ClearBalance Lending Up; Financing Fills Need in Hospital Billing

FINANCING: Patients With High Deductibles Often Use the Service

By Meghana Keshavan

Monday, September 9, 2013

The number of patient loans made by San Diego-based lender ClearBalance Inc. has grown 76 percent from last year as the number high-deductible health insurance plans increases.

With high deductibles come high costs to patients, who can’t always afford to pay $2,000 or even $10,000 to the hospital up front. Patient financing as offered by ClearBalance helps hospitals recoup costs from patients who can’t afford these large hospital bills, preventing default rates which are rampant among high-deductible and self-pay patients.

ClearBalance works with about 450 hospitals around the country, including Sharp HealthCare and Palomar Health locally, and the number is growing.

The number of patients with high-deductible plans is expected to continue rising as state-run health insurance exchanges come online later this year, ClearBalance CEO Mitch Patridge said

“Hospitals aren’t geared toward creating a new payment architecture that will fit this influx of new, high-deductible-carrying patients,” he said.

ClearBalance has serviced more than 3.3 million patient accounts since it was founded in 1992 and has funded more than $850 million in patient loans, about $350 million of which were in the past three years, Patridge said.

Part of a ‘Quiet Revolution’

High-deductible plans — also known as catastrophe plans — are rising in popularity, particularly among employers who want to adhere to new Affordable Care Act guidelines while maintaining their bottom lines. About two-thirds of employers offer such plans, and about a quarter of employees use them, according to a 2013 annual health benefits survey from New York-based consultancy Towers Watson & Co.

Although they offer lower monthly premiums, patients wind up paying thousands of dollars out of pocket. The average high deductible is about $2,000 and can be $10,000 or more. Nevertheless, an August report from the Kaiser Family Foundation indicated that this has helped employers slow the rise in health care premium costs.

“It’s part of what I see as a quiet revolution in health insurance, from more comprehensive to less comprehensive, with higher deductibles,” Drew Altman, CEO of the Kaiser Family Foundation, said in a teleconference.

Hospital Bill Defaults Cut Sharply

The ClearBalance loan program enables patients to instantly qualify for bank financing for hospital bills, helping health care providers improve their net recovery of patient bills.

“Payment plans set up by hospitals typically default out at 45 percent or greater,” Patridge said. “We guarantee results to hospitals of default rates less than 18 percent.”

The company makes the payment process much simpler, said Cynthia Burns, registration manager for Palomar Health. For a $5,000 deductible, for example, ClearBalance can slice that payment immediately into up to 72 months, which breaks down to a more palatable — and interest-free — $70 per month. The hospital pays an undisclosed “servicing fee” to ClearBalance in return for receiving the bulk of the patient’s bill paid immediately.

The general absence of interest and late fees keeps Palomar patients on board with paying back their loans, Burns said.

Burns said that, upon using ClearBalance, patient bill defaults at Palomar dropped from 41 percent to 11 percent among those who used the financing program. Still, only a small slice of patients use the ClearBalance option; in three years Palomar has registered about 6,000 patients with ClearBalance, generating about $11 million in payments. By comparison, Palomar, which recently built a hospital in Escondido that cost nearly $1 billion, sees about 22,000 inpatients per year.

Sharp HealthCare has also been offering ClearBalance to patients since 2010.

“The economy was taking a downturn, and we saw our patients struggling to make ends meet,” said Gerilynn Sevenikar, vice president of patient financial services at Sharp. The system has a 14.9 percent recourse rate among patients using the ClearBalance system, funding about 3,000 patients with about $5.2 million.

“We’re now seeing patients with deductibles up to $10,000, who have no way to pay their Sharp bills without help in financing,” Sevenikar said. “But with ClearBalance, we’re able to make it a win-win — offering a low-cost loan to the patients — and recoup more costs than we might have otherwise.”

High Deductible Health Plans, Gamble for Some, On the Rise

Near the end of last year, a big finance company in Charlotte, N.C., was doing what a lot of other businesses have been doing recently: switching up their health care offerings.

“Everything was changing, and we would only be offered two choices and each were a high-deductible plan,” says Marty Metzl, whose husband works for the company.

High-deductible plans are the increasingly common kind of health insurance that have cheaper premiums than traditional plans, but they put you on the hook for thousands of dollars in out-of-pocket costs before the insurance kicks in.

According to the Kaiser Family Foundation, back in 2006, just 10 percent of Americans who get health insurance through their employers had a high-deductible plan. Today, more than a third have them, and that percentage is growing daily.

The trend, which could increase with implementation of the Affordable Care Act, has some doing the math before seeking care.

What’s It Going To Cost?

For the Metzls, the options were deductibles of $3,000 or $4,500.

“After much angst and thinking and talking, we decided to choose the higher deductible plan,” Metzl tells NPR’s Jacki Lyden. “It really just felt like we were rolling the dice and gambling that none of us would get sick or have any catastrophic accident in 2013.”

That gamble didn’t pay off. Late one night, Metzl was working at home when she heard her husband yell for her to come to the bathroom. Her son had hit his head. She says that even though blood was running from his head and down his back, her thoughts quickly went to the family’s insurance.

