If there is a group of people that know about medical debt, it’s medical billers. Sixty percent of Americans have been in debt due to medical bills, with most consumers owing on average between $5,000 and $9,9999 (and 13% owing more than $20,000). [1] These figures of patient responsibility have medical billers constantly balancing collections with compassion. Most of the time it is out of the biller’s hands whether any abatement can even be offered, leaving only a hard press towards collecting a hefty balance from a patient who is struggling to pay.
New research from Stanford economist Neale Mahoney showed that, by 2020, “individuals had more medical debt in collections than they had in collections from all other sources combined, including credit cards, phone bills and utilities.” [2] The study went on to indicate that the earlier more often used figure for medical debt of $81 billion, was undercutting the actual debt load substantially, showing the American population actually holds $140 billion in outstanding medical debt.
The pandemic has only intensified the medical debt burden for Americans. A study by Commonwealth Fund, the Employee Benefit Research Institute and the W.E. Upton Institute found that an estimated 7.7 million American workers lost their employee-sponsored health insurance by June, which also affected 6.9 million dependents.
This past year has provided a trifecta of debilitating factors that are layering on the stress for patients, doctors and medical billers. People have lost their health insurance, lost their jobs, and with that have less disposable income. With no job, some are likely to take on a plan with higher deductibles, and thus higher out-of-pocket costs, making effective patient billing even more important.
Legislation has been proposed recently that would suspend collection of past due debt and interest accrued on it from February 1, 2020, until the end of the pandemic from providers who accepted or applied for federal relief. While these new laws are currently stalled in Congress, there is no telling what reimbursement to providers will look like, and how long that process would take if legislation like this is passed. For a business where velocity of capital is the difference between growth and stagnation, it’s important for every biller to keep an eye on our nation’s legislative, financial and procedural response to Americans’ growing medical debt.
In the meantime, providing the right resources to patients can alleviate the pain of those in debt while increasing the likelihood of payment on a greater percentage of bills due. According to LendingTree, 23% of people that were in debt but subsequently paid it off did it through payment plans. A lot of patients aren’t aware of payment plans as an option to repayment, or are too embarrassed to call and ask for a plan. By offering payment plans that patients can quickly set-up on their own through an app, billers can reduce their patients’ financial burden while locking in revenue that might never have been realized. Billers can also consider working with providers to set standard negotiating parameters based on patient debt levels, since 3 in 4 people who had medical debt at one time tried to negotiate their bill.
With medical debt being the number 1 source of debt collections, and surprise medical bills growing in frequency and impact, medical billers are now playing a key role in a national conversation. There is no reason we can’t all do our part to ease the American burden while capturing revenue for our medical providers.
[2] https://siepr.stanford.edu/news/americas-medical-debt-much-worse-we-think