As more costs are being charged to consumers by hospitals and other providers, bad debts are growing. More debt is being racked up by people with insurance than those without coverage. Over two-thirds of bad debt are generated by insured patients.

This is the finding of nTelagent, Inc., a company that markets retail point-of-service technology.

I spent some time on the phone with Earl Winter, the CEO and founder of the company, this week. He told me about nTelagent’s analysis of 50 providers with multiple service points, located throughout the U.S. in urban and rural areas.

“What’s happening is that the health care industry has moved to a retail consumer financing model,” Earl explained. “Over the past four years, employers have shifted more costs to employees by raising copayments and deductibles. Service providers have been unprepared, and bad debt is going up.”

Noting that the average deductible for an insured can range from $500 or $1,000 to as much as $5,000, Earl said that the average bad debt amount is relatively low. In rural hospitals, nTelagent found an average bad debt bill of about $600, and for urban hospitals, $1,100.

With experience in retail POS, nTelagent’s system does what most other hospital admission IT applications don’t do: at admission, the system determines the patient’s insurance profile, and whether the patient qualifies for charity. In this process, the system checks some 4,000 different social programs for which the individual might qualify. This is up-front, versus at the back end when the patient receives the bill. In the latter scenario, more often than not, a patient and her family experiences a sort of health cost sticker shock. nTelagent’s offering is called the Self-Pay Management System (SPMS).

If the patient can be matched with a health insurance program, the system generates forms and they are submitted to the plan.

If the patient is uninsured, the system applies a discount to the bill and/or the specific business rules determined with the provider. Then the admissions clerk, prompted by the system, works with patient to sort out financial arrangements for payment: these could include a prompt payment discount, terms, medical banking, among others.

For the insured, the system determines specific copay amounts, deductibles, and the final financial arrangements for paying these.

Health Populi’s Hot Points:
Medical bad debt is a growing malady in the U.S., becoming a major factor in the growth of personal bankruptcy. nTelagent’s hard data demonstrates that even with the blessing of health insurance, people accumulate bad medical debt — not solely a problem of the uninsured.

There have been some evolving approaches to helping providers manage this fiscal burden. One example is a sort of medFICO score in December here; this project has since been shelved.

Care Credit
and the Citi Health Card are but two examples of new credit cards serving the niche of consumer health payments. As consumers take on more of this financial responsibility, these programs are sure to grow to serve the expanding marketplace.

The question remains: with eroding wages and increasing costs for all goods and services facing consumers, where does the health care line item fall in the American consumer’s home budgeting priorities?