Constant coverage of charging and collection concerns: on October 30, the Wall Street Journal ran a front-page article titled "Medical Seizures: Hospital Try Extreme Measures to Collect their Overdue Debts." Unfortunately, focusing on how hospitals collect payment misses the core problem

Healthcare Financial Management, Dec, 2003 by Richard L. Clarke

On October 30, the Wall Street Journal ran a front-page article titled "Medical Seizures: Hospitals Try Extreme Measures to Collect their Overdue Debts." Unfortunately, focusing on how hospitals collect payment misses the core problem.

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The article was part of a less-than-flattering series on hospital charging and collection practices. I commented on these issues in my August 2003 column. I also sent a letter to the editors of the Journal after this latest article, which the Journal has agreed to publish.

In my letter, I noted that I was glad substantial attention was focused on hospital collections problems--because there are significant problems. I also wrote that, unfortunately, readers might conclude the real problem relates to how hospitals pursue collections based on a case cited in the article. That case involved a hospital's collection agency seeking arrest warrants when patients repeatedly fail to respond to payment requests and court hearings or fail to live up to payment commitments. Interestingly, using the Journal's own numbers, these "extreme" cases amount to only 0.02 percent of the total population served by this hospital.

In my letter, I noted that how hospitals pursue collections is not the main issue. Rather, the complexities and cost of administering the U.S. healthcare system are the main issues. This fragmented and broken system of charging, billing, and collections consumes about 31 cents out of every dollar spent on health care. Medicare regulations (reported to be more voluminous than the entire IRS tax code), byzantine payment rules, 40-plus million uninsured people, complex payment formulas, and so on are the real problems. The system works against all of us, I stated in my letter, and that's why we need to deal with these real problems. I appreciate the Journal's willingness to air this view in its pages.

Charging and collection techniques will continue to grab headlines. Some suggest the ongoing press coverage is the result of well-funded efforts by an insurance company that sells high-deductible individual health policies and a union that is trying to unionize hospital workers. Regardless of the funding, the public-relations aspects of this issue are real.

The fundamental problems of underpayment, burdensome and confusing regulations, and the plight of the uninsured need the attention of policy makers and the press. And perhaps during next year's presidential campaign, these problems will be discussed. In the meantime, however, hospitals need to examine their charging and collection practices and make improvements as needed.

The American Hospital Association, various state hospital associations, and HFMA are working to provide guidance on these issues. But the most important aspect of dealing with these issues is to ensure the front-end processes of gathering and verifying information work effectively to determine the patient's insurance coverage and ability to pay. HFMA is providing tools and techniques to help make these improvements. Through various revenue cycle educational programs, the PatientsAccounts newsletter, the PATIENT FRIENDLY BILLING[R] project, and other services, HFMA is helping members focus on the issues that need to be addressed.

I hope that by improving revenue-cycle management, hospitals can help shift the debate to the real issues.

HOW DO HOSPITALS SET CHARGES FOR SELF-PAY PATIENTS?

Learn more about this topic in the article "What It's Worth" by Ray B. Lefton on page 60 of this issue of hfm.

HFMA's Principles and Practices Board has provided guidance on how to distinguish between charity care and bad debt. See Statement 15 at www.hfma.org/resource/P_and_P_board/Statement_15.htm.>

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