In this Business Profile, Gerry McCarthy, President of TransUnion Healthcare, discusses industry trends contributing to higher bad debt and what to do about them. Gerry is responsible for the strategic direction of the healthcare business and expanding its footprint in the healthcare market overall. He has more than 20 years of experience in healthcare information technologies.

Gerry McCarthyTell us about TransUnion Healthcare.

TransUnion Healthcare is a division of TransUnion, a global information solutions company that serves both businesses and consumers in 33 countries. Since its inception 12 years ago, TransUnion Healthcare has focused primarily on revenue cycle management and on maximizing reimbursement and cash flow in healthcare organizations.

We maintain that focus through three key areas: 1) patient access, 2) financial navigation and 3) revenue recovery. In fact, we positively affect all aspects of the revenue cycle with a "hard dollar" return on investment-our solutions help our customers recoup real cash for their businesses. TransUnion Healthcare's current customer base includes more than 1,100 hospitals and 25,000 physician practices and is experiencing remarkable growth across the healthcare industry.

Now that the Affordable Care Act (ACA) is in effect, is there a greater need for revenue recovery?

Although ACA has extended insurance coverage to millions of Americans, it has actually created an underinsured population. We're seeing a real shift from fee-for-service to a much higher percentage of self-pay patients in high-deductible plans who may not understand their financial obligations for healthcare.

Only five years ago, the average deductible in such a plan was $1,500. Now, it's common for it to be $5,000 for an individual or $10,000 for a family. In addition, insurance copayments are growing. There's been a change in what is reimbursed from health plans to employers, and now to patients. We are now seeing that 10-20% of some services are a patient's responsibility after they meet the deductible.

Those two factors-high deductibles and higher copayments-are really affecting an underinsured population.

When you consider that the average family income is $52,000 per year and the average family deductible is $10,000, any type of healthcare event-a surgery or emergency department visit, for example-can quickly put the family under water financially. That's why we continue to see healthcare as the number one reason for personal bankruptcy. And those bankruptcies are growing.

As a result of these changes, hospitals and physician practices increasingly identify charity care for these patients and manage collections from insurance companies. Most importantly, they are shifting their business model to collect up front patients' self-pay money they pay out of pocket. The way providers interact with patients has gone through a complete revolution.

How can providers address the challenge of improving collections and reducing bad debt?

Readily available data-driven solutions can help in a number of ways. First, on the front-end, providers can collect more through automated patient access solutions that identify and verify insurance eligibility of patients who come in the door.

Second, providers can help patients understand their out-of-pocket costs up-front by giving them estimates specific to payers and plans associated with patients.

TransUnion Healthcare Revenue Cycle Management Solutions
TransUnion Revenue Cycle Managemant (RCM) Solutions for Healthcare

Third, providers can offer patients a recommended payment plan. For example, TransUnion Healthcare is also a credit bureau, which helps us evaluate the propensity for a patient to pay. If we determine a patient cannot pay based on information they share, we can automatically search for charity care. We can also communicate with insurers to see that prior authorization and medical necessity are established to help with appropriate reimbursement.

Fourth, providers can reduce bad debt on the back end. In most hospitals and physician practices, about 5% of uncompensated care patients have some level of insurance coverage that could have been reimbursed. This problem is growing alongside enrollment in the ACA's health exchanges due to system issues that may not identify insurance due to subtle changes in subscriber names or to subscribers who don't adequately understand their insurance coverage.

For example, to help providers reduce bad debt on the back end our coverage discovery product, eScan, can identify insurance for patient populations that providers can't find. Armed with that information, our customers can then return those dollars back to their organizations. Hospitals typically run on thin margins, and eScan can make a real difference to financial health. In one instance, a health system was able to recognize $21 million in charges. They credited TransUnion with putting them back in the black. In fact, by December 2015, through our customers use of eScan, more than $1 billion will have been returned to hospitals and physician practices.

Any recommendations on what to look for as organizations consider potential business partners for these types of revenue cycle solutions?

It turns out that if you collect one dollar at the point of service, you are eight times more likely to collect the entire patient responsibility compared to waiting until the back-end for collections. Given that, it's important to look for a business partner who understands the patient as a consumer and her or his propensity to pay. TransUnion's data sets make us one of the largest eligibility clearinghouses for patient estimation tools to educate patients and drive collection of real dollars at point-of-service.

Also, look for a partner with a revenue cycle management solution that focuses on the depth, breadth and integrity of data. They should include the features and functions we've been discussing, such as eligibility, estimation, charity care and coverage discovery. Look for a partner with the data and analytics capabilities to provide a dashboard that shows not just cash flow, but also shows ways to proactively affect patient behavior to optimize reimbursement and maximize the financial health of the organization.

And finally, we see a common pitfall that as people increasingly move toward electronic medical records and working with larger players, they default to existing partnerships without first evaluating the market. It's important to take a step back to ask about core competencies of your EMR provider. Do they really understand revenue cycle management, patient access, and the billing components that lead to coverage discovery?

Any additional reading you'd suggest?

Visit our website for more information our our white papers below.

Capturing the lost dollar: Finding solutions for uncompensated care

TransUnion Survey: Half of Americans will switch healthcare providers if the Supreme Court Eliminated Subsidies

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TransUnion LogoContent for this Business Profile is supplied by TransUnion. This published piece is provided for advertisement purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions of those profiled are those of the individual and not those of HFMA. References to commercial manufacturers, vendors, products, or services that appear do not constitute endorsement by HFMA.

Publication Date: Tuesday, September 01, 2015