The folks who invented the credit score for lenders are hard at work developing a similar tool for hospitals and other health care providers.
The project, dubbed “MedFICO” in some early press reports, will aid hospitals in assessing a patient’s ability to pay their medical bills. But privacy advocates are worried that the notorious errors that have caused frequent criticism of the credit system will also cause trouble with any attempt to create a health-related risk score. They also fear that a low score might impact the quality of the health care that patients receive.
Fair Issac Corp., developer of the FICO credit score, is one of several investors in Healthcare Analytics, the Massachusetts start-up that is developing the hospital risk tool. Another investor is Tenet Healthcare Corp, one of the nation's largest hospital operators. Stephen Farber, who resigned as chief financial officer of Tenet in 2004, is the CEO of Healthcare Analytics.
Several published reports have described Healthcare Analytics product as a MedFICO score, computed in a way that would be familiar to those who've used credit scores. The firm is gathering payment history information from large hospitals around the country, according to a magazine called Inside ARM, aimed at “accounts receivable management” professionals. It will then analyze that data to predict how likely patients will be to pay future medical bills. As with credit reports and scores, patients who've failed to pay past bills will be deemed less likely to pay future bills.
The idea sounds ominous to Pam Dixon, who runs the World Privacy Forum, which studies medical privacy issues.
"This is a bad idea and I don't think this benefits the consumer at all," Dixon said. "And what about victims of medical ID theft? Are we going to deny treatment to these people because they have a terrible MedFICO score?"
Firm says product's not ready yet
Tim Hurley, a spokesman for Healthcare Analytics, said criticism of the firm's work is purely speculative, as its product is still in development. Even the term MedFICO is inaccurate, he said
"MedFICO does not exist," he said, adding that the name “will very likely not be used when we bring our tools to market.”
He refused to confirm other published details about the company's work, saying it was too early given the “premature nature of our product development cycle.” Farber, the Healthcare Analytics CEO, is not granting interviews to discuss the product, said Hurley. Farber did speak to a Chicago Tribune reporter earlier this year.
Hurley did say, however, that hospitals will not use the Healthcare Analytics product before patients receive medical treatment, and it will have no impact on medical decisions.
He also pointed to federal law that makes it illegal for hospitals to refuse treatment to patients in their emergency rooms, regardless of a person’s ability to pay.
The Healthcare Analytics tool will be used after patients receive care and after a bill is generated to help hospitals make better financial planning decisions, Hurley said. It will also help health care providers sort through patient records and potentially make it easier to write off some unpaid bills as charity cases, rather than delinquent accounts, which would offer the hospital some accounting benefits, he said.
The firm “is particularly focused on finding ways to help hospitals systematically allocate charitable resources, to make sure that patients who need financial assistance the most receive it on a consistent basis across the industry,” he said.
Impact could reach beyond the ER
Dixon, however, was skeptical. While she didn't suspect the so-called MedFICO would be used to turn patients away in emergency situations, she said it could impact patients during follow-up visits or other non-emergency situations.
"If you had a poor score, you could be denied a hospital stay, for example," she said.
Linda Foley, who runs the Identity Theft Resource Center, also said any kind of medical risk scoring would run into a thicket of federal laws designed to protect consumers. It's not clear if such a score would be covered by the Fair Credit Reporting Act and other credit-related laws that grant consumers the right to see their own credit reports and scores. The information may also be covered by the Health Insurance Portability and Accountability Act (HIPAA), which restricts the use of patients' private information.
"The problem we see is: Who is regulating this?" she said. “How do we know it will never be used before treatment?”
She also pointed to the problem of Medical ID theft, which now hits 250,000 people each year, according to the Federal Trade Commission. Identity theft victims frequently find it difficult to clean their credit reports of errors; she feared medical ID theft victims might face the same fate.
Foley also said that a health care score, even if it was initially designed only for use in post-treatment billing issues, could end up being used in unforeseen ways.
"That’s happened with credit scores. Now they are being used for all kinds of things like setting auto insurance rates. What else could a MedFICO be used for?" she said. Perhaps an employer might access the scores and use them to predict which workers might be expensive to insure, she speculated.
Since the invention of the credit score in the 1980s, risk scoring has become a valuable tool in many industries. Auto insurers have created their own scoring system, for example. Many Web sites buy software that assesses the risk that any individual credit card purchase may be fraudulent.
A crowded field
Meanwhile, Fair Issac's core business of selling credit scores to lenders has recently become a more crowded field. Some banks now use their own formulas to generate risk scores, and the nation's three main credit bureaus have developed their own scoring formula.
Scoring risk in the health care industry could be a valuable business, given the rising rate of unpaid bills. American hospitals face $40 billion in unpaid bills every year and 47 million Americans did not have health insurance last year. Others face rising out-of-pocket costs.
That means hospitals need more tools for collecting debts from private individuals, Hurley said.
“Hospitals have historically worked primarily with insurance companies and government programs like Medicare to arrange for payment,” he said. “It is a recent trend that individual patients, including insured patients, have assumed significant individual responsibility for paying for care.”
Fair Issac did not immediately return a request to be interviewed. A spokesman for Tenet directed all questions to Healthcare Analytics.
While published reports said the new patient scoring system could be in place by this spring or summer, Hurley denied that, saying the firm didn't even have plans to test the system for another six months and it wouldn’t be sold commercially until the end of the year.