The HSE has a long running issue with the timely and optimum collection of patient income and the recession has really brought the issue to the fore. Priscilla Lynch reports
Given the extreme financial pressure the HSE is currently under, the issue of income collection is now more relevant than ever.
However, despite increased efforts by the HSE to improve patient fee collection, the Department of Health has insisted that this is not good enough and more needs to be done as a matter of priority.
The figures revealed by the Medical Independent in the last issue regarding the HSE’s income debtors made for interesting reading – a whopping €271 million in patient fees and private insurance charges was owed to the Executive at the beginning of 2011. In correspondence between HSE CEO Mr Cathal Magee and Department of Health Secretary General Mr Michael Scanlon, obtained by this paper, the HSE confirmed it was owed €162 million by health insurers, €30 million in public charges, €13 million in emergency department fees, €59 million in road traffic accident fees and €7 million for other charges by the end of 2010.
This is a lot of money in any terms and the cash-strapped health services could certainly do with the funds given that the HSE was over budget by €153.9 million at the end of August and is facing an almost impossible struggle to break even by year end, even with unpalatable service curtailments.
While the Executive managed to stay within budget last year, despite a significant budget cut from 2009, this was partly achieved with significant bed and ward closures and cancelled operations, particularly in the West, towards the end of the year.
This year’s budget was again reduced and the HSE is experiencing an incredibly tough year, not helped by the fact that ED overcrowding is an ongoing issue, and there are currently approximately 1.95 million people with a medical card or GP visit card, a record figure that is still continuing to rise.
So why has this essential uncollected income for our health services been allowed to accumulate to such proportions and what is being done to claw back the cash?
Despite the increase in its overall patient charges debt, the HSE has insisted that it has made increased efforts over the past few years to ensure patients and insurance companies pay the money they owe.
However, much hyped plans to centralise health service debt collection nationally have not come to fruition.
The HSE has pointed out, however, that it did manage to collect a total of €462 million in income last year; made up of €380 million in private patient charges, €40 million in public patient charges, €17 million in emergency department fees, €11 million in road traffic accident fees, and €12 million in ‘other’ fees.
The key HSE Value for Money income objective for 2011 is to grow collection and billing by €100 million through improving the speed of collection of all acute patient income and increasing the efficient utilisation of its complement of privately designated beds. In addition, debt collection is also a standing item on the agenda for the HSE Audit Committee, the Executive stated earlier this year.
Despite its targeted approach to improving income collection, the HSE has hit a number of major stumbling blocks.
By the beginning of April there was already a shortfall of €21.8 million in income billing activity for 2011 because of the declining level of privately-insured patients, use of private rooms for infection control, historically high targets and in some cases sub-optimal use of private beds, according to the HSE.
While the prices the HSE charges the health insurers for treating their patients in public hospitals has steadily increased in recent years, its attempts to speed up the collection of these charges haven’t been that successful, as evidenced by the fact that the majority of the €271 million in outstanding debt is owed by the health insurance companies (€162 million) for private patient fees.
The HSE’s particular keenness to speed up payments by the health insurers is therefore understandable. They are the Executive’s biggest hospital income stream outside of Government funding, with the VHI being the HSE’s single largest debtor.
As previously reported by the Medical Independent, the VHI accounted for 68 per cent of the €162 million owed to the HSE in unpaid private patient charges at the end of January 2011, while Quinn Healthcare owed 20 per cent of the figure, Aviva owed 9 per cent and other small group schemes, such as the ESB and the Gardaí schemes, owed the remaining 3 per cent, documents obtained by this paper confirm.
The VHI has clarified the figures explaining that it has not received claims for the value of that amount. However, the total €157.8 million figure in outstanding private patient fees, as of January 31, is made up of claims that have been submitted and are awaiting payment (€40.2 million), claims under query by insurers (€19 million), claims ready to be submitted (€9.8 million), claims being prepared by the hospitals (€11.9 million) and, most notably, claims awaiting consultant sign off (€76.9 million).
Currently, it takes private hospitals approximately 45 days and public/HSE hospitals approximately 120 days to submit completed claims, according to the VHI.
