In this episode, Nick McLaughlin, Founder and CEO of Breez Health, discusses the state of hospital financial assistance programs in 2024.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- Breez Health background
- The state of hospital financial assistance programs in 2024
- Benefits to hospitals when low-income patients are approved for financial assistance
- Medical debt
- Hospital financial assistance programs
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome Nick McLaughlin. Nick is the founder and CEO of Breez Health, a member of the Goodroot community of companies dedicated to furthering the mission of delivering more accessible, patient-friendly financial assistance programs for hospitals across the U.S. Nick developed a financial assistance technology platform and service solutions that streamline financial assistance applications and processes for payments and hospital billing departments. In his role as CEO of Breez Health, Nick is furthering the development of his technology solution and scaling his team of financial assistance and customer support experts. By partnering with the hospital community to ensure optimization of charity care programs, he has maximized revenue opportunities and affordable care to patients regardless of their ability to pay. With over 12 years of experience working in hospital billing and revenue cycle, Nick has a deep understanding of the challenges facing hospitals and their patients. In this episode, we’re discussing the state of hospital financial assistance programs in 2024. Thank you for joining us, Nick.
Nick McLaughlin: Hey, my pleasure, Kelly. Thanks for having me today.
Kelly: Well, great. Well, let’s jump in. To get us started, can you tell us a little bit more about your background and about Breez Health?
Nick: Yeah, happy to. So, as you covered in the bio, I do come from the hospital billing and collection space. I spent the first 12 years of my career working in third-party collections and early out. The first two years were actually on the phone with patients talking with them about how they can pay their past-due hospital bills as a patient financial counselor. And then I moved into a sales role for about a decade. And it was a tremendous opportunity to learn about the hospital finance and revenue cycle world. I got super involved in HFMA, became the chapter president in Indiana, and really what I brought away from that was the opportunity to learn the business from a lot of really smart, really awesome people. And that’s really what led me to starting Breez Health. Because working in the collection space, you’ve got your recovery rates for hospital bad debt that range from 5 to 10 to 15% depending on the socioeconomic status of the hospital partner. And what that leaves is 85-95% of accounts that hospitals send to collections going unpaid forever. And the more I got to know– the more I got to know financial assistance programs, and as 501(r) came out, I thought,” Man, this really seems like an underutilized resource,” and asked myself, “Well, how many of these patients that our hospitals are sending to collections would have qualified for financial assistance?” And it turns out it’s quite a few.
Kelly: Wow, it’s quite impressive. That sounds like a great organization. What would you say is the state of hospital financial assistance programs in 2024? And what are some areas that hospitals are getting right? And what are some of the big opportunities for improvement?
Nick: So, I would say that the best word I would use to describe the state of hospital financial assistance programs in 2024 would be underutilized. And I say that because if you take a look at household incomes– across the household income levels as a percentage of the federal poverty level, which is how most of these financial assistance program eligibility criteria are based on, about 58.5% of American households fall below 400% of the federal poverty level. And I say 400% of the federal poverty level because that is the benchmark that I would say most hospitals use for partial discounts on their financial assistance programs. The American Hospital Association recommends free care for patients below 200% of the federal poverty level and then partial discounts to patients above that. And that 200 to 400% is the lower to the lower-middle income range that really are helped by partial financial assistance discounts to make what are often unaffordable high deductibles or balances, making them partially collectible instead of uncollectible from a hospital recovery standpoint.
And it was because– let me take that 58% number. If you think about the accounts that hospitals send to collections, I ask myself, “Are the patients that go to collections higher incomes or are they lower incomes than the average Americans?” And I think we can comfortably say that the average income of someone that winds up in collections is lower than your average American household. And so conservatively, let’s just set that benchmark at 58.5%. What would happen if we took the 58.5% of the accounts that hospitals send to collections and converted that over to financial assistance or charity care? How would that impact recovery rates? And if we’re only getting 5 to 15% recovered, and we took the bottom 58% of income earners out of that altogether, I’m confident we would still collect just about every single dollar that we’re currently recovering, and we would be more effectively connecting those lower-income patients with the financial assistance that they qualify for and frankly need in order to maintain affordable access to care.
