Patient Lawsuits and Wage Garnishment By Hospitals: How Did We Get Here?

By Rahul Jain, director of sales; and Zeena Ojjeh, marketing, OODA Health.

Clinician Writing Medical ReportA Kaiser Health News analysis found that from June 2012 to 2018, the University of Virginia Health System and its doctors sued former patients more than 36,000 times for over $106 million, garnishing wages, and forcing families into bankruptcy.[1] The nonprofit health system isn’t alone as new stories emerge weekly of providers suing patients over collections–sometimes for bills as small as $13.91.

But how did we get here, and who is to blame? A new study conducted by HIMSS in partnership with OODA Health reveals how patient payment dysfunction echoes across the ecosystem, adversely affecting financial and clinical outcomes for patients, payers, and providers.

While initially it may appear that payers are insulated from the issues around patient billing, a closer analysis reveals that patients who are unable to pay their bills are non-compliant in their care — which leads to additional downstream hospitalization costs. Also, the unpaid bills are factored into successive rate negotiations between payers and providers, which increases the reimbursement amount that payers owe providers. In fact, according to the study, 67% of providers use patient collections as a justification for rate increases in payer negotiations, with 21% of providers using low patient payment rates as a prominent negotiation tactic with payers.

For providers, patient billing reverberates past financial performance to impact their primary mission and purpose: patient care. The study found that the prospect of dealing with medical billing distracts patients from complying with their care, and lower compliance is likely to lead to even more medical bills down the line. Eighty percent of patients reported that billing and payment concerns resulted in a lower level of compliance and adherence to medical plans. More to the point, 65% of providers admitted that billing impacts their ability to provide ideal patient care as they are distracted by clerical/financial tasks that limit time with or take time away from patients.

For patients, the rise of high-deductible plans has had unintentional consequences, as new plan designs were meant to reduce premiums and incentivize consumer shopping. However, patients are now buckling under this new health insurance structure in which 50% of workers have an individual deductible of at least $1,000. What’s worse, providers are not equipped for patient billing as the payment experience itself leads to confusion. According to the study, 72% of patients are confused by their explanation of benefits and 70% are confused by their medical bills. The provider billing process is so confusing that 65% of patients would switch to a new doctor if the payment experience was easier.

The blame for our patient billing problem gets passed around between patients, payers, and providers. We need a systematic change, so providers aren’t sacrificing clinical care to get paid; a solution that makes it easier for patients to understand their bills, and a payment process that doesn’t artificially inflate the cost of care for everyone. Most of all, patients deserve a system where they can focus on their health and recovery, not lawsuits and liens on their property.


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