April 6, 2021

Get the Score Right when Determining Patient Financial Responsibility

Applying financial assistance scores to determine patient financial responsibility is complicated. Conventional wisdom would say “bad credit equals poverty” while “good credit is synonymous with affluence.” But, like most things in life, it’s not that simple.

Many healthcare revenue cycle managers believe financial assistance is simply the last resort after all attempts to collect payment are exhausted. They might be surprised to know they could save valuable staff time—and considerable amounts of money wasted on fruitless collection efforts—by preemptively providing financial assistance to those who qualify.

Determining genuine charity worthiness is particularly important for faith-based and children’s hospitals, which adhere to a different financial assistance standard. They need a way to be assured that financial assistance has been provided to every patient truly in need.

Yet determining who qualifies is where things start to get complicated. Pulling someone’s credit score and looking at their tax statement is the traditional “gold standard” for determining financial assistance eligibility. Much like a child’s puzzle with just two pieces, however, that approach does not provide a full or realistic picture.

Here are just a few scenarios in which the conventional approach to determining financial assistance worthiness could be misleading:

• A young person just beginning their working life. Their score could be low because they haven’t established a credit history or even paid taxes yet.
• A patient with sterling credit may recently have been laid off and have little to no savings. This person could truly be qualified for financial assistance even though his or her credit score leads you to believe otherwise.
• A person with poor credit due to living beyond their means, even though they should be able to pay for their healthcare obligations based on a generous income.

Luckily, a more sophisticated method for determining credit worthiness has evolved. It is based on looking at dozens, or even hundreds, of data inputs (most publicly available) to generate a remarkably accurate assessment of a person’s true financial picture. If you think of using a credit score and tax record as the equivalent of a two-piece baby puzzle, a demographic scoring system is more like building a puzzle with hundreds of pieces to create a Van Gogh painting reproduction. There’s just no comparison between the two!

This sophistication is possible thanks to computer analytics, which handles the “heavy lifting” without patients filling out an application or providing their tax forms. Another plus: demographics-based scoring guarantees that financial assistance is provided fairly and consistently. It’s not a trivial matter since up to 25 percent of patients who are eligible for financial assistance can be missed when credit scores are used to determine eligibility.

Click here to learn more about how to use financial assistance scores to determine patient financial responsibility.