Patient Financial Responsibility Increased 12% from 2017 to 2018

June 25, 2019 - Patient financial responsibility increased by 12 percent for inpatient, outpatient, and emergency department care in 2018 despite consumers transitioning to lower cost settings, revealed a new TransUnion Healthcare analysis.

Specifically, the analysis released today at the 2019 Healthcare Financial Management Association (HFMA) Annual Conference found that from 2017 to 2018:

• Inpatient care costs increased from $4,086 to $4,659
• Outpatient care costs grew from $990 to $1,109
• Emergency department costs rose from $577 to $617

“For several years patients have faced a greater cost burden as healthcare expenses shifted from payers to patients,” Dave Wojczynski, president of TransUnion Healthcare, said in the announcement. “As a result, patients are now making decisions about where they receive care based on costs – not just the quality of care they may receive.”

Patients are having to make more cost-conscious healthcare decisions as average patient financial responsibility and the number of individuals facing greater out-of-pocket spending increases.

The analysis found that 59 percent of patients in 2018 had average out-of-pocket expenses between $501 and $1,000 during a healthcare visit. The percentage of patients experiencing costs in that range jumped from 39 percent the previous year.

On the other hand, the number of patients facing average out-of-pocket expenses of $500 or lower fell from 49 percent in 2017 to 36 percent in 2018.

As patient financial responsibility increases across the board, consumers appear to be selecting lower cost care settings more often. For example, the analysis showed that inpatient care – the most expensive care option – experienced a leveling off, with the percentage of price estimates stabilizing at about eight percent from 2017 and 2018.

Meanwhile, the percentage of outpatient service estimates, which are typically about one-quarter of the cost of inpatient care, increased from 65 percent to 73 percent during the same period.

“Patients are likely seeing more providers and payers recommending that they take advantage of cost-effective healthcare options, which brings down costs for all parties,” explained Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare. “This is especially important as costs continue to rise in all areas of healthcare, particularly in inpatient, outpatient and emergency department services.”

The findings also indicate a more pressing need for healthcare price transparency, especially in light of recent evidence that shows patients are finding it more difficult to pay their financial responsibility for care, Wojczynski said.

“This means price transparency is critical for healthcare providers who are not only competing for patients, but also want to secure timely payments from them,” he said in the announcement.

Healthcare price transparency is at the top of policy priority lists. Just yesterday, President Trump signed an executive order that gave HHS the greenlight to create additional hospital price transparency regulations, including a requirement to publicly disclose negotiated contract rates.

Hospitals already have to publish their chargemasters in a machine-readable format on their websites, according to a rule CMS implemented in January 2019.

However, hospitals are struggling to help patients understand their actual financial responsibility.

A 2018 survey regarding the CMS hospital price transparency rule showed that 92 percent of providers are worried about publishing their chargemasters online, with many raising concerns about how the public will perceive their prices.

Furthermore, many hospital groups oppose publishing contract rates because the negotiated prices for healthcare services are generally considered trade secrets. Publicly disclosing the rates could reduce competitive and ultimately increase patient financial responsibility.

But research shows that as patient financial responsibility rises, the likelihood of collecting patient payments in a timely manner significantly decreases.

Hospitals may want to consider going beyond price transparency rule compliance to give patients the information they truly need to understand patient financial responsibility. Adding context to chargemaster and negotiated price information will be key as patients receive more price information and demand more knowledge about their rising out-of-pocket costs.