And so some areas that hospitals are getting right in the financial assistance realm is I’ve seen so many hospitals that are missionally enthusiastic about connecting their lower income folks with the discounts they need so they can keep coming to the hospital or the clinics when they need the care because this epidemic of delayed care and patients going without care because they’re afraid of the cost, that’s something that we’re absolutely seeing. And as most nonprofit hospitals, and even most for-profit hospitals for that matter, a big part of the mission is caring for patients regardless of their ability to pay. And so there’s missional support around these financial assistance programs and desires to streamline and simplify these processes and making them more patient-friendly because there’s an acknowledgment that the manual, paper-based, clunky processes of financial assistance that have largely been the case for the last 15-plus years since the Affordable Care Act when it came into being, that there’s opportunities for improvement there.
And well, that’s a big one of the opportunities for improvement is going more digital, meeting patients where they’re at from a user experience standpoint, and making it easier for patients to understand and access and navigate financial assistance, which really is what we’re up to at Breez Health, is partnering with hospitals to make financial assistance easy, not just for the patients, because we need to make it easier for them to understand and access and navigate financial assistance, but also easier for the hospital as well, because we need to make it less costly and burdensome on the hospital to promote the financial assistance program, to process applications, to post discounts, things like that.
Kelly: Very interesting. And are there benefits to hospitals when low-income patients are approved for financial assistance?
Nick: Yeah, absolutely. So good things happen when hospitals stop spinning their wheels, chasing after patients who cannot afford to pay. And there’s really two pieces or two sides of this coin. There are cost savings opportunities, but there’s also some found revenue opportunities when low-income patients are approved for financial assistance. And even through that whole screening process. Because when we engage these lower-income folks, these folks that qualify for financial assistance with the financial assistance application, we’re collecting new contact information and demographics. We’re collecting insurance information, income information. We’re getting a really good sense as to what their ability to pay is, and we’re giving them every opportunity to present to us again third-party reimbursement opportunities. And so from a found revenue perspective, about 10% of the applications that come in through our client’s online financial assistance platforms are patients that they report that they have no insurance at all and that their income is below the Medicaid eligibility threshold in their state. And so these are patients that we can follow up with, help get on Medicaid, and get you reimbursed for the awesome care that you either provided or are potentially providing in the future because it’s not just about converting dollars collected in the past. It’s also about trying to make sure that they know they can come to you in the future and that you’ve got their back and are going to help make sure all resources that are available to them are there to cover their costs at your hospital.
So, Medicaid is a piece. About 2% of the applications that come in through our online financial assistance platforms are patients giving billable insurance information that had not previously been caught upstream. And so that’s revenue found as well. And then there’s also some reimbursement, more deeper reimbursement side positives of approving financial assistance for patients. Some of it is around 340B eligibility and providing a certain amount of community benefit. There are reimbursement factors involved with DSH or uncompensated care reimbursement, as well as Medicare Bad Debt reimbursement for fixed-income seniors on Medicare. You get 65 cents on the dollar. So, there are certainly found revenue opportunities, but there’s also cost savings opportunities when we approve patience for financial assistance. And a big chunk of that is reducing the print and mail expenses and streamlining the manual paper process into something that’s automated and less manually burdensome on your team. So, we’re not sending hard copy bills to patients any longer that qualify for financial assistance because their discounts have been posted, and we no longer need to send those out. Or we’re not taking a phone call from somebody who can’t afford to pay and hearing a sob story and then taking the time to put a financial assistance application in an envelope and put that in the mail and maybe eventually it goes out to them. Half the time, maybe it comes back. And then there’s the whole rigamarole of chasing after paperwork. If we can streamline that, use required fields in an online application and really make it a lot more patient-friendly, good things happen.
Kelly: That makes a lot of sense, Nick. And there’s been quite a bit of negative press around medical debt and hospital billing practices the last few years. Is it really as bad as some media outlets are trying to say it is?
