Health Care Reform May Restrict Hospitals? Collection Outsourcing Activities

Members of the Senate Finance Committee have been meeting all week to discuss policy options for financing health care reform ahead of a committee mark-up of comprehensive health care reform legislation expected in June. Included is a proposal that may delay how soon hospitals can outsource their receivables management activities and bad debt.

The proposal is meant to provide more free care and make not-for-profit hospitals more accountable for their tax-exempt status.

Policy option papers submitted by Committee Chairman Max Baucus of Montana and Chuck Grassley of Iowa, the committee’s top ranking Republican, propose requiring not-for-profit hospitals to follow certain procedures before initiating collection actions against patients.

Details about the proposal aren’t likely to become available until a health care reform bill is released in June, a Baucus aide said. But ACA International Executive Committee Members Chris Wunder and Mark Neeb told insideARM that they are concerned federal lawmakers might make uninformed decisions about the accounts receivable hospitals outsource.

Not all receivables management work outsourced to collection agencies is bad debt related, they said, adding that collection agencies collect millions of patient payments in the hospitals’ name.

“If they restricted that type of work it would be silly,” said Wunder, past ACA president and president of medical ARM firm Receivables Outsourcing, Inc., (ROI) in Timonium, Md. “Hospitals don’t have the tools and staff to do that work.”

Neeb agreed, adding that collection agencies often contact patients before a bill is classified as bad debt to find out why the patient hasn’t paid their bill.  Sometimes collection representatives learn patients haven’t paid because they are waiting for the insurer to settle a claim.  In many cases, however, it’s because they don’t understand the bill, which agencies take time to explain, managing the process to preserve the relationship between the hospitals and patient.

“The patient base is served best by people who have the best expertise to run those processes,” said Neeb, president of The Affiliated Group, a collection agency based in Rochester, Minn.