Jun 18, 2018 | Laboratory Hiring & Human Resources, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement, Management & Operations
Clinical laboratories will want to develop value-based lab testing services as the nation’s largest health insurers prepare to engage with Medicare Advantage patients in record numbers
UnitedHealth Group (UNH), the nation’s largest health insurer, forecasts wildly impressive growth of Medicare Advantage plans and value-based care. If this happens, it would further shrink the proportion of fee-for-service payments to providers, including medical laboratories.
Changes to how clinical laboratories and anatomic pathology groups in America get paid have been the subject of many Dark Daily briefings—such as, “Attention Anatomic Pathologists: Do You Know Medicare Is Prepared to Change How You Are Paid, Beginning on January 1, 2017?” August 22, 2016—and many others since then.
Switching to a value-based care reimbursement system, administered through Medicare Quality Payment Programs (QPPs), is one of the more disruptive changes to hit physicians, including pathologists. And, given UnitedHealthcare’s predictions, healthcare system adoption of QPPs will likely accelerate and continue to impact clinical laboratory revenue.
50% of All Americans in Value-based Care Systems by 2028
UnitedHealth Group also envisions more than 50% of seniors enrolled in Medicare Advantage plans within five to 10 years, up by 33% over current enrollments, Healthcare Finance reported.
“Where it can go, hard to tell, but I don’t think it’s unreasonable to think about something north of 40% and approaching 50%. It doesn’t seem like an unreasonable idea,” said Steve Nelson, CEO, UnitedHealthcare, a division of UnitedHealth Group, during the earnings call.
In light of UNH’s widely-publicized comments, clinical labs should consider:
- Preparing strategies to reduce dependence on fee-for-service payments;
- Developing diagnostic services that add value in value-based reimbursement arrangements.
For labs, more seniors in Medicare Advantage plans means fewer patients with Medicare Part B benefits, which cover tests in a fee-for-service style. In contrast, Medicare Advantage plans are marketed to seniors by companies that contract with Medicare. These insurance companies typically restrict their provider network to favor clinical laboratories that offer them the best value.
Why Insurers Like Medicare Advantage Plans
UnitedHealth Group is not the only insurer anticipating big changes in the Medicare Advantage market. Humana (NYSE:HUM) of Louisville, Ky., is reallocating some services from Affordable Care Act health insurance exchange plans to the Medicare Advantage side of the business, Healthcare Dive reported.
According to a Kaiser Family Foundation (KFF) report, these insurers are ranked by number of enrollees in Medicare Advantage plans:
- UnitedHealthcare—24%;
- Humana—17%;
- Blue Cross Blue Shield affiliates—13%.
Healthcare Dive noted that, in a volatile healthcare industry, payers seem to prefer the stability and following benefits of Medicare Advantage plans:
- Market potential, as evidenced by growing elderly population;
- Good retention rate of Medicare Advantage customers; and
- Favorable payments by the Centers for Medicare and Medicaid Services (CMS) to the insurers.
Cleveland Clinic Makes Deals with Humana, Blue Cross Blue Shield
Last year, Cleveland Clinic and Humana announced creation of two Medicare Advantage health plans with no monthly premiums or charges for patients to see primary care doctors, and no need for referrals to in-network specialists, according to a joint Humana-Cleveland Clinic news release.
And, along with Anthem Blue Cross and Blue Shield in Ohio, Cleveland Clinic also launched Anthem MediBlue Prime Select, a Medicare Advantage HMO plan with no monthly premium, a news release announced. For most of their care needs, members access Cleveland Clinic hospitals and physicians.
Control Costs as Medicare Advantage Plans Grows
These examples highlight the necessity for clinical laboratories to prepare as the Medicare Advantage program expands and accompanying networks narrow.
“Medicare Advantage plans will result in more pressure on providers [such as clinical laboratories] and hospitals to focus on the cost of care,” said Michael Abrams, Managing Partner at Numerof and Associates, told Healthcare Dive.
With an exploding elderly population, medical laboratories should analyze what the shift to value-based care and Medicare Advantage plans may mean for their revenues.
—Donna Marie Pocius
Related Information:
UnitedHealth Group’s David Wichmann on Quarter1 2018 Results, Earnings Call Transcript
UnitedHealth Group Grows First Quarter Profits Driven by Medicare Advantage
Medicare Advantage Will Have More Enrollment, Lower Premiums in 2018
Payers are Flocking to the Medicare Advantage Market
Medicare Advantage 2017 Spotlight on Enrollment Market Update Issue Brief
Medicare Advantage Benefits
UnitedHealth Group Predicts 50% of Seniors Will Choose Medicare Advantage
Medicare Advantage Plans Keep Growing
Cleveland Clinic and Humana Create Two New Zero Premium Medicare Advantage Plans
Anthem Blue Cross Blue Shield Ohio Collaborate to Deliver Integrated Care
Attention Anatomic Pathologists: Do You Know Medicare Is Prepared to Change How You Are Paid, Beginning on January 1, 2017?
