How much is too much for patients to pay off a bill for medical care? According to data gathered by the Crowe Revenue Cycle Analytics (Crowe RCA) software, collection rates drop significantly when the patient portion reaches a balance of $7,500. The inability to collect expected revenue has resulted in a significant increase in bad debt among healthcare providers. A new Crowe report, "Hospital Collection Rates for Self-Pay Patient Accounts," looked further into this topic based on data collected through calendar year 2021.

Crowe is a public accounting, consulting and technology firm with offices around the world. The Crowe RCA solution captures every patient transaction for over 1,600 hospitals and more than 100,000 physicians nationally for purposes of automating hindsight, accounts receivable valuation and net revenue analyses. Within its benchmarking database, Crowe analyzed a portfolio including 47 states and comprising 1,413 hospitals.

With the rising cost of medical coverage, many consumers are enrolling in insurance programs such as high-deductible plans (HDHPs), health saving accounts, and various Affordable Care Act 'metal' plans –  bronze, silver, gold and platinum. These programs and plans are often the least expensive in terms of monthly premiums, but patients are left with a large portion of the bill when care is needed.  

"In the past, insured patients may have had a $75 to $200 copay and many were able to pay the total amount at the point of service," said Brian Sanderson, a principal in the Crowe healthcare consulting group. "These days medical bills could be thousands of dollars, even after the insurance balance has been resolved, which is more than a lot of patients can afford, and hospitals are struggling to collect this revenue."

Collectability on self-pay patient accounts dropped significantly when the out-of-pocket expenses exceed $7,500. According to the Crowe report, total patient statements with balances of more than $7,500 have more than tripled in the past three years, from 5.2% in 2018 to 17.7% in 2021. As a result, hospitals reported higher bad debt – write-offs associated with patient balances that are deemed uncollectible after significant collection efforts by the provider. In fact, 2021 was the first time self-pay-after-insurance accounts were the leading source of bad debt, accounting for 57.6% of patient bad debt compared to 11.1% in 2018.