The HSE says it is actively engaging with the health insurance companies regarding delays in certain hospitals and wants to reach an agreement that will allow payment to hospitals within 30 days. However none of the three main health insurers has signed up to this proposal and the HSE claimed earlier this year that it continues to have to wait for up to six months for claims to be settled.
Vhi, however, has defended its payment of claims, saying they are processed as quickly as possible.
“Vhi Healthcare proces-ses claims within three to four days of receiving all necessary documentation in support of a claim. In addition, we are currently working with hospitals on the development of e-claiming, which will expedite the lead-time between a patient’s discharge from hospital and the submission of their claim to a private health insurer,” said a spokesperson for the Vhi in response to the HSE’s figures.
In a letter to the Department’s Secretary General Mr Michael Scanlan, HSE CEO Mr Cathal Magee identified consultant sign-off delays as being behind over half (€76.9 million out of €162 million) of the private insurance payments backlog and urged the “decoupling” of the payment of hospital bed and consultant costs to simplify the administrative process and speed up income collection for the public hospitals. The health insurers have already rejected requests by the HSE to accept direct billing hospital accommodation charges and the Executive has now asked the Department for regulatory changes to accommodate this.
The HSE CEO provided the Department with a list of the top 10 consultants (only identified by hospital not name) in each of the four HSE regions and the amount of claims they had not signed off on by the end of January (See Table 1). Consultants in Our Lady of Lourdes, Drogheda, the Mid Western Regional Hospital, Limerick, the Mercy Hospital in Cork, and Tallaght Hospital, were among the worst performers, with the HSE West having the largest financial value of claims awaiting consultant sign-off at €4.5 million.
One consultant who works in the Mercy had not signed off on over three quarters of a million (€774,620) worth of health insurance claims, while a consultant in the Mid Western Regional Hospital, Limerick had €705,367 worth of claims awaiting sign-off in January.
All 10 consultants with the highest value of claims awaiting sign-off in the Dublin North East region worked in Our Lady Of Lourdes Hospital. Mr Magee confirmed the HSE would be targeting consultants with the highest backlogs in an effort to increase income collection. In addition, he said each hospital is now required to dedicate administrative resources to ensure the prompt filling out of forms.
The IHCA has previous ly defended consultant sign-off delays saying the process is onerous and very time-consuming. While Mr Magee acknowledged this in a letter to Mr Scanlan, he said the HSE “could not stand over current practice and [it] must improve”.
“I note that at our recent meeting with the Minister, he was supportive of the realisation of the income charging and collection environment in the HSE, perhaps this is a matter that you could bring to his attention. Clearly, there are management challenges for the HSE to address with regards to the improvement of the current collection of private bed charges. We are focused on this as a key business objective for 2011,” Mr Magee wrote in a letter to Mr Scanlan back in April.
Public hospitals have traditionally been allowed to use 20 per cent of their beds for private patient treatment, but compliance with this ratio has varied over the years.
To help achieve private income potential, the HSE developed a model to calculate the maximum potential to generate private income from the existing stock of private and semi-private beds. According to documents seen by the Medical Independent, the maximum income potential for 2010 under the model was €642 million, but the actual generated amount was only €381 million; a capture rate of 59 per cent. While a 100 per cent utilisation rate is likely to be impossible due to the fact that private rooms are often used by public hospitals for infection control or for terminally ill patients, the HSE said many hospitals could do much better than they currently do.
If all hospitals could bill on discharge the extra €100 million income collection target for 2011 could have been achieved in two months. If all hospitals reached an average 73 per cent for private bed utilisation, the €100 million could also be reached, so there is significant potential there for the HSE to generate extra income and it has initiated working groups, workshops and other targeting measures to help increase private bed income generation.
The HSE’s goal now is to get all hospitals to the 89 per cent private bed utilisation level of St James’s Hospital, Dublin, and ensure that all patients choosing to be treated privately are charged the appropriate per diem charge. It also wants all public in-patient and day case admissions seeking to be treated privately to be charged.
A significant issue emerged a few years ago when it was decided by the Department that if a patient was admitted ‘publicly’, but then chose to be treated privately, then the hospital could not charge for their care.
Achieving these targets will not change the volume of private work undertaken in public hospitals or affect access to care, it will simply mean better categorisation of private patients, the Executive has stressed.
