ORLANDO, Fla.—High-deductible plans are changing the way health systems interact with their patients, from where they get care to how they're presented with their bills.
The changing healthcare environment was a significant focus of the Healthcare Financial Management Association's annual National Institute this week in Orlando, Fla.
Healthcare providers are collecting $0.18 to $0.34 on the dollar from patients with high-deductible plans, said Christopher Kerns, managing director at the Advisory Board Co. Once a bill exceeds 5% of household income, a patient's propensity to pay drops to nearly zero, he added.
Yet the impact of high-deductible plans on bad debt varies from system to system. While some have reported a significant effect, others say they've experienced little difference. Many major employers offering high-deductible plans, for instance, are also helping to fund health savings accounts. Those workers also might have a higher ability to pay than people who are purchasing their insurance from an exchange.
Yet the research on patient collections isn't encouraging. Less than half of patients are paying their share of the bill before it goes to collection, said Diane Watkins, vice president of revenue cycle at St. Luke's Health System in Kansas City, Mo. The average deductible for employer-sponsored coverage is now at $1,200, and it's even higher for exchange plans.
“Very few people are fully prepared to meet that obligation,” Watkins said. “They just don't have the money, in some cases.”
St. Luke's, therefore, has introduced a 25% prepayment policy for self-pay patients as well as those who will owe more than $1,000 or 20% of the cost of their scheduled procedures.
Vendors, too, are offering products that will allow providers to have financial conversations with patients before any care is delivered. At the meeting, technology company Simplee announced that it is expanding its online payment platform to include tools that allow patients to get real-time, pre-service cost estimates and then explore financing options.
While health systems are taking different approaches, more providers are initiating financial conversations before treatment begins, including financial literacy education, said Bruce Haupt, president of ClearBalance, which offers no-interest payment plans.
The MetroHealth System in Cleveland is among the systems that hasn't seen an increase in bad debt associated with high-deductible plans. But commercial plans account for only 22% of the county-owned system's revenue, said Craig Richmond, chief financial officer. Moreover, Medicaid expansion in Ohio has reduced the number of self-pay patients to 6% in 2014 from 18% in 2012.
But MetroHealth is fielding more calls from patients with questions about their bills. “We see a lot more inquiries from our patients about their cost-sharing estimates,” Richmond said. “We find that we're doing a lot of education.”
To that end, MetroHealth started sending out its 38-foot RV, staffed with three financial counselors, to hold financial and insurance enrollment conversations at farmers markets and places of worship. “We call it enrollment on wheels and we really use it in an educational manner,” Richmond said.
The growth of high-deductible plans also is transforming healthcare into a retail market, especially for services viewed as commodities, like imaging and laboratory tests, said Mark Grube, managing director at consulting firm Kaufman Hall. That means that providers will need to invest more resources into research to help them understand the market dynamics of how consumers are accessing the healthcare system.
Increased competition from non-traditional providers, such as pharmacy-based urgent care centers and stand-alone emergency departments, could cut into outpatient volume for health systems, added Dan Clarin, vice president at Kaufman Hall. “There are certainly providers that have gone after bits and pieces of (the retail market),” he said. “Very few are doing it holistically.”
Some systems are partnering with pharmacies or publicizing their prices as a way to get a foothold in the retail space. But others are tackling the increased competition in a different way.
Those systems are moving to an episodic care or bundled payment model rather than focusing on each patient interaction. “It's our view that they will not always be able to compete on price,” Clarin said. “But it's going to require a more nuanced response than they had before.”
