Higher Annual Deductibles and Co-Payments Cause Hospitals to Intensify Efforts to Collect Directly f
Even Hospitals and physicians are acting quickly to improve their ability to collect directly from patients as vendors enter market with new collection tools; clinical labs are slower to respond to this fast-moving trend
Collecting deductibles from patients and tackling growing bad debt is quickly becoming a priority at hospitals and health systems around the nation. Clinical laboratories and pathology groups face the same need to become better at collecting money directly from patients at time of service.
By now, it has become clear to most providers that most health insurance plans include requirements that consumers meet a substantial annual deductible—anywhere from $1,500 to as much as $10,000 for a family. Co-payment amounts also have increased significantly, particularly for ancillary services such as medical laboratory tests and imaging studies.
Advocate Higher annual deductibles and co-pays are a feature of the new Bronze, Silver, Gold, and Platinum health plans offered through the health insurance exchanges established by the Affordable Care Act (ACA). But this is equally true of many private health insurance plans.
Providers Scrambling to Do Better at Collecting Money from Patients
These are the primary reasons why hospitals and physicians are scrambling to adopt financial management practices and technology tools to minimize and address growing levels of patient bad debt. This was the theme of a story published by Modern Healthcare, which predicted that increased bad debt will be a major concern for providers in light of the bigger portion of healthcare costs that patients must pay.
Indeed, these new types of health plans add about 15% to 20% to a patient’s financial responsibility. Previously a patient’s share of the bill for healthcare was in the 6% to 10% range, according to a report recently issued by Citi Enterprise Payments. Citi, in collaboration with Boundary Information Group, conducted research to find out the impact of consumer-directed health plans on doctors and hospitals.
Employers Continue to Pay More for Health Benefits Programs
“It’s a dramatic change in collection practices,” declared Andy Scianimanico, in a story published by the Chicago Tribune. Scianimanico is Vice President of Revenue Cycle for Northwestern Memorial Healthcare. “The biggest challenge for us is to move conversations (with prospective patients) as far up in the process as possible. It’s not about strong-arming patients to pay,” he said. “It’s about getting information into the hands of patients so they can make better-informed decisions.”
Hospitals and health systems are adopting more assertive methods to deal with the money owed them by insured patients. Some institutions will telephone them in advance of services. Another common approach is to assess their ability to pay, using vendor-provided screening tools, such as RevRunner by RelayHealth. More hospitals are also utilizing financial counselors to help patients develop a payment plan when appropriate.
Financial Responsibility of Patients Increased 87% in 24 Months
The TransUnion Credit Bureau did a study of what patients now owe, compared to earlier years. For a mix of five common procedures—including major joint replacement and child delivery—the average amount of patient responsibility for those medical bills was $2,568 in the second quarter of 2012. That was 87% more than the $1,375 figure for second quarter 2010. TransUnion had gathered data from 200 hospitals for this study
Towers Watson and the National Business Group on Health (NBGH) surveyed the health benefits plans of employers. As the table above shows, both employer and employee costs for health insurance rose steadily between 2007 and 2012. This table does not include the requirements for higher annual deductibles and co-pays that have also increased during these same years. As a consequence, patients must pay a much higher proportion of their healthcare costs, creating collection problems for hospitals, physicians, and clinical laboratories. (Table to the left prepared by Janet Loehrke and copyright USA Today.)
For providers, the bad debt impact of employee health plans with higher annual deductibles is compounded by the Affordable Care Act’s Bronze, Silver, Gold, and Platinum plans.
Researchers at Kaiser Family Foundation have predicted that the largest number of people will select bronze plans. This health plan pays only 60% of costs and has an out-of-pocket maximum of $5,950 for individuals or $11,900 for families.
Financial Communication and Tools Can Help Providers Collect More
To help hospitals and physicians deal more effectively with patients whose health plans require substantial annual deductibles and out-of-pocket fees, a number of vendors are now offering providers financial management practices and tools. Providers are also improving how they educate patients about their obligations.
In Columbis, Ohio, OhioHealth reportedly reduced its bad debt while improving patient collections. It did this by teaching front-line staff to be consistent in requesting a payment from a patient.
Staff at OhioHealth are encouraged to converse with a patient like this: “I see you have a $50 copayment for your account. I’d be happy to take that payment over the phone for you today.” In the first week, staff collected $45,000 using this approach, noted a story published in Healthcare Financial Management.
Technology can also help hospitals improve collections. Baptist Memorial Health Care Corporation in Memphis, Tennessee, has enhanced its ePay portal to include future payment scheduling, mobile alerts, payments, and messaging services, according to the Modern Healthcare article.
Dark Daily has covered the trend of increasing bad debt at hospitals. One consequence of this trend is that hospitals need to be careful with collection efforts, as state and federal regulators are watching the collection efforts taken by many hospitals and physicians. (See “Hospitals Report Growing Levels of Bad Debt as Many Patients with High-Deductible Plans Are Unable to Pay Their Medical Bills”, September 27, 2013.)
Clinical laboratories and anatomic pathology groups have the same need to collect these higher deductibles and co-pays from patients. That is why it is important that laboratory staff are aware of patients’ increasing financial responsibility.
Front-line staff in labs had always had the important role of greeting and registering patients. Soon, they will be learning to also head off bad debt by using effective communication processes, technology, and sensitivity as they educate patients on their growing financial responsibilities.
—By Donna Marie Pocius