LA County Aims to Curb Medical Debt With Automatic Aid Screening

Shah, who sees tuberculosis patients at a small public clinic in Los Angeles’ San Fernando Valley, said the approach follows the same upstream logic as infection control. “We like doing things upstream,” Shah said, “meaning before they happen, not after the damage is done.” The goal is to stop low-income families from getting a bill that buries them in debt.

Medical debt is widespread. An estimated 100 million adults in the United States have some form of healthcare debt, and in LA County, the nation’s most populous, public health officials calculate that about 800,000 residents have medical bills they cannot pay. Shah said the impacts are staggering: people end up with credit card debt and a vicious cycle of high interest rates and poverty, forgo prescriptions and appointments, and then get into worse health.

Hospitals typically offer financial aid to patients with low incomes, but information about assistance is often hard for patients to get, applications can be cumbersome, and research shows many eligible patients never seek aid. Jared Walker, founder of Dollar For, a nonprofit that helps patients nationwide apply for aid, often called charity care, said, “Most people walk into the hospital and walk out without any knowledge of financial assistance.”

Unpaid bills also drive costly collection efforts. Adena Tessler, regional vice president for the Hospital Association of Southern California, said hospitals are “turning their wheels trying to collect on debt that isn’t collectable.”

One potential solution is presumptive eligibility, a system that automatically screens and qualifies low-income patients for financial aid without requiring an application. Such systems rely on software that checks patient eligibility based on publicly available information such as credit history. Some hospitals already use them. Shah said hospitals that have deployed presumptive eligibility systems have reported as much as a 50% increase in the amount of financial aid they give patients. A California law passed last year will require all California hospitals to start presumptive eligibility screening by next July, but only about 1 in 5 hospitals in LA County currently use the systems, Shah said.

Public health officials wondered whether they could help more hospitals set up the systems. Shah said the county, which, like many local governments, faces major fiscal challenges, could not pay for the expansion. But the public health department could bring together healthcare and hospital officials in the county to figure out another solution. “The beauty of government is not when it always has to do the work,” Shah said. “We have the ability to make sure that people cooperate.”

The Hospital Association of Southern California, initially wary of the county initiative, came to see improving hospital financial aid programs as beneficial to hospitals, many of which were wasting money on collections. Paul Young, a senior vice president with the association, said, “The billing process is cumbersome and costly.” The association agreed to procure a digital presumptive eligibility system and make it available to its members. Young compared the bulk-purchasing approach to “a Costco model,” saying it would lower the cost for individual hospitals.

At the same time, L.A. Care, a nonprofit health plan that administers Medicaid coverage for more than 2.5 million low-income county residents, committed $2 million to set up the system. Melanie Fontes Rainer, who leads strategic planning for L.A. Care, said the investment reflected the safety net insurer’s mission to make medical care accessible to more people. “It’s going to make Los Angeles County better,” she said.

The partners hope to get the new system up and running by January. Getting it running faces challenges, and hospital officials are still figuring out how the system will be funded in the long term, according to the report.