By Sarianne Gruber
I am not a betting person by nature, but last month I had to update my health insurance coverage, and after much deliberation I decided on the higher deductible option and lower monthly premium. Yes, I am betting on not having a visit to the emergency room during the next twelve months, as are so many of my fellow Americans. Yet, how are these high deductible plans really financially impacting patients and providers? For insurers and employers, these plans are a new approach to handling the rising healthcare costs, with the objective to lessen their exposure and reduce expenditures. However, High Deductible Health Plans (HDHPs) essentially shift financial accountability to consumers. Based on recent statistics, there has been a ten-fold increase in the past 7 years of people having insurance coverage with these programs to more than 11.4 million people (as of 2011). And, according to America’s Health Insurance Plans, the growth in HDHPs is a major contributor to current expectations to grow from $250 billion in 2009 to $420 billion by 2015, a 68 percent increase in five years.
Changes in Financial Accountability for Patients
Under HDHPs, patients are faced with a greater upfront burden whether they are covered under a traditional or high deductible plan. The McKinsey Quarterly May 2010 article “The Next Wave of Change for US Healthcare Payments” by Thomas Pellathy and Shubham Singhal predicts that for insured patients, it is estimated that the rate of bad debt is increasing at well over 30 percent each year in some hospitals. And in 2010, consumers’ bad debt for medical expenses was $65 billion. What does HDHPs mean for the patient?
- Increased patient accountability for medical services
- Increased patient medical liability for payment of services
At the April HIMSS 2015 Richard Nagengast, Director at Northwestern Memorial Hospital, in a joint presentation with Paul Bradley, Chief Data Scientist at ZirMed, spoke on “Using Data Analytics for Improving Productivity and Revenue”. He called attention to predictive analytics for the self-pay process, and how important relationships are with your patients, especially satisfaction levels. Many patients now have insurance for the first time. Yet, at the same time there are more patients being sent to collections for the self-pay portion. He discussed the need to push the patient responsibility upfront, to have the patients understand the out-of-pocket expenses before procedures. “Imagine never having to send patients to collections” proclaimed Nagengast, and “data is the way to do it”.
Changes in the Payment Role for Providers
A recommended read is the J.P. Morgan white paper; “Key Trends in Healthcare Patient Payments” by Jeffrey D. Eyestone, Vice President,, Healthcare Solutions Specialist. Highlighted below are some of the unique challenges and changes in the payment process for providers from Eyestone’s article:
- Providers must now collect payment directly from the consumer, not the insurer.
- Many payment and processes are not engineered for simple and efficient patient payments.
- The process of transacting directly with consumers presents a whole new set of challenges for providers who must now calculate patient responsibility as a first step towards rationalizing their payments systems.
- Patient responsibility is a compound of two sub-components, which are eligibility and estimation.
- Often, providers also are calculating a propensity to pay score whether the patient is insured or not. If an insured patient has a high deductible balance and therefore, a high patient responsibility, or if the patient is self-pay, a combination of other transactions like:
– mortgage balance inquiry
- and more can help determine a patient’s propensity to pay, give insight into payment options, and determine if a patient is a candidate for payment plans or charity care.
- Patient responsibility can only be calculated after provider can ascertain their eligibility status, plus the amount the patient owes for co-pay and their deductible balance, plus the information on their estimated fees.
- The healthcare providers need to provide the patient with all of this information as well as establishing a payment method as soon as possible, ideally while the patient is still present.
Suggested articles on the topic of optimizing patient payments are : “Key Trends in Healthcare Patient Payments” by Jeffrey D. Eyestone, J.P. Morgan Chase, 2013. “The Next Wave of Change for US Healthcare Payments” by Thomas Pellathy and Shubham Singhal, McKinsey Quarterly, May 2010. HIMSS15 Online “Using Data Analytics for Improving Productivity and Revenue“. Paul Bradley, PhD, Chief Data Scientist ZirMed, Inc. and Richard Nagengast, Director, Patient Accounting Northwestern Memorial Hospital.