insurance plans

Your Money Adviser: Businesses Manage Medical Bill Payment Plans

September 18, 2013 by NewsMaker

The Holston Medical Group, for instance, a large, multispecialty physician group in Tennessee, had one plan with such low payments that it would have taken the patient 115 years to pay a bill off.

But the days of such informal arrangements may be numbered. You can still find installment plans, but now they are often more structured agreements, managed by a company hired to oversee your account.

Hospitals say they are turning to such businesses because, as insurance plans shift more costs to patients, providers are stuck trying to collect money they are owed. (Hospitals provided about $41 billion in uncompensated care in 2011, according to the American Hospital Association.) Some hospitals have even come under fire for heavy-handed practices, like putting representatives of collection agencies in emergency rooms to get patients to pay up front.

Enter services like CarePayment and ClearBalance, which promote no-interest payment plans to hospitals and patients as flexible and “patient friendly.”

“Hospitals are very sensitive to the fact that out-of-pocket costs for patients are increasing drastically,” said Craig Froude, chief executive of CarePayment. “They’re trying to figure out how to adapt.”

Details vary depending on the terms negotiated between the hospital and the payment company. In some cases, hospitals offer the plans as an option. Other hospitals automatically enroll patients who do not pay a bill within 90 days. Typically, the companies offer plans of as long as two years, and sometimes as long as five years, with no interest or fees for patients. Payments are usually based on a percentage of the total bill, with minimums around $25 a month.

The hospital pays a fee to the company in exchange for getting its payment up front. The company then collects the payments. Some offer automatic deductions, and let patients check their accounts online.

The benefit is that hospitals may get more of the money they are owed than they would otherwise, even after factoring in fees to the outside company. The patient gets time to pay a big bill, and avoids the damage to a credit record that would occur if the debt were sent to collection. That can still happen. If the patient does not pay, the company sends the account back to the hospital for review.

A patients who uses such a plan may receive a card bearing the names of the hospital and the payment firm, but it is not a credit card. The companies say they may conduct a “soft inquiry” on a patient’s credit report, which does not affect the credit score. A patient whose score falls below a certain level will still be put on a plan, but the company will not pay the hospital until the patient has made a few payments on time.

A patient’s payment record generally is not reported to credit bureaus. Mitch Patridge, chief executive of CSI Financial Services, which is based in San Diego and offers ClearBalance, said it gave patients the option of having their payment history reported to credit bureaus if they chose, to help build credit.

Jeff Costello, chief financial officer at Beacon Health System in South Bend, Ind., said it had tried offering short-term payment plans and even low-interest loans through a local bank, but “patients didn’t like paying interest for medical bills.”

The system began using CarePayment’s no-interest plan in 2009 and it has been well received by patients, he said; some who use it once ask for it up front when seeking additional care. Patients can add new bills to the account, he said, and have their monthly payment recalculated.

Here are questions to ask about medical installment plans:

■ Will I have to pay interest if I don’t pay off the bill by a certain date?

Some providers, including dentists and eye care outlets, offer true credit card financing. They may offer zero-percent rates, but the rate can skyrocket if you are late or stop paying. Hospitals say their plans are different and offer no (or, in some cases, very low) interest. But make sure you understand the details of any plan you accept and get a copy of the agreement in writing, so you know what happens if you cannot pay.

■ Can I still get financial assistance if I agree to a payment plan?

You should always ask first about financial help, to reduce your overall bill, said Mark Rukavina, a specialist on medical debt. Under the Affordable Care Act, nonprofit hospitals will have to develop written policies on their “charity” care and collection practices. Many for-profit hospitals have written policies, too. You should ask.

■ Should I use a no-interest plan, even if I can pay in full?

Some providers offer significant discounts if you pay in full within 30 days. If you can do so, that might be a better option.

E-mail: yourmoneyadviser@nytimes.com

Article source: http://www.nytimes.com/2013/09/19/your-money/businesses-manage-medical-bill-payment-plans.html?partner=rss&emc=rss

Bucks: Computer Snag Limits Insurance Penalties on Smokers

A computer glitch involving the new health care law may mean that some smokers won’t bear the full brunt of tobacco-user penalties that would have made their premiums much higher — at least, not for next year.

The Obama administration has quietly notified insurers that a computer system problem will limit penalties that the law says the companies may charge smokers, The Associated Press reported Tuesday. A fix will take at least a year.

The problem relates to the computer system where insurers submit their “qualified” health plans to be offered on the new exchanges where individual insurance plans will be sold beginning Oct. 1.

“This is a temporary circumstance that in no way impacts our ability to open the marketplaces on Oct. 1, when millions of Americans will be able to purchase quality, affordable insurance for the first time,” said Joanne Peters, a spokeswoman for the Department of Health and Human Services, in an e-mailed statement.

Starting in 2014, the law requires insurance companies to accept all applicants regardless of pre-existing medical problems. But it also allows them to charge smokers up to 50 percent higher premiums to ward off bad risks. For an older smoker, the cost of the full penalty could be prohibitive.

The underlying reason for the glitch is another provision in the health care law that says insurers can’t charge older customers more than three times what they charge the youngest adults in the pool.

According to a June 28 guidance from the government to insurers quoted by The A.P., “Because of a system limitation … the system currently cannot process a premium for a 65-year-old smoker that is … more than three times the premium of a 21-year-old smoker,” the guidance said. If an insurer tries to charge more, “the submission of the (insurer) will be rejected by the system,” it added.

Ms. Peters said in her statement that the problem is temporary. For 2014 only, “tobacco ratings across age groups cannot produce premiums that are more than a three-to-one ratio,” she said. “In 2015 and beyond, the system will expand to allow issuers to increase this ratio, if they choose to do so.”

Older smokers are more likely to benefit from the delay, experts say. But depending on how insurers respond to it, it’s also possible that younger smokers could wind up facing higher penalties than they otherwise would have.

The glitch could mean that insurers could charge all smokers the maximum allowable surcharge to get around the ratio problem, which would end up penalizing younger smokers with higher penalties than they might otherwise have received. But it is unclear what insurers will do.

“‘We are aware of the issue,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, an insurance industry group. “But I can’t speak to how insurers will respond to it.”

He said he was unaware of any estimates of how many people would be affected by the law’s insurance smoker surcharges.

Premiums for a standard “silver” insurance plan would be about $9,000 a year for a 64-year-old nonsmoker, according to the online Kaiser Health Reform Subsidy Calculator. That’s before any tax credits, available on a sliding scale based on income.

For a smoker of the same age, the full 50 percent penalty would add more than $4,500 to the cost of the policy, bringing it to nearly $13,600. And new tax credits available to help pay premiums cannot be used to offset the penalty.

The administration is suggesting that insurers limit the penalties across all age groups. The guidance document from the Department of Health and Human Services used the example of a 20 percent penalty for young and old alike.

In that case, the premium for a 64-year-old would be about $10,900, a significant cut from the $13,600 if insurers charged the full penalty.

Workers covered through job-based health plans would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules.

Article source: http://bucks.blogs.nytimes.com/2013/07/10/computer-snag-limits-insurance-penalties-on-smokers/?partner=rss&emc=rss

Your Money Adviser: Businesses Manage Medical Bill Payment Plans

Bucks: Computer Snag Limits Insurance Penalties on Smokers

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