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Bad Debt Grows as Out-Of-Network Benefits Shrink

By Alexandra Wilson Pecci  
   October 16, 2018

A lack of OON benefits leads to never-ending financial obligations for patients and a greater likelihood of bad debt for providers.

Surprise, sky-high medical bills have been irking patients and legislators a lot lately, but as the number of patients with out-of-network (OON) benefits shrinks, the problem of high bills will continue to grow, according to research from the Robert Wood Johnson Foundation.

A lack of OON benefits leads to never-ending financial obligations for patients and a greater likelihood of bad debt for providers, according to Katherine Hempstead, PhD, senior policy adviser at the Robert Wood Johnson Foundation.

Hempstead authored the new analysis, which looked at trends in OON benefits in the individual and small group markets.

"Out of network benefits have become much less common, especially in the individual market, where the proportion of plans with OON benefits has declined from 58% in 2015 to 29% in 2018 in the individual market," she tells HealthLeaders via email.

"In the small group market, the decline was smaller: 71% to 64%," she says.

However, even plans that do offer OON benefits increasingly have very high deductibles and maximum out-of-pocket (MOOP) caps.

For instance, in the individual market, the median OON deductible is approximately $12,000, the analysis shows. Some are even higher.

"A sizable share of plans in the individual markets have OON deductibles that exceed $20,000, and have no MOOP, meaning that patient obligations can continue infinitely," Hempstead says.

For hospitals and health systems, all of this adds up to more patients who will be unable to pay their bills.

"The takeaway for revenue cycle managers is that most customers in the individual and small group market have little or no out-of-network coverage," Hempstead says.

Because of this lack of OON coverage, hospitals and health systems should do some investigating beforehand.

"It will be important to ascertain in-network status before providing services, or the likelihood of bad debt will be high," Hempstead says.

That's something that hospitals and health systems can feasibly do, "especially if they have a price estimator tool," says Donella J. Lubelczyk, RN, BSN, ACM-RN, CRC, CRCR, executive director of revenue cycle at Catholic Medical Center in Manchester, New Hampshire.

"They would need to do this with the patient and make sure the patients understand their out-of-network costs prior to selecting the service(s)," Lubelczyk says via email. 

Patients also have a responsibility to know which providers are in and out of their networks.

A recent HealthSparq survey shows that 40% of patients who received a surprise bill said they could have done more to better understand their benefits and healthcare processes. 

"Patients really need to understand their in-network plans, but most people do not and need to get assistance," Lubelczyk says.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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