Consumers Faced Surprise Medical Bills, Payment Struggles in 2021

The majority of consumers faced surprise medical bills in 2021 and expressed concern about financial hardships due to outstanding healthcare costs, InstaMed’s 12th annual Trends in Healthcare Payments report found.

The report included data obtained from $460 billion in healthcare payments processed on the InstaMed platform and survey responses from consumers, providers, and payers across the country.

Consumer finances have improved since the start of the pandemic, with more than half (65 percent) of the general population reporting that they were in good financial health. Financial support from the government may have played a role in this, as 53 percent of consumers used stimulus checks to pay bills, and 30 percent directed the checks toward paying down debt.

However, consumers faced significant financial challenges regarding healthcare in 2021. Nearly half of households had healthcare expenses in the past year, and around a third of individuals put off seeking healthcare services due to cost.

Out-of-pocket healthcare spending and deductibles also increased, contributing to financial struggles, the report said.

Nearly 90 percent of consumers were surprised by a medical bill last year, with 56 percent receiving a bill that was more than they expected and 50 percent receiving an unexpected bill.

Despite the CMS hospital price transparency rule, 91 percent of consumers did not know hospitals must disclose prices. Almost three in four consumers said they found out about the cost of their services after receiving care, even though nine in 10 consumers wanted to know their payment responsibility upfront.

Consumers may have faced unexpected bills because few hospitals comply with the price transparency rule, the report found. For example, 83 percent of hospitals did not comply with at least one of the major requirements of the regulation. Additionally, only 21 percent of providers said they prioritized price transparency.

Consumers revealed that going digital could help improve their healthcare payment experiences.

Seventy percent of consumers reported that they received medical bills via mail. The majority said they would prefer to pay the bill online with a credit or debit card rather than a paper check. Around 90 percent of consumers paid recurring bills online and said they wanted the ability to pay all their healthcare bills in one place.

Online payment was particularly popular among Millennials, with 80 percent of Millennials saying they want a digital platform for medical bills and 74 percent reporting that they would switch healthcare providers for a better payment experience.

However, 39 percent of healthcare providers said they believe billing and collection efforts have no impact on the patient experience, indicating a disconnect between patients and providers regarding healthcare finances.

Most providers (75 percent) used paper and manual processes for patient collections and 82 percent issued patient refunds via paper checks. Automation may help providers speed up their patient collections process. It took 70 percent of providers more than 30 days to collect payment after a patient encounter, according to the report.

When it came to receiving payments from health plans, 87 percent of providers preferred electronic funds transfer (EFT) without fees, while 10 percent preferred paper checks.

While consumers faced significant payment struggles, providers also faced their share of challenges during 2021, including stressful environments and an increase in disruptive patients. Chief executive officers for provider organizations ranked staff shortages as their top concern, with 73 percent of practices saying staffing was their biggest pandemic challenge heading into 2022.

“The last two years of the COVID-19 pandemic have presented many challenges to the healthcare industry,” Bill Marvin, managing director and head of J.P. Morgan Healthcare Payments and chief executive officer of InstaMed, said in the press release.

“The trends and stakeholder sentiments that we are seeing are unlike anything we have seen throughout the history of this report. Most importantly, these trends and sentiments offer hope and progress for the healthcare payments experience, yet we continue to maintain our view that the healthcare payments industry is ripe with opportunities for innovation, digitization, and scale.”