Healthcare financial leaders say high-deductible health plans, whether pushed by employers or offered through the exchanges, are rapidly expanding the risk of non-payment. Many consumers choose plans with the smallest upfront cost and largest deductibles, and they often lack a thorough understanding of the plans.
This article first appeared in the January/February 2015 issue of HealthLeaders magazine.
Over the last few weeks, I've asked several healthcare executives what they see as the biggest revenue challenge their organization will face in 2015. The response has been unanimous: high-deductible health plans.
As patients become increasingly accountable for paying for their own medical care, hospitals, health systems, and other provider organizations have more dollars at risk for non-payment than ever before because it is generally more difficult to collect from patients than from commercial and government payers.
More self-pay means more risk
The health insurance exchanges pose a big threat to revenue because many consumers are choosing plans with the smallest upfront cost and largest deductibles, says Bill Pack, vice president, finance and hospital operations at Denver-based SCL Health, a $2.4 billion health system with eight hospitals and 2,151 licensed beds in Colorado, Kansas, and Montana.
"This first year of having the exchanges, we've learned a lot, and patients are also learning a lot. Mostly, we think patients go online and shop for a plan, and they pick the bronze plan because that has the lowest premium, although usually also the highest deductibles and lowest benefits. Because of that, we're starting to see a lot more self-pay obligation after insurance."
Pack says SCL Health expects to treat even more patients with high-deductible plans in 2015.
"Are patients going to remain in the same plan now that they are finding out they have a large out-of-pocket expense that they didn't previously truly understand? I'm sure there will be a large percentage of patients who will do that, and I think we'll see more and more of it. People do tend to shop by price. They are buying what turns out to be what we consider catastrophic coverage because they see the lower premium, and then they end up not being able to pay their medical bills."
Nate Hunt, director of operations at University Hospitals Accountable Care Organization—which is part of University Hospitals of Cleveland, a $3.5 billion system with 15 hospitals and 2,414 registered beds—says that high-deductible plans are a major concern in his market.
"Ohio is one of the nation's leaders in employers who offer high-deductible plans, so between that and the insurance exchanges, we are really seeing an impact on collections and billing," Hunt says.
"We are already seeing the effects of the high-deductible plans, and combined with the continual movement toward less reimbursement dollars for the same services from the federal government, we're being challenged financially."
Helping patients comprehend their coverage
Patients often don't have a thorough understanding of their high-deductible plans, which puts a burden on providers to educate them, says Jessica Wright, chief operating officer at Rehab Associates of Central Virginia, which operates 11 physical therapy clinics in and around Lynchburg.
"We have seen a significant shift to high-deductible plans over the past 12 to 18 months, and we have taken some significant strides to work with patients to be as transparent as possible on that side," Wright says.
"We work very hard to help patients understand their insurance benefits. Even though it is their insurance, we've learned they don't really understand it. They may have a co-pay plan, but they may also have co-insurance or a deductible-based component when it comes to physical therapy care. We have to take the initiative to help them understand what their level of responsibility is going to be with their PT treatment."
Rehab Associates recently began using third-party vendor technology to access patients' benefit information to give them an estimate of their total bill.
"We are able to readily access the information and pull it into a report to print for the patient to review, and they can take a copy home at their first visit so they understand what the financial expectations are going to be. … We have seen our upfront collections increase threefold since we implemented this process in October," Wright says, noting that part of the goal is also to maintain a high level of patient satisfaction.
"We'd rather be dealing with a grateful patient on the front end than an upset patient later," she says.
Improving the bottom line
SCL Health is also taking proactive steps to increase its ability to collect from patients in order to protect revenue, Pack says.
"We are looking at ways to come up with payment plans that are workable for people who can't pay their deductible. For example, for the times when a patient owes a $5,000 deductible but doesn't have the cash available to pay," he says. "We are asking ourselves about the ways we can have nonrecourse loans with a bank where we help patients be able to pay when they can't write a check to pay their bill all at once, and we are currently exploring those options."
Pack also notes that SCL Health's revenue cycle has been helped by Medicaid expansion in Colorado. He hopes more low-income patients within the organization's footprint will eventually be covered as well.
"One thing that has been a great opportunity for us in our Colorado markets has been the expansion of Medicaid. It's been a help for us to cover the cost of patients who now qualify for Medicaid that didn't qualify before. We'd sure like to see that happen in Kansas and Montana."
Rene Letourneau is a contributing writer at HealthLeaders Media.