Nick: So, I’m going to answer that question confidently with a no. It’s not as bad as the Wall Street Journal and New York Times are trying to say. I think about some of the headlines that I’ve seen over the last year or two. Hospitals often don’t help needy patients, even those who qualify or big hospitals provide skimpy charity care despite billions in tax breaks. I think the frames that they’re using to chastise health systems that they say aren’t doing a good enough job providing financial assistance, it’s not helpful, especially considering all the financial assistance and patient advocacy work that hospitals are doing. That said, I still think that if we hospital finance leaders look ourselves in the mirror, we can acknowledge that, yes, there are still some opportunities for improvement with this process to more efficiently and effectively connect the lower-income patients that qualify to the financial assistance resources that they need. So, is it as bad as they say it is? Certainly not. We could do a better job of highlighting the good stories to combat the bad stories. However, there is certainly opportunity to improve financial assistance and proactively attack the medical debt crisis that we have in our country as hospitals.
Kelly: Yeah. No, I completely agree with that. Breez Health has conducted a recent survey that found more than half of Americans are unaware that hospital financial assistance programs even exist. Why is that? And how do we fix it?
Nick: Yeah, that’s a great question. I think some of the biggest reasons why most Americans don’t even know that hospital financial assistance programs exist is because the way that we’ve publicized them to this point as an industry has been largely informed by the minimum requirements of 501(r). And so there’s a list of benchmarks or requirements called the widely publicized requirements that hospitals need to make their financial assistance policy documents available on a web page or on their website. They need to have a conspicuous written notice available on their patient statements. And the challenge– well, first, I’ll say that just about all hospitals are 501(r) compliant from a practice and publicizing these documents. A number of them haven’t looked at their financial assistance policy documents in a while, and those could certainly use some updating. However, having the documents where they need to be, it’s been a requirement that’s reported on the 990 Schedule H. And so it’s something that most hospitals are compliant in. It’s just not in a patient-friendly manner. So, the conspicuous written notice, for example, just reads on most patient statements, “Financial assistance is available for those who qualify. For more information, call 1-800 customer service.” And nobody calls. They don’t really know what financial assistance means. And there isn’t a whole lot of promoting financial assistance beyond those efforts.
And so the real opportunity is, “Okay. How do we change the paradigm around these programs to help our patients, especially our lower-income patients, know that financial assistance is available to them?” We don’t want to send out a paper application to everybody because that adds additional hard costs in many cases. And so what our clients at Breez are doing is leveraging the online financial assistance platform, which includes the ability to see if you qualify just by answering household size and income to check the household for eligibility against the hospital’s income eligibility criteria, as well as to be able to submit an application online as well. So, it’s self-serve. It’s patient-friendly. And by having that as something that you can promote to your patients instead of a manual paper-based application process that often winds up in a headache, our clients are so much more enthusiastically promoting the availability of financial assistance to their communities. We had one client just last year go on the local news to let their community know that they’ve made this online financial assistance platform available, online financial assistance applications available to their patients and say, “Hey, this is for households that earn up to $100-120,000 per year.” And that encouraged a significant amount of engagement.
Now we’re leveraging QR codes on business cards and signs in patient registration and access areas to let people know that they can see if they qualify and submit applications while they’re waiting to see a doctor. And so these are some ways that we can more effectively promote the availability of financial assistance. And it’s also important to take some of the stigma out of it because far too often, patients hear charity care and they assume, “Oh, that’s just for homeless people or really poor people.” And that’s not the case. There’s a lot of underinsured folks out there who have insurance but still struggle to pay their out-of-pocket costs if they can at all. And we want to apply financial assistance discounts to those accounts as well, instead of having those wind up in medical debt.
Kelly: Those are some great ideas. There’s been some new legislation in a few states, namely Colorado, Illinois, Oregon, Washington, and Minnesota. They have made screening for financial assistance eligibility a requirement before sending accounts to collections. What are some takeaways from different state laws around the country that hospitals should be aware of and potentially implement?