The HSE has also informed the Department that its preference is for a review of the current charging regime “and a move to a more straightforward and less administratively burdensome regime”.
The responsibility for the collection of patient charges generally lies with hospital managers and procedures for collection can vary from hospital to hospital, for both the collection of private and public fees.
So the HSE continues to focus on the performance of individual hospitals in the management of patient debt.
A very enlightening table charting the total public and private debt collection performance of 29 public and 17 voluntary hospitals was supplied to the Department by Mr Magee back in April, and obtained under Freedom of Information legislation by the Medical Independent (See Table 2).
The table shows that Tallaght Hospital had the largest outstanding income debt of the surveyed hospitals (€16,411,621) at the end of 2010, closely followed by Galway University Hospital/Merlin Park Hospital (€16,007,110), then Mid Western Regional Hospital, Limerick (€15,685,017), and Cork University Hospital (€14,858,973). Perhaps unsurprisingly, these hospitals regularly have budget overrun issues and long ED waiting lists, though in line with their outstanding debtor amounts, they collected the largest amount of income on the list last year.
The hospital with the lowest amount of outstanding patient income debt was Monaghan General Hospital, which was owed just €171,836.
In relation to hospital performance regarding average number of debtor days, the Mater Hospital was the worst performer, with a whopping average of 372 debtor days at the end of 2010, while Bantry Hospital was just three days behind that figure at 369 days. The next longest average debtor timeframe was recorded by Louth County Hospital at 330 days, though this was an improvement on its performance in December 2009 when it had the highest average debtor timeframe of all the hospitals at 406 days. The hospital with the lowest debtor day timeframe was the Rotunda Hospital at 48 days while the next best performer was Mallow General Hospital at 64 days.
St James’s Hospital managed to halve its average debtor days figure from 153 days at the end of 2009 to 75 days by the end of last year, proving that targeted initiatives can reap serious dividends. The introduction of an electronic claims management system at the hospital had a significant positive impact on both private and public patient fee collection timeframes and helped to eliminate many of the reasons cited for delayed payments or non-payment of accounts, a Performance Report from the HSE noted earlier this year.
There is also a pilot scheme ongoing in a small number of hospitals where a secondary consultant can sign-off on the details of a claim form, agreed by the health insurer, if the original consultant does not sign-off in a timely manner, and the results of this should prove interesting.
Public and RTA
The HSE insisted earlier this year that the collection of public patient charges has improved despite the growth of the overall debt figure.
Emergency department (ED) fees, which were introduced during the tenure of previous Minister for Health Mary Harney and are now €100 per visit (unless patients have a medical card or referral form from their GP), used to be difficult to collect at first. Hospitals now generally try to collect the cash upfront, with most offering laser machines to take cash or credit straight from patients’ cards while many, including Cork University Hospital, have even installed ATM machines in the foyer of the ED. However, Mr Magee admitted in his correspondence with Mr Scanlan earlier this year that the HSE may have to write off some of the €59 million owed in road traffic accident fees at the end of 2010 but that a pilot study in two hospitals – Waterford and CUH – would hopefully identify improvements in the existing billing and collection system that could be rolled-out nationally. In addition, he said (back in April) that the HSE needed to contact injuriesboard.ie to agree how to proceed with deductions at source.
It will only be in 2012 that we will learn how the HSE fares in its attempts to collect the outstanding €271 million debt of patient fees and increase its income yield.
Unfortunately, as a large chunk of the debt at the beginning of the year had been outstanding for between one to three years and beyond – at the start of the year €54 million had been outstanding for between 12 and 36 months while €39 million had been outstanding for over 36 months – it is unlikely the HSE will recoup all of it and many millions will have to be written off.
While the HSE does use debt collection agencies as a last resort, this is a delicate issue given that it could be chasing payment from people with serious ill health or a bereavement or simply cannot afford to pay and the HSE itself acknowledges this, saying it seeks to maximise the recovery of income “in a socially responsible, ethical, efficient and cost effective way”.
However, given the massive amount of income outstanding and the current pressure on the HSE’s budget, it is likely the issue of collecting vital patient charges to plough back into running our overstretched health services will remain high on the agenda.