of confronting ESRD patients about money resulted in many programs outsourcing their collection efforts. Most providers instructed collection agencies to take a soft approach with their patients to minimize patient distress. Nevertheless, their patients were now receiving calls from collection agencies about paying for out-of-pocket costs, primarily for the sake of satisfying the requirements of Medicare’s bad debt regulation.

Does anyone see anything wrong with this picture? Prior to the change in bad debt requirements, ESRD providers were willing to forgo pressuring patients for money. In an effort to reduce the Medicare budget, well intentioned laws and regulations were enacted that put significant financial pressure on ESRD providers to go after their patients for money. Most dialysis patients are older, unable to work, and financially challenged. Yet they are expected to pay tremendous amounts out of pocket each month. Those who can afford secondary insurance policies receive some relief, but skyrocketing annual deductibles have resulted in patients having to pay out-of-pocket for their coinsurance for much of the year.

While I understand the need for those who receive Medicare coverage to pay something for the benefit they receive, it seems that ESRD patients have an undue burden placed upon them by being required to pay the same 20% coinsurance as those without a chronic disease.  However, rather than policies that decrease their burden, these fragile patients face increased pressure from their own providers to pay for the life-saving services they receive. Providers look like the “bad guys,” but most patients and clinical workers are unaware of the policies that have resulted in our current situation.

Public Ownership

Publicly owned for-profit companies are responsible to their shareholders for their bottom line. Shareholders demand positive returns on their investments. Thus, these companies have an additional pressure to pursue out-of-pocket payments from patients in order to garner every penny they can. However, could shareholders agree to take a penny or two less in order to not pursue ESRD patients for payments that are small to the corporation, but huge for patients? Could our government not decrease the percentage of the Medicare coinsurance assigned to ESRD patients? And why not revise the bad debt regulations for ESRD so that providers will not feel so much pressure to pursue money from their patients?

Rick Collins is the director of business development for Sceptre Management Solutions, a company specializing in billing for outpatient ESRD facilities, nephrology practices, and vascular access. Your questions and comments are welcome and he can be reached at rcollins@sceptremanagement.com or 801.775.8010.