Patients and price

Healthcare's financial managers will increasingly do business in a world where patients are on the hook for significant shares of their medical bills, prices are publicized and reimbursement is tied to quality.

Against that backdrop, the Healthcare Financial Management Association introduced two initiatives related to financial interactions with patients and pricing transparency.

In a brief talk last week opening the association's annual conference in Orlando, Fla., HFMA President and CEO Joe Fifer unveiled draft guidelines for conversations providers have with patients inside and outside the emergency department as well as before they are treated. The guidelines address points such as when and where it's appropriate to initiate a financial discussion, who should conduct the conversation, how to proceed when a patient has an outstanding balance and how to measure compliance.

The group is accepting public comments through July 31, and hopes healthcare providers will adopt the voluntary practices beginning in the fall. The recommendations build on previous standards set by HFMA and the American Hospital Association about a decade ago, and Fifer said they add a new level of specificity.

They also come about a year after Minnesota Attorney General Lori Swanson cast a harsh light on Accretive Health, a publicly traded revenue-cycle management firm. Swanson alleged the company violated patient privacy and consumer protection laws while pursuing patients for debt they owed several hospitals in the state. A settlement agreement bars Accretive from operating in the state for up to six years.

Accretive said in May 2012 that it would fund a panel to draft patient collection standards but had not yet selected a partner to develop the guidelines. Co-founder and former CEO Mary Tolan served on the steering committee for the HFMA initiative along with 14 other representatives from provider organizations, patient advocacy and industry groups.

Fifer said the HFMA is also establishing a task force on price transparency, working with the Medical Group Management Association, the Leapfrog Group and America's Health Insurance Plans, among others.

Throughout the four-day meeting, attendees wrestled with the delicate balance between increasing collections and working with patients who are paying a greater share of their balances.

Timothy Reiner, vice president of revenue management at Adventist Health System, Altamonte Springs, Fla., opened a session on how to select collection agency partners by noting that consumers' out-of-pocket costs are growing and expected to accelerate under health insurance exchanges, where the most affordable plans come with significant cost-sharing.

“It's sort of like the Olympics—you can get the gold medal, the silver medal or the bronze medal,” he said. People least able to afford healthcare are likely to choose the “bronze” insurance plans, where they may be responsible for up to 40% of their healthcare costs. “They probably don't have the $5,000 to $6,000 out of pocket to pay us,” Reiner said.

Vendors also introduced products aimed at easing the collection process. Citigroup, the financial services giant, last week unveiled Money2 for Health, a tool described as a healthcare “wallet” that aggregates explanations of benefits for patients, and allows them to make online payments to participating providers. Its charter members include Aetna and Parallon Business Solutions, the revenue-cycle management arm of hospital giant HCA, which is piloting the technology in two markets.

Providers also are looking at a smaller spike in insurance coverage than they were expecting, cautioned Andrew Bressler, managing director at Bank of America Merrill Lynch. The Congressional Budget Office revised its 10-year estimate down to 25 million, which represents some “leakage” of employees who lose insurance at work and don't pick up coverage on an exchange, he said. Employer coverage is expected to decrease by 7 million.

While the financial markets have cheered healthcare reform by boosting the share prices of investor-owned chains, Bressler noted that the estimated $37 billion net positive impact will be shared unevenly among 5,000 hospitals over 10 years. “It's not going to be as big a win as first thought,” he said. “You have to be cautious about that.”

Bressler and others also emphasized that the Affordable Care Act includes many provisions that mean lower Medicare reimbursement, and that providers could see more Medicare cuts as lawmakers address the federal deficit.

But Dr. Donald Berwick, a keynote speaker, told the attendees that they should able to do much better with a lot less. About a third of what the U.S. spends on healthcare is waste, the former CMS administrator said, citing a study he published last year with RAND Corp.'s Andrew Hackbarth.

“If you're only playing the old game, you'll have the (old) results, and they're not going to be good enough,” he said. “The only way to produce value is to meet the needs in front of you and reduce waste.”

Follow Beth Kutscher on Twitter: @MHbkutscher