Identifying tipping point helps hospitals be more inclusive with charity care

Thousands of patients each year who are eligible for financial assistance programs are not being identified at the front-end of the billing process. For those healthcare organizations interested in identifying these patients, determining a “tipping point” could be particularly helpful. By tipping point, I mean determining the approximate percentage of a family’s annual gross income when a patients’ ability to pay their hospital bills declines dramatically.

TransUnion Healthcare and North Shore LIJ Health System (NSLIJ) recently issued a joint study that identified when out-of-pocket medical expenses exceed 3.5 percent of a family’s annual gross income for NSLIJ’s patient population, the ability for the patient to pay declines dramatically. 

NSLIJ was interested in conducting the study because affordability has become a major concern as out-of-pocket spending for the uninsured and healthcare cost sharing, such as deductibles, co-insurance and co-pays, has increased at much higher rates than families’ income. NSLIJ believed that it could expand its charity care criteria to be more inclusive by adding a new analytic threshold into its identification processes that analyzes out-of-pocket medical expenses as a percentage of family income.

To conduct the study, NSLIJ provided TransUnion Healthcare with an input file from the first quarter of 2009 which included all patients with outstanding balances greater than $50 at discharge. Approximately 43,600 self-pay and insured accounts were analyzed. Key data elements included amount owed by patient, amount paid by patient, and the financial burden calculation of patient responsibility balance (PRB) divided by annual gross income (AGI).

Other healthcare organizations can expand their charity care identification processes by adding additional analytics such as the tipping point variable. By doing so, hospitals can:

·      Build more effective strategies for follow-up on patient accounts with outstanding balances.

·      Locate a new group of potentially eligible charity care patients.

·      Strengthen the data and analytics used to designate accounts for presumptive charity care when patients have not responded to billing and collection efforts.

By identifying more patients for financial assistance and doing so earlier in the revenue cycle, hospitals will achieve a more efficient settlement process and reduce dollars spent on collections and financial assistance efforts. 

Jim Bohnsack is vice president at TransUnion Healthcare.