Moving patient payment upfront

Patients carrying high-deductible insurance plans under the Affordable Care Act presented Ascension Health's leadership with a walk-the-walk moment last month.

Hundreds of patients, many newly insured, were leaving Ascension Health's hospitals and other facilities drowning in debt from the deductibles not covered by their plans, said Rhonda Anderson, chief financial officer of the nation's largest not-for-profit health system.

The likelihood of collecting was almost nil. And all pursuit would achieve was damage to the patients' credit ratings, she said.

So Catholic-sponsored Ascension Health decided to eat the deductibles for any patient, including exchange patients, who earn below 250% of the federal poverty level at any of the 137 hospitals in 24 states it manages.

Anderson didn't have an estimate yet on how much that will cost the system. But about 20% of exchange patients fall within those guidelines.

Writing off that debt was in keeping with Ascension Health's “mission and Catholic heritage to assist the poor and vulnerable,” she said.

The ascendency of high-deductible health insurance is challenging hospitals and physicians across the country to change the way they prepare for and collect payments from people getting hit with large out-of-pocket costs for care. And it's not only in government-sponsored or promoted insurance programs.

A study released last year by the National Center for Health Statistics found that in 2014, 24% of people under age 65 with private health insurance were enrolled in high-deductible health plans and another 13% in high-deductible plans with health savings accounts to help pay expenses on a pre-tax basis. That compares with 16% and 7%, respectively, in 2009.

High-deductible plans are defined as plans with annual deductibles of at least $1,250 for single coverage and $2,500 for family coverage, the center said.

In the past year, hospital systems have been in a better financial position to extend generosity to patients having trouble meeting their deductibles. That's largely because the Affordable Care Act has sharply reduced the number of nonpaying patients who now get coverage either through exchange-based plans or Medicaid.

Ascension, for instance, saw its bad debt shrink to $1.1 billion, which is equal to 5.4% of total operating revenue in 2015, down from $1.26 billion, or 6.3% of operating revenue, the previous year, according to Modern Healthcare's Hospital Systems Financial Database. The 274 health systems in the database reporting for all three years saw their bad debt fall to $20.8 billion, or 4.3% of total operating revenue last year, from $23 billion or 5.2% in 2014.

But the rising prevalence of high-deductible plans, both on and off the exchanges, threatens to undermine that progress. Instead of a small number of people paying none of their bill, hospitals are starting to see a larger number of people struggling to pay the deductibles, which can come to thousands of dollars for a single hospital visit.

Direct collections from patients are part of what hospitals broadly call revenue-cycle management, which uses software to register patients, authorize insurance payments, send bills, finance payments and collect debts that are not in arrears more than 120 days.

It's a crucial function of every health system that typically is under the purview of the finance department and the chief financial officer.

Anderson said St. Louis-based Ascension Health is seeing exchange enrollees with health-plan deductibles as high as $10,000.

It's the world for which Gwinnett Medical Center in Lawrenceville, Ga., has steeled itself, said Cynamin Kinard, director of patient financial services at Gwinnett.

Gwinnett, which is merging with Northside Hospital in Atlanta, just hired its fourth financial advocate to call all non-emergency hospital patients facing high-cost procedures and diagnostics, such as MRIs, CT scans and surgeries, Kinard said.

The key to surviving this era of high-deductible plans is to vet patients before their treatment and share with them as accurately as possible how much they can expect to pay out of pocket, she said. “If we didn't do that, our bad debt would be increasing,” Kinard said.

Gwinnett is a two-hospital system, with its 552-bed flagship hospital located about a half-hour outside of Atlanta.

The system's financial advocates call patients between three days and 24 hours before their procedures. They crunch the numbers with patients to show what their insurance will pay and what they will be on the hook for, Kinard said.

The advocates are armed with a suite of predictive, revenue-cycle software from RelayHealth, a unit of McKesson Corp. It pulls and evaluates credit scores to determine what the patient is able to pay and, from their credit history, their willingness to pay for the care they are about to receive.

They also try to get the patients to pay deductibles via credit card over the phone.

If the best time to collect out-of-pocket costs is before the visit, the second best time is before the patient leaves the hospital, Kinard said.

For that reason, Gwinnett has a process to send financial counselors to the bedsides of some patients to offer them the opportunity to pay their out-of-pocket costs on the spot. Cash, check or credit cards are all accepted, she said.

Kinard said the hospital very rarely sees a patient anymore who doesn't owe something for care.

In December, Gwinnett added payment financing options from Charlotte, N.C.-based AccessOne that provides patients with a 40% discount on their bills if they pay at the point of service and an interest-free option with a 10% discount if they pay in full within a year, she said.

At its biennial leadership academy for executives, Ascension Health asked a group of managers to recommend standards across all its operations to improve price transparency, Anderson said. They want patients to understand upfront what insurance will pay for care and what they'll face. That report is due in October.

Ascension Health was so concerned with keeping its main revenue-cycle vendor, Accretive Health, financially viable, that the system in December joined with private equity company TowerBrook Capital Partners to buy a 40% stake in Accretive.

Ascension Health agreed to a 10-year sole-source contract for acute-care revenue-cycle products and support from Accretive and is participating with TowerBrook in investing $200 million in the company.

Anderson said Accretive is fast and accurate in determining insurance authorization for covered care. She said it does a good job evaluating patients who have been unable to pay their share within 30 days and predicting whether the patient has the resources to pay or if they might be eligible for Medicaid or another program for healthcare coverage.

Accretive CEO Dr. Emad Rizk said dealing with patient payments has become increasingly complex because of variations in health insurance and consumers' cost-sharing obligations.

Addressing those issues upfront is not only critical to collecting a bigger chunk of what's owed, he said, but hospitals that do well at price transparency are likely to do well at patient satisfaction.

And that's a metric that payers like Medicare are closely tracking. “What was traditionally done on the back end (of care), hospitals are trying to move to the front,” Rizk said.