May 6, 2015 by Lisa Brammer
According to a report by TransUnion Healthcare, a subsidiary of the credit and information management company, American patients feel extra financial burden because healthcare costs increased in 2014 while revolving credit became less available. It showed that consumers’ ability to pay for select medical procedures decreased by more than 11 percent. And if consumers are not able to pay their medical bills, providers are also likely to feel the pinch of accumulating additional bad debt.
TransUnion Healthcare used their proprietary ratio to compare available revolving credit to select healthcare costs. In the fourth quarter of 2014, this ratio declined to 13.5 to 1 from the 15.2 to 1 seen in the fourth quarter of 2013. This means that for every $100 in healthcare costs, consumers had $1,350 in revolving credit to potentially use to help make those payments (down from $1,520 the previous year).
The TransUnion Healthcare report contains data assessments gleaned from thousands of unidentified hospitals and healthcare clinics from across the country. The report’s emphasis is on the patients’ payment portion (try saying that 3 times fast) for frequently ordered procedures such as: major joint replacements, natural child birth deliveries, and cesarean sections.
TransUnion Healthcare’s 2014 report found that the average patient payment costs increased about 11 percent, mostly due to the steeply rising costs of popular joint replacements (20 percent increase). Cesarean section costs dropped by 5 percent in 2014 and natural child birth deliveries costs remained about the same.
“Our latest report demonstrates that consumers continue to feel the pressure of rising healthcare costs,” said Gerry McCarthy, president of TransUnion Healthcare. “Despite a slowly improving economy, many consumers are finding they have less money to make these payments. This issue is not just about patients, though, as thousands of healthcare administrators across the country face the challenge of providing quality care while also seeking fair compensation.”
Increasing patient deductibles also add to the problem. Patient deductibles increased almost 7 percent in 2014. “Deductibles have nearly doubled over the past five years through the adoption of high deductible plans offered by employers and the implementation of the Affordable Care Act,” McCarthy said. “We will be tracking this trend closely as we suspect that average deductibles could rise much more in the coming years. The continued increase in deductibles will place even more importance on transparency of costs in the billing process and will require providers to offer payment plans that will demand a new level of effort to collect reimbursement.”
Since a lot of Americans are now responsible for a larger share of most health expenditures due to these higher deductibles, copays, and coinsurance percentages, they are becoming much more aware of costs. And this awareness brings with it a greater expectation for providers to offer upfront cost estimates and timely, accurate bills.
While patients are looking for more information about healthcare costs, 54% of those surveyed said they were either “sometimes” or “always” confused by their bills and a whopping 62% reported they were either “sometimes” or “always” surprised by their out-of-pocket costs. Actually, more than 80% of respondents stated that receiving pre-treatment cost estimates and pre-treatment insurance coverage estimates would be either “helpful” or “extremely helpful.”
Despite the fact that an overwhelming amount of patients would like pre-treatment estimates, only 12 % of respondents found it “very easy” to get cost information before receiving medical care, and almost 50 percent said it was either “somewhat difficult” or “very difficult.”
According to McCarthy, “We are finding that the healthcare providers that have been the most flexible in adjusting their billing practices also appear to have performed best during these transitional years. A key change in the industry is the increased prominence of upfront cost estimates and more timely and transparent healthcare bills.”
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