The proliferation of high-deductible health plans
The proliferation of high-deductible health plans (HDHPs) in the healthcare ecosystem has created unique challenges for health systems, patients and providers. These plans are designed to shift financial risk from the payors to individual patients with the goal of allowing individuals to drive their care more selectively. However, these products have proliferated much quicker than most had anticipated as a result of the Affordable Care Act’s insurance market place and a number of employers shifting towards high-deductible plans; trends which will likely continue into the foreseeable future. This article will consider the three groups that are facing the challenge head-on: patients, health systems and provider.
With HDHPs, patients bear more financial accountability for their healthcare costs than ever before. A HDHP is defined as a plan where deductibles exceed $1,300 for individuals and $2,600 for families. This is fairly common, as we continue to see patients with individual deductibles as high as $5,000 and $10,000 for families in our local markets.
Patients have been seeing an non-linear increase in out of pocket costs compared to increases in wages. In a study performed by Deloitte, out-of-pocket expenses for consumers reached $672 billion in 2012. This number is expected to increase 300% over the next five years.
As a result, we’re seeing these patients with larger out-of-pocket expenses deferring care. A 2014 study by the Commonwealth Fund found that two out of five insured adults whose deductibles compromised 5% or more of their income delayed or avoided needed care due to the costs.
These plans also affect health systems, significantly. The tight financial margins common to most medical practices do not permit them to delay payment. Rather than bill the patient’s insurance and then attempt to collect from the patient after, patient collections are migrating to earlier in the process. The financial risk is put on the patient, but also shared with the health systems, notably non-profits and community health centers that will see the grunt of these patients. As a result, we will continue to see an increase in uncompensated care and bad debt, affecting bottom lines.
So what can we do as health systems?
-Understanding your bad debt and where it is coming from; for example, ED, inpatient, clinic and by payer.
-Increase your value as a contracting strategy with insurance plans. How do you position yourself as a partner or offer something that supports the insurance plan’s goals.
-Create an in-house loan program.
-Evaluate charity care and discount policies. Now may be the time to consider re-evaluating your inclusion/exclusion for these cases.
-Update billing payment options to 24-hrs-a-day online options. Incorporating such things as credit-card-on-file payment systems that automatically charge out-of-pocket amounts.
-Focus on educating ALL patients on their new plans and communicating their financial responsibilities. Properly train schedulers and financial counselors to have these conversations with patients.
-Increase cash drawer levels while also maintaining integrity of internal controls.
At UT Southwestern, my employer, we piloted a full-on point of service collection and enterprise payment system between both the Hospital and Provider side. This was a complete cultural change for most of us going from a state where things such as copay collection was highly variable to a systematic scrubbing every last dollar we could whether it be copay, deductible, co-insurance and/or outstanding balances system.
Take away from our pilot:
-Ensure that your system interoperability. We struggled on being able generate accurate and similar quotes across the care continuum. This provided very poor patient service. Imagine receiving a surgical quote from the Provider’s office and then receiving another from the Hospital where the surgery would occur and both quotes showing different numbers.
-On the soft side, we provided appropriate training and scripting for front-end staff to collect financial obligations. Critical to this has been the drive to collect credit card information during scheduling. An update in EPIC 2012 allowed us to drive this piece into our practices.
Ultimately our goal was to have a proactive system, where we are discussing out-of-pocket costs at the point of scheduling, whether it be in the clinic, hospital or lab. Downstream ideas are cornering our patient access centers. We utilize a system-wide patient access center for scheduling and registration. In order for us to be successful we will need to scale this endeavor to all front-line call center staff. In addition, other systems which are excelling in this area are offering such things as consumer-friendly estimators and calculator tools to drive full transparency.
On-going conversations with Providers about high-deductible plans and how it impacts patients’ care is critical. Most administrators realize that we have not created a system to give them detailed knowledge about the challenges these plans create. Systems need to start providing education for Providers and caregivers that explains the potential effect of high-deductibles on patient care. Furthermore, we need to explore how these plans have been bringing about the deferring of care and how to offset this through heightened awareness to ensure patient compliance of more cost-effective treatments. Things such as cost-benefits of prescribing certain medications or issuing particular tests and being up-front about these issues with their patients all come to mind.
Dialogues on how to manage these HDHPs are at early stages, yet are likely to continue into the foreseeable future. We are still on the cusp of bringing the administrative support to provide seamless care for these patients. These plans have significant impacts to patients, health systems and providers.