“It was like something out of a horror movie, and I was standing there thinking — instead of, ‘Oh my gosh what happened to my son’ — I’m thinking, ‘Oh my gosh, how much is this going to cost if we have to take him to the ER at 11 at night?’ ” Metzl says. “I mean, I was horrified that that thought even came into my mind, but that’s where my brain went.”

The Metzls decided not to take their son in. Instead, they patched him up as best they could and sent him back to bed.

Read more at http://wlrn.org/post/high-deductible-health-plans-gamble-some-rise

KHN: Hospital bad debt climbs as coverage costs are shifted onto workers

19% of employer-covered workers were enrolled in high-deductible plans last year

August 13, 2013

The rise of high-deductible health plans has left many patients unable to pay their full medical bills, causing bad debt levels to climb at some hospitals, Kaiser Health News‘ “Capsules” blog reports.

• The Financial Leadership Council’s Sarah Gabriel explains how to make affordable financing a win-win for patients and hospitals.

According to the Kaiser Family Foundation, 19% of employer-covered workers last year were enrolled in high-deductible plans, which are insurance policies with family deductibles as high as $5,000 that are often paired with health savings accounts. That’s more than double the rate of workers in high-deductible plans in 2009.

Supporters of the plans say they force workers to pay more attention to costs, encouraging them to avoid needless care and shop for the best deals. However, hospitals say patients enrolled in such plans struggle to pay for their care.

>> Hospitals worry about cost-sharing in ACA health plans

“We have definitely been hearing from members that they are seeing an increase in bad debt and even in charity care for people with high-deductible health plans,” says Caroline Steinberg, the American Hospital Association‘s vice president for trends analysis. She adds, “A lot of these folks tend to not understand the structure of their benefits until they get to the hospital, and they’re not covered as thoroughly as they thought.”

Tenet Healthcare CFO Daniel Cancelmi last week told reporters that the “number of accounts that we’re seeing that relate to these high-deductible plans has been building, and it has been putting pressure on our bad debt levels” (Hancock, “Capsules,” Kaiser Health News, 8/12).

Improving the Overall Experience Begins Even before a Patient Enters a Hospital’s Front Door

A recent article in the Los Angeles Times underscores the intensified focus that healthcare providers are placing on optimizing the patient experience, particularly as federal payments to hospitals become tied to patient satisfaction scores.

According to the LA Times July 21 article, “Under the national healthcare overhaul, patient experiences matter. Federal payments are being tied to surveys that gauge patient attitudes about such things as a hospital’s noise and cleanliness, communication and pain management.”

The patient billing experience also impacts a patient’s view of his or her overall experience with a healthcare provider. Therefore, adding patient-friendly payment options is another critical aspect of improving the overall experience, especially as more and more patients are backed by a high-deductible health plan.

A study released in June 2013 by America’s Health Insurance Plans (AHIP) found that more than 15.5 million Americans are now enrolled in high-deductible health plans – more than triple the amount enrolled over the past six years.

The ClearBalance patient-friendly loan program improves the patient/family experience and increases net collections.

• All families can immediately qualify, regardless of credit score
• Interest-free loans with payment terms as long as 72 months
• Patients pay no annual fees, late fees, punitive rates or minimum finance charges
• Easily add new balances and consolidate multiple bills into one easy payment

Craig Pergrem, Senior Director, Customer Service Care Center at Novant Health, had this to add. “We understand the changes in healthcare are ongoing, and we feel that ClearBalance gives our patients and their families a choice in decisions with regard to high-deductible plans and large, out-of-pocket expenses that are rarely planned. Novant Health feels this is one part of the Remarkable Patient Experience.”

Novant Health recently joined more than 450 hospitals nationwide utilizing the ClearBalance program to help patients and their families contend with high-deductible health plans and, most importantly, improve the patient/family experience.

For more information, please call ClearBalance at 858-200-9208.

High-Deductible Health Plans = Growing Self-Pay Receivables, Healthcare Providers Look to Help Patients Contend with Out-of-Pocket Expenses

Findings from a July 2012 survey conducted by Deloitte Center for Health Solutions indicate that employers will increase the use of co-pays, deductibles and increased premium participation to manage rising healthcare costs. In fact, more than half of the employers surveyed by Deloitte said they plan to introduce high-deductible health plans within the next three to five years.

As high-deductible health plans grow in popularity, healthcare providers will be contending with skyrocketing self-pay balances which many patients will find difficult to pay .

As one senior healthcare executive puts it: “We have found that people inherently want to pay their bills, but they need a reasonable method to do so.”

Or, as another executive says, “A bad debt account should be that patient who simply refuses to pay you, not someone who just needs an affordable repayment option.”

To contend with larger balance-after-insurance accounts, healthcare providers typically offer internal payment plans as an alternative; however, patients often need longer repayment terms than available through the provider. To compound the issue, when it comes to paying their bills, consumers generally make healthcare bills a lower priority.

There is, however, a solution. CSI Financial Services’ ClearBalance^® is a patient-friendly program designed to immediately pay the provider, yet give patients up to 72 months to pay their balance.

Not only will implementing ClearBalance increase patient satisfaction, but the program will also increase self-pay collection rates by a minimum of 20%compared to internally managed payment plans.

For more information, please call ClearBalance at 858-200-9208.