Nick: Well, this is a really interesting piece, Kelly, because I think about states like Minnesota and Illinois. And the state legislators have said, “You can’t send accounts to collections until you’ve screened them for financial assistance eligibility.” And that seems like a pretty effective way to increase awareness around financial assistance programs. And yes, patients can opt out of screening, and hospitals in those states are required to document that they’ve said, “No, we don’t want to be screened for financial assistance.” But the state of Minnesota, you can’t even take a $500 credit card payment before screening patients or offering financial assistance screening to those folks. And so the biggest takeaway that I would recommend, especially as more states add requirements like this, is we need to figure out how to make the financial assistance program and the processes that are involved with the program as minimally burdensome as possible because, as you know, hospitals don’t have just a ton of resources waiting around to answer questions about financial assistance applications or to send applications to folks and review paper applications. So, what can we do to automate and to remove the burden of as many of these financial assistance processes as possible?
And that’s where online applications come in. That’s where online self-screening comes in, encouraging all patients that come into the waiting room or check-in to see if they qualify for financial assistance using the hospital’s tool, as well as automating the eligibility verification piece on the back end, automating the application processing, determining who qualifies because the old way is somebody submits a paper application form along with a laundry list of documents, pay stubs, bank statements, tax returns, W-2s, whatever is required by the hospital. And somebody has to take a look at the application form and see if the information on the application form qualifies, and then they need to try to use the documentation that was provided to verify that what they put on the application form was correct. And that’s a long burdensome manual process. At Breez, we’ve actually automated that process, leveraging third-party income verification data so that we don’t have to spend– your team doesn’t have to spend all that time chasing down incomplete applications, missing documents. We can receive an application, verify that their situation is what they say that it is, and then give them an approval or a denial based on that data without having to go through this whole manual, time-consuming rigamarole. So, I think that’s a really important thing to consider, especially as more states and potentially the federal government addresses the political will around medical debt and the general feeling from a society and from a regulatory standpoint that there are too many patients that qualify for financial assistance that are slipping through the cracks, and that’s a large cause for the medical debt crisis in our country.
Kelly: Well, kudos to your team for automating that process because it desperately needed it. Nick, is there anything else you’d like to share with us today?
Nick: Yeah, I think I’d like to use that question just to bring it back to the patient. I know it’s so easy in the hospital business office realm to get caught up in this process or that process or in collecting insurance, managing denials, things like that. But if we think about the folks that come to our hospitals, they come from all walks of life. And they are the lowest on the income spectrum, and thankfully, we have Medicaid available to mostly fund the services to those patients. And we’ve got folks on the other end of the income spectrum who anytime we send them a bill, they can cut a check and take care of it just fine. But there’s a large chunk of people in the middle who really struggle with affordability of healthcare.
And my encouragement to hospital leadership is to really see your financial assistance program as a very direct path to help make sure that they can maintain affordable access to care at your facility. And financially, this is beneficial for the hospital too, because those underinsured folks, once we get through that deductible, we can collect from those big commercial insurance pockets or Medicare pockets. We don’t want patients to hesitate to come to our hospital or our clinics because they’re afraid of the cost. And so that’s why I would really encourage hospitals to take a close look at their financial assistance policy and program, see if there are opportunities to update and streamline and simplify and improve it, both from the patient’s perspective, but also from an operability perspective internally. And we can streamline this process to make the healthcare system work so much better for everybody.
Kelly: Those are some great suggestions. Thanks, Nick. And thank you so much for being here and for sharing your insights on the state of hospital financial assistance programs in 2024. We really appreciate all of your information today.
Nick: My pleasure, Kelly.
Kelly: And if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?
Nick: Yeah, email is the best way for you, Kelly. So, my email address, if anyone has questions about Breez or about our online financial assistance platform or automated application processing services, that would be nmclaughlin@breezhealth.com. And I’m sure you’ll have it linked in the comment notes as well. So nmclaughlin@breezhealth.com. I look forward to hearing from you.
Kelly: Yes, we will definitely link you up with that. And thank you so much for providing that. Thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…
[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.com/podcasts. The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.
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