Amid the headlines of labor shortages and hospital closures, many Americans may have missed some positive recent healthcare-industry news: The U.S. reached a new, all-time low in the rate of Americans without health insurance. 

Standing at just 10.5% in 2021, down from 11.1% two years earlier, the uninsured rate was pushed down in large part due to the Medicaid expansions declared under the COVID-19-related public health emergency, according to a 2023 report from the U.S. Department of Health and Human Services. 

Nonetheless, we shouldn't be lulled into a sense of complacency about the state of healthcare affordability in the U.S. It's important to remember that we've still got a long way to go. 

For example, a 2022 survey by the Commonwealth Fund revealed that 43% of working-age adults were inadequately insured in 2022, a figure that included 29% of people with employer coverage, and 44% of those with coverage purchased through the individual market.

As a result of this lack of affordability, 46% of survey respondents said they had skipped or delayed care because of the cost, while 42% said they had problems paying medical bills or were paying off medical debt. Further, 49% said they would be unable to pay for an unexpected $1,000 medical bill within 30 days, including 68% of adults with low income, 69% of Black adults, and 63% of Hispanic adults.

For providers, patient difficulty affording medical bills can lead to missed revenue opportunities, as well as increased difficulty and expense associated with collections. 

As the prevalence of high-deductible health plans has exploded in recent decades, so too has another worrying trend for providers: the growth of patient self-pay. Once a relatively miniscule amount of large providers' revenue mixes, patient payments today account for more than 30% of provider revenues, and that number is likely to grow as health insurance costs continue to soar for most Americans. 

This shift toward "the patient as the new payer" has been a bumpy ride for providers, to say the least. For example, a 2022 report found that self-pay after insurance accounts were responsible for nearly 60% of patient bad debt in 2021, compared to 11% in 2018. Additionally, the share of insured patient statements with balances of more than $7,500 grew from 5.2% in 2018 to 17.7% in 2021, while the percentage of balances higher than $14,000 increased from 4.4% in 2018 to 16.8% in 2021.

This represents a worrisome trend for providers in terms of collections, as patients not surprisingly struggle to pay off bills with higher balances. For example, the same report found that, in 2021, collection rates plummeted to 55% for self-pay, after-insurance bills, down from 76% the year prior. 

Amid ongoing labor shortages that strain resources and rising patient out-of-pocket costs, hospitals are likely to face difficulties for the foreseeable future in collecting these high balances from self-pay patients.

To successfully manage self-pay accounts from a revenue cycle management (RCM) perspective requires a multi-pronged strategy. The first step is to identify accounts that have not had payments or adjustments performed in the prior 90 days. Next, separate these accounts into multiple categories, such as: those that can make partial payments, those likely to pay the full balance if financing options were available, those that qualify for financial assistance, and, finally, the accounts that should be classified as bad debt. This segmentation allows accounts to be prioritized, enabling RCM staff to focus their attention on those most likely to be collected. This approach offers the potential to dramatically improve net realization of cash from patient pay receivables.  

If recent industry trends hold, providers should expect to see a growing amount of patient self-pay in the coming years as health costs continue to rise and deductibles increase. To prepare for the associated RCM challenges, providers should take the time now to design an effective operational program to collect self-pay dollars.

Kimberly Hartsfield is Executive Vice President, Growth Enablement at VisiQuate. Kimberly is a seasoned healthcare executive with almost 30 years of experience in the payer, provider, and consulting arenas. She has utilized her experience in the healthcare industry as a frequent presenter, with nearly 60 national speaking engagements on a variety of topics including data and analytics, compliance, value-based payment models, and provider cost and quality transparency. Kimberly currently serves as EVP, Growth Enablement at VisiQuate, helping healthcare organizations achieve peak business health by taking command of their data to maximize revenue cycle operations. www.visiquate.com