How high deductibles impact patients, practices

October 17, 2014

There has been a major shift in the financial aspect of patient care and it’s affecting patients and those who provide their care in major ways. Perhaps you’ve noticed certain patients not coming in as often or a rising accounts receivable (A/R) that’s increasing in age and amount. The shift by third-party payers and government entities to have patients shoulder more of the cost of healthcare is creating a huge need for hospitals, clinics and private practices to change how they communicate about and collect patient payments.

Read Part 2: Increase patient collections by developing a policy for success

Read Part 3: The technology factor: Tools to help you collect

 

There has been a major shift in the financial aspect of patient care and it’s affecting patients and those who provide their care in major ways. Perhaps you’ve noticed certain patients not coming in as often or a rising accounts receivable (A/R) that’s increasing in age and amount. The shift by third-party payers and government entities to have patients shoulder more of the cost of healthcare is creating a huge need for hospitals, clinics and private practices to change how they communicate about and collect patient payments.

As healthcare costs continue to rise, frustrations are rising for both patients and practices. To fully understand and address this challenge, it’s important to put it all in perspective by understanding where we’ve come from and how we got where we are now.

Between 2003 and 2013, healthcare premiums in the United States rose 80 percent from an average of $9,068 for a single worker up to $16,351.1 The increase in premiums translated to an increase to the employee’s contribution toward their insurance of 89 percent - from an average of $2,412 per single worker in 2003 up to $4,565 in 2013 - as employers began shifting more of the cost of healthcare coverage to workers.

This means that before a patient has even seen a single doctor for a new year, their healthcare is now already costing them nearly double what it used to cost them only 10 years ago. These numbers are expected to rise with healthcare reform and the shared costs of covering the previously uninsured.

Onus on patients

On top of premiums nearly doubling for many of our patients, more employers are choosing to shift offerings to high deductible plans to keep their premiums more affordable. Payers are also pushing for these shifts in hopes that putting the onus on patients for a larger portion of their visits discourages frivolous use of healthcare coverage and will reduce costs.

One statistic that illustrates this particularly well is that in 2006 only 16 percent of small firms (companies with three to 199 workers) had their employees enrolled in high-deductible plans requiring employees to pay the first $1,000 or higher of their care, on top of premium charges.2 That number increased consistently over the next six years and by 2012 about 50 percent of small firms had their workers on these types of plans. It is expected that in 2013 and 2014 this number will increase significantly again.

What does this all mean to you and your patients? It means patients are finding themselves responsible to pay their entire bill until they’ve met their deductibles. Practices and patients are not accustomed to this radical change after many years of paying or collecting nominal co-pays of $10 to $25 per visit or billing the 20 percent due after the payer paid their 80 percent. This affects your A/R radically because traditionally, practices have written off an average of nearly half of patient portion when it goes unpaid and practices determine it’s too costly to chase after it.

Next: Self-pay increases

 

 

Self-pay increases

The percentage of practice revenue that should come from patients has grown dramatically. In 2007, patients’ self-pay was just an average of 12 percent of practice revenue but by 2012 that number had nearly tripled to 30 percent.3 This could double as the Affordable Care Act contributes to an increase in high deductible plans. This means your practice can no longer afford to look the other way when it comes to patient portion. Historically, 50 percent of patient responsibility goes uncollected.4 In the past, writing off half of patient portion might not have been detrimental, but today failing to collect from patients can mean a loss of 15 percent or more of revenue, weighing down A/R and increasing costs to collect as time goes on.

Not only are practice employees and patients unaccustomed to these changes, practices are often ill-prepared to communicate with patients and collect from patients in ways that increase their time of service payments and give patients realistic expectations.

Your practice works hard to provide patient care day in and day out - you deserve to be paid! Over the next three months, this series of articles will address ways to boost time of service collections in the new high deductible landscape. By equipping your practice you can boost revenue, improve patient relations and protect your practice.

References:

1. Kaiser/HRET Survey of Employer Sponsored Health Benefits, 2003-2013

2. Kaiser/HRET Survey of Employer Sponsored Health Benefits, 2006-2013

3. Woodcock, Elizabeth. Seven Steps to Improve Your Practice’s Revenue Cycle Management; Navicure. 2014

4. Stampiglia, Tom. “Maintaining Profitability in the Era of Consumer-Directed Health Care.” Group Practice Journal. May 2009