Confusion and More Smoke and Mirrors.

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I found this latest report very interesting in light of the Affordable Care Act (ACA) and its purpose. That, according to a new report by the Consumer Financial Protection Bureau, nearly 20 percent of U.S. consumers — 42.9 million people — have unpaid medical debts.

The findings suggest that many Americans are being trapped by debt because the notices they get from hospitals confuse them and insurance companies about the cost of treatment. As a result, millions of Americans may be surprised to find they are stuck with lower credit scores, making it harder for them to borrow to buy a home or an automobile.

“When people fall ill and end up at the hospital with unexpected bills, far too often they have entered into a financial maze,” CFPB director Richard Cordray said in a speech to be delivered Thursday in Oklahoma City.

On average, a person with only overdue medical debt owes $1,766. Someone with unpaid medical bills and other sources of debt — possibly credit cards or back taxes — owes an average of $5,638. More than half of all debt on credit reports stems from medical expenses.

The report by the federal regulator indicates that much of this trouble could be avoided. About half of consumers who only carry medical debt have no other signs of being under financial distress. But complaints to the CFPB indicate that medical bills routinely baffle consumers. Unwieldy insurance and hospital statements leave them uncertain as to how much money they really owe, the deadline for payment, and which organization should be paid. On top of that many hospitals are demanding the co-payments or deductibles up front before a patient is admitted or can have outpatient surgery. “Say it ain’t so!” I just had to fight for a recent patient scheduled for cancer surgery. She called to cancel her outpatient surgery because the hospital billing service had called her and demanded her $4,500 deductible up front in order to complete the scheduling of her surgery. I was horrified that the hospital would “threaten” my patient, especially since they had no idea what the patient’s eventual operating room charges would be. They backed off when I threatened to call the insurance commissioner.

Also, the “new system” is baffling. Consider two scenarios. One the patient scheduled for a routine colonoscopy. The procedure is covered by insurance under the new law unless a biopsy or lesion of removed. Then it is the patient’s responsibility for the bill. What? Are we kidding? How does the patient know, going into the procedure, whether the procedure will be covered and what the bill will be? More important question is whether this encourages patients to pursue preventive health care? I suspect not!

Consider scenario number two. The patient a 72-year-old man, in this case a lawyer (just thought that I would try to confuse you even more by making the patient a lawyer, even though it doesn’t matter) faints at a meeting and is brought to the emergency room with a very low heart rate. The emergency room doctor, who examines the patient, informs him that he wants to admit the patient for observation. Luckily the patient calls me to ask what were my thoughts. I inform the patient. Ah Ha I say and inform the patient, after he tells me what his electrocardiogram (heart scribble diagram) that he needs a pacemaker and that he is not to be admitted for observation only, which Medicare will not pay for this “service.”. He needs to be seen by a cardiologist, admitted for treatment and the possible insertion of a pacemaker, which Medicare will now pay. The doctor argues with the patient until I have a chance to speak with the nurse and direct them to the new rules as of 2010.

All this confusion in the health care system tends to generate disputes from consumers about the unpaid debts. This has prompted the CFPB to also announce Thursday that it will require major consumer reporting agencies to provide regular reports on how they investigate and respond to disputed charges.

The unpaid medical bills have negative repercussions for credit scores, which help determine how much money people, can borrow and the interest rates for mortgages and auto loans.

An unpaid bill of at least $100 could lower an otherwise sterling credit score of 780 by over 100 points, the Fair Isaac Corp. told the CFPB based on a previous model it used to calculate creditworthiness.

The firm updated its credit score model in August, putting less weight on unpaid medical bills when predicting the likelihood of repayment. Consumers with only medical expenses in collection would see their credit score increase by a median of 25 points once the new model is fully implemented.

The updated model was announced after a separate CFPB report in May on the impact medical debt had on credit scores.

The latest CFPB analysis overlaps with a separate study released in July by the Urban Institute, a Washington, DC based think tank.

The Urban Institute study found that the share of Americans with debt in collections has remained relatively constant, despite the country as a whole whittling down the size of its credit card and other debts since the Great Recession ended in the middle of 2009. That points to a sizeable share of Americans who are not only struggling to understand medical bills but also have no choice but to take on debts they have little chance of repaying.

The Urban Institute found that 35.1 percent of people with credit records had been reported to collections for debt that averaged $5,178, based on September 2013 records.

Now besides the hospital charges consider the facts regarding the newest of announcements that insured people are receiving in the mail. That their insurance policies are being terminated and low and behold the newer policies have even higher premiums and higher deductibles.

How is this affordable to middle America? I give you the case of the “mature” female who after getting this termination notification attends a meeting with the insurance broker. Here she finds out that her premium for the exact same policy that she had, which was terminated, had a premium increase of 22% and her deductible went from $4,500 to $6,500.

How will our patients be able to afford the progressive increases? How is the Middle American worker to support the new health care system and what are the options for the average taxpayer as the premiums and deductibles continue to rise out of site?

Another question, after just getting a report that Medicaid reimbursement (that is what the states will pay doctors for visits and procedures for the poor and exchange patients) is being cut…..Which physicians and hospitals will be able to afford to care for these patients? And then who will care for these patients?

How much more can we confuse the patients, the caring physicians, nurses, physician assistants and administrators in our country regarding a system poorly thought out, poorly developed and horribly administered?

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