Study shows medical debt crisis growing more severe

Oct 10, 2014 | Health Insurance Billing

Today, roughly one in five Americans suffer from medical debt. This often comes as a result of patients being unprepared for the cost of their treatment, whether due to the rise in high-deductible plans or surprise charges and facility fees. Roughly 63 percent of Americans indicated that they have received medical bills that were considerably more expensive than they anticipated, according to a recent NerdWallet survey

The survey showed the extent of American's confusion and anger about their medical bills by analyzing Centers for Medicare & Medicaid Services data and polling more than 2,000 recent health care consumers. 

The results showed than over 57 percent of American patients received bills that they confused them. This number was even higher for older patients, with 61 percent of those 55 to 64 reporting receiving confusing bills. 

A lack of health care cost transparency seems to the main source of the confusion. Sixty-three percent of patients reported cost more than they expected, and 73 percent claimed that they could have made better decisions if they were aware of the cost of medical care before seeking treatment. 

The study also found that hospital billing errors were a major source of conflict. NerdWallet studied Medicare billing data compiled by Medicare's Office of the Inspector General in 2013 and discovered that each and every one of the hospitals had billing errors. Although these facilities were forced to repay the government for their overcharges, this discovery speaks to an overwhelming issue for our health care system. 

"We believe that if the government —the single largest payer for health care — is consistently billed in error and overcharged, you can only wonder what happens to patients who are not familiar with the health care system or get bills that are confusing to them," Christina LaMontagne, general manager of NerdWallet Health, who led the study, explained to Forbes. 

Until better health care cost transparency is available, patients will continue to be underprepared for their medical treatments. This can cause significant issues in cash flow for care facilities, which can grow to affect the quality of care provided. Outsourcing accounts receivable management can lead to a sharp decline in the number of dollars written off to bad debt.