How healthy is your medical credit score?


System being designed to help hospitals figure out whether you’ll pay them
By JASON ROBERSON / The Dallas Morning News

Mortgage lenders aren’t the only ones showing more interest in your credit score these days – the health industry is creating its own score to judge your ability to pay.

The new medFICO score, being designed with the help of credit industry giant Fair Isaac Corp., could debut as early as this summer in some hospitals.

Healthcare Analytics, a Waltham, Mass., health technology firm, is developing the score. It is backed by funding from Fair Isaac, of Minneapolis; Dallas-based Tenet Healthcare Corp.; and venture capital firm North Bridge Venture Partners, also based in Waltham. Each kicked in $10 million for the project.

The score is already raising questions from consumer advocacy groups that fear it will be checked before patients are treated. People with low medical credit scores could receive lower-quality care than those with a healthy medFICO, they argue.

“How much assurance do I have that they’re not going to look at this medFICO first, before they decide whether to treat or not?” asked Linda Foley, founder of the Identity Theft Resource Center in San Diego.

Post-discharge checking

That will not happen, says Stephen Farber, chairman and chief executive of Healthcare Analytics. Hospitals will check the score, which will be based on the patient’s medical bill payment history, only after the patient is discharged, he said.

“We only come into play once the patient has been treated and discharged, and the bill already exists,” said Mr. Farber, who has visited hospital executives nationwide over the last six months to sell the concept. “We just help figure out what sort of relief a hospital should grant the patient.”

Hospitals and other caregivers already can tap into regular credit scores – even without the patient’s permission – but those are not necessarily a good indication of whether a patient will pay a medical bill, Mr. Farber says. Such credit scores are based on voluntary purchases, such as a car. Health care debt is largely involuntary.

Under the Fair Credit Reporting Act, hospitals and doctors are allowed to report health care debts to credit reporting agencies, but they cannot indicate what they were for.

“They have to do it in a way that there will be no way a person looking at the information would be able to guess what they were treated for,” said Frank Dorman, spokesman for the U.S. Fair Trade Commission.

By custom, hospitals generally do not report delinquent accounts, but they do turn them over to collection agencies, said Norm Magnuson, vice president of public affairs for the Consumer Data Industry Association, a Washington D.C. trade group for companies that provide credit reports.

In such cases, only the medical provider’s name and the amount owed would be listed. But even that cannot be included if the name gives away too much information, as in the Betty Ford Clinic, widely known as an alcohol and drug rehabilitation facility.

The proposed medFICO score would be legal as long as it only includes billing data. And unlike a standard report, which only lists late medical bills, the medFICO score would reflect a history of on-time payments.

To develop its scoring system, Healthcare Analytics is collecting patient billing data from hospital systems with a combined $100 billion in annual net revenue.

Tenet executives say the scoring system could help them decide whether a given patient can pay his or her bill or if they should just write it off as uncollectible, or a “bad debt” in industry lingo.

Without a way to gauge the likelihood that patients will pay their bills, hospitals cannot comfortably invest in new projects or accurately balance expenses against revenue.

Adding up debts

Tenet, the nation’s third largest hospital system, with 63 hospitals and medical centers, had $433 million in bad debt through this year’s third quarter. Seventy-five percent of that bad debt was from uninsured patients and 25 percent from those with deductibles they couldn’t, or wouldn’t, pay, according to Steve Mooney, Tenet’s senior vice president of patient financial services.

To figure out how to collect from patients, Tenet now divides them into categories based on whether they are married or single, whether they came through the emergency room or had a scheduled procedure, and whether their regular credit score is high or low.

“But the problem with the credit score is that not everybody has one,” Mr. Mooney said. “We have about 40 percent of our self-pay patients who we do not get a credit score on.”

Meanwhile, consumer advocates argue that given the problems arising from the current Fair Isaac credit score – such as identity theft and inaccurate scoring data – it should not become the basis for a medical version.

In an analysis of more than 500,000 individuals’ credit scores, the Consumer Federation of America says it found that 29 percent were 50 points lower than they should have been.

“What if there’s a mis-scoring – whether it’s due to some clerical error, or due to an identity theft issue, where you have two William S. Joneses, who have similar numbers?” asked Ms. Foley. “This is the same problem we’ve seen in the credit industry.”

Ms. Foley said a recent personal experience heightened her sensitivity to the possible dangers.

The day before she was interviewed, she said she spent more than six hours in an emergency room with her husband, who was believed to be suffering a heart attack.

“We have an HMO, but what if we didn’t have health coverage?” Ms. Foley asked. “If he had a low score, would he have gotten the same type of care that he got last night?”

Mr. Mooney, of Tenet Healthcare, says the hospital business has changed over the past 30 years to take on characteristics of the retail industry. With patients expected to pay a larger share and do more comparison shopping, they soon will be able to purchase health care much like an automobile, he said.

Pamela Dixon, executive director of the World Privacy Forum, a consumer advocacy group, isn’t impressed. “I don’t like it; I don’t like it at all. These are people’s lives we’re talking about. This isn’t some car.”
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