1 in 6 insured hospital patients receives surprise medical bills. When an ER visit is involved, the rate increases to 1 in 4.
A surprise medical bill is when a patient receives a healthcare bill from a provider that isn’t in their insurance plan network. The surprise is two-fold: 1) In most cases, the patient didn’t realize that they received care from an out-of-network provider. 2) Because the care was out-of-network, the bill is often steep — more cost than the patient can cover. See an excellent overview from the AMA, here.
Surprise bills are a problem for patients for the apparent reasons — unplanned financial burdens, expensive services, and the credit score damaging effects of not paying. But surprise bills are also a problem for healthcare providers. For providers, surprise bills fall into the patient payments bucket. Patient payers are less reliable than insurance payers. Patient payer bills take longer to collect and have a lower chance of being paid in full -- more time in A/R and more bills sent to collections.
Regardless of insurance status, most Americans are not equipped to pay for medical expenses. Patients are unlikely to pay medical bills that are greater than 5% of their household income as 78% of American workers live paycheck-to-paycheck.
Collecting from patients difficult, even more so when the expense is unexpected. Surprise bills increase the odds of underpayment or no payment for provider services. Surprise bills are a problem for the patients who unexpectedly get hit with new expenses as well as the providers trying to collect earned revenue.
While legislation around surprise billing looms, providers need to take a broader view. Regardless of what happens with surprise billing, the financial burden placed on patients is growing. Providers must become intentional in how they manage patient payers. They need strategies and systems that maximize the amount collected from each patient and that drive toward value-based care. This includes everything from consumer-friendly payment portals, proactively offering payment plans, using predictive analytics for patient payment scoring, and integrating AI-driven workflow optimizations.
Regulations and practices around balance billing will change. But it’s only a part of what providers are up against as more and more payments shift to patients. Providers who implement data-driven strategies around payments will better understand their patient populations, collect more of their earned revenue, and build stronger patient relationships. These advantages will be essential as practices like surprise billing wane, and we enter a new era of value-based care.