Pathology groups and clinical laboratories should be taking steps to collect from patients at the point of care, as a key strategy to minimize patient bad debt
Here’s some bad news for hospital Chief Financial Officers (CFOs) and an early warning for clinical laboratory administrators. A rising number of patients with high deductible health plans (HDHPs) are unable to pay their medical bills.
Enrollment in HDHPs has soared in recent years because more employers and health insurers have adopted these plans. HDHPs also are called consumer-directed health plans (CDHPs) and typically have annual family deductibles of between $5,000 and $10,000.
Clinical Laboratories Will to Collect More Money from Patients
For several years, The Dark Report and Dark Daily have predicted that clinical laboratories and pathology groups would find it difficult to collect from patients with HDHPs. These health insurance plans can be attractive to families and individuals seeking to keep monthly costs down because the premiums are low. But when healthcare costs climb, out-of-pocket spending by patients rises sharply.
“The number of accounts that we’re seeing that relate to these high-deductible plans has been building, and it has been putting pressure on our bad debt levels,” stated Daniel Cancelmi, CFO for Tenet Healthcare Corporation (NYSE: THC) in Dallas, Texas. He was quoted in a story published by Kaiser Health News (KHN).
“We’ve seen it [patient bad debt] building over the past several years, and it’s continued into 2013 as well,” added Cancelmi. Tenet operates 49 hospitals and more than 100 outpatient centers in California, Texas, Florida, and other states.
Hospitals Reporting Increased Bad Debt owed by Patients
Members of the American Hospital Association (AHA) are also reporting an increase in bad debt and requests for charity care from patients with HDHPs, KHN reported. “A lot of these folks tend to not understand the structure of their benefits until they get to the hospital, and they’re not covered as thoroughly as they thought,” commented Caroline Steinberg, tAHA Vice President for Trends Analysis, in the KHN story.
In August, the Kaiser Family Foundation/Health Research & Educational Trust (Kaiser/HRET) released a survey that showed a fast-growing trend among employers is to enroll workers and their family members in HDHPs. Titled “Kaiser/HRET 2013 Employer Health Benefits Survey,” study found that, as of 2006, only 4% of all employees in employer-sponsored plans were in HDHPs. By contrast, 20% of employees are now enrolled in HDHPs.
The same survey showed that in 2006, 52% of workers had a general annual deductible. That has changed too. Today, 78% of workers have one.
Most Effective Cost Control Strategies include HDHPs
Also in August, a survey of 108 large employers by The National Business Group on Health (NBGH) showed that the two most effective cost control strategies among these employers were HDHPs and increased employee premium cost-sharing. In addition, 22% of those employers responding to the NBGH survey said they planned to offer only HDHP plans next year (2014), up from 7% of survey respondents in 2009. (See The Dark Report, “Labs Should Prepare for Larger Patient Deductibles,” May 6, 2013.)
Aon Hewitt, a large consulting firm in Lincolnshire, Illinois, reported the results of a survey of employers it did last year. The survey results showed that CDHPs surpassed health maintenance organizations (HMOs) as the second most common plan design U.S. employers offer, just behind preferred provider organizations.
Until recently, the movement to HDHPs was a little-known trend that allowed employers and insurers to shift health insurance costs to workers and families, according to Paul Mango, a Director with McKinsey & Company, in Pittsburgh, Pennsylvania. In a presentation at the Executive War College in 2012, Mango said, “This shift is the biggest stealth issue of the last four or five years, because it has resulted in a dramatic increase in HDHP enrollment.
30 Million People Are Now Enrolled in HDHPs
“The market for HDHPs has tripled so that almost 30 million people are enrolled in these products,” continued Mango. “This represents about 20% of the insured population.” (See The Dark Report, “Health Insurers Now Finding Ways to Cut Costs and Shed Risks,” June 4, 2012.)
Among the steps that clinical laboratories and all providers can take to increase collections is to implement new processes to estimate what patients owe at the point of service. Many health insurers have smart phone apps that show patients what they owe in real time for most health-care services.
These tools even calculate the amount that remains of a patient’s deductible throughout the year. Such tools are essential if providers—including clinical laboratories and pathology groups—are to collect from patients at the point of care, rather than having to bill and chase patients after the fact.