Curiously Awesome

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Simple - they want to identify which patients to pursue for payments because they can afford to pay their hospital bill.

A growing number of hospitals are mining their patients credit information to figure out which ones are more likely to pay their bills. In 2006, almost 5,000 community hospitals provided uncompensated care, which cost them $31.2 billion.

Consumer advocates are concerned about the potential for misuse of this information by the hospitals. Hospitals may opt to deny or cut a patient’s care if they find information leading them to believe they won’t pay their bill. Hospitals assure us this won’t happen…however, many hospitals do ask their patients for permission to access their financial records. This authorization is carefully buried in the fine print, however. Another concern is the hospital’s access to a patient’s financial records for the purpose of scouring for information about credit lines, which could then to used to encourage a patient to utilize this credit to pay their hospital bill, despite high interest rates or other costs.

This definitely has the potential for misuse and might put a patient at risk financially.

Some hospitals that have begun checking patients’ financial information will do this when they first register a patient for treatment; other hospitals hold off until after patients have received care. Hospitals are not allowed to refuse to treat a patient in an emergency. Private hospitals typically are not required to provide nonemergency treatment, but public hospitals are often required to give even nonemergency care that’s medically necessary, depending on local laws.

Interestingly, Equifax Inc., one of the credit bureaus, has developed a separate credit score that is specific to health care that will predict whether a patient can be expected to repay their medical bills. The health-credit score is a number derived from a patient’s traditional credit report. Equifax recently developed this number by matching up a cross section of hospital payment records with patients’ credit reports to look for common patterns.

Also of note is the fact that SearchAmerica Inc. is a company that mines credit bureaus for data on behalf of its hospital clients. Their client roster has doubled in number to 900 since 2005. As a patient registers for treatment at their hospital, the company advises the hospital on whether they are likely to qualify for financial assistance. Additionally, SearchAmerica generates a health-care credit score, which utilizes factors in a patient’s history such as how they pay their hospital bills. After the patient receives care, the company then factors in the size of the bill and reports to the hospital how likely it is that the patient will pay their bill.

There is a gray area about how much latitude hospitals have to legally check their patients’ financial information. Under the Fair Credit Reporting Act, hospitals are allowed to obtain patients’ credit reports after they have permission. After a patient owes money, the hospital then becomes a creditor and has strong grounds for checking a credit report even without permission, especially when a bill is long overdue.

Some industry officials argue that a hospital typically takes on the role of creditor once a patient walks in their door, and so has the right to check credit reports without permission before any care is delivered. Federal law seems to support this view, though it’s difficult to be certain without knowing every specific circumstance in which hospitals are pulling the reports prior to delivering treatment. Credit bureau Experian Group Ltd. states that it requires hospitals to get authorization for credit checks.