May 18, 2018 | Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement
From reduced medical laboratory test ordering to dealing with high-deductible health plans (HDHPs), clinical laboratories and anatomic pathology groups are impacted daily by rising healthcare costs. Until now, however, one demographic was not affected—affluent Americans. But that is no longer the case.
According to Bloomberg, thousands of people—some earning more than $125,000 a year—are now foregoing health insurance altogether and instead choosing concierge medicine because it costs less.
“We’re not poor people, but we can’t afford health insurance,” Mimi Owens, a resident of Harahan, La., told Bloomberg.
Priced Out of the Market
Bloomberg also reported on a Marion, N. C., family whose monthly insurance premium of $1,691 in 2017—triple their house mortgage payment—was increasing to $1,813 in 2018. The couple, who had no children and an income of $127,000 from a small IT business plus a physical therapy job, had a $5,000 deductible. However, their total annual insurance investment after premiums was about $30,000, and that was before any healthcare claims.
They decided, instead, to purchase care through a membership in a physician practice.
“Self-employed people are being priced out of the market,” Donna Harper, an insurance agent in Crystal Lake, Ill., told Fierce Healthcare. The self-employed business owner reportedly had to cancel her Blue Cross Blue Shield (BCBS) plan because the premiums totaled $11,000 annually with a $6,000 per year deductible.
“I haven’t been in the hospital for 40 years, so I’m going to roll the dice,” she stated.
Increasingly, this is the choice many people with higher incomes are making and it is impacting both the healthcare and health plan industries.
Huge Deductibles, Skyrocketing Premiums!
Regardless of whether people purchase their health coverage through the Affordable Care Act (ACA) Health Exchanges or their employers, deductibles can be as high as $5,000/year for individuals and $10,000/year for family coverage, or more.
And, in 2017, annual premiums for workers averaged $18,764, a Kaiser Employer Survey reported.
According to CNN Money, ACA premiums for silver plans in 2018 were 37% higher than the previous year, and the average increase for all health exchange plans since 2017 was 24% nationwide.
And, while financial assistance is available, people making more than 400% over the Federal Poverty Level will not qualify for premium subsidies from the ACA, according to HealthCare.gov.
Lots of “Essential” Services, But Narrow Networks
Critics of the ACA point out that one of the reasons Health Exchange plans are so expensive is because every plan is required to have “essential health benefits” that many enrollees to not need or want. For example, a childless couple in their 50s has to pay for an ACA plan that includes services such as maternity, newborn, and pediatric care.
Another cause for sky rocketing costs are the ACA’s limited number of health plans in many regions. In fact, according to Bloomberg, half of the counties in the US—which together cover 30% of all Americans—have just one insurance company available to the Health Exchange customers.
Uninsured Rate Edges Up in 2017
So, it may come as no surprise that after declining over recent years, the uninsured rate noted at 2017 year-end actually increased by 1.3%, which translates to 3.2-million Americans, a Gallup and Sharecare analysis found (see image below).
That report attributes the uptick in the uninsured population, the largest since ACA’s start, to:
- Health insurance companies pulling out of the ACA exchanges;
- Costs for remaining insurance plans too high for consumers to bear; and,
- Those Americans who earn too much for federal subsidies opting to go without health insurance.
Concierge Care Instead of Health Insurance
Many people do not have health insurance, but that does not mean they are without healthcare. For example, the N.C. couple named in the Bloomberg article decided to pay $198 a month (instead of the $1,813 annual premium) for private membership (AKA, concierge care) in a doctor’s office practice. The fee gives them unlimited office visits, discounts on prescription drugs, and lab tests.
The Detroit News, in its report on the launch of University of Michigan Medicine’s Victors Care in April, called membership-based practice programs a “revolutionary shift in medicine.” Victors Care plans, which start at $225 a month, reportedly give people unlimited office visits. (See Dark Daily, “Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories,” April 23, 2018.)
And HealthLeaders Media noted that about 34% of medical practices surveyed indicated that within three years they may add a membership-based payment model.
Dr. James Mumper, MD (left), founder and chief medical officer of PartnerMD, a concierge care practice in Richmond, Va., treats Howard Cobb (right), who has been Mumper’s patient for 14 years. (Photo copyright: Richmond Magazine/Jay Paul.)
For the doctor’s part, concierge medicine has appeal. Physician want to spend more time with their patients and have fewer patients, noted the Richmond Times-Dispatch.
“So much of being a good primary care physician is listening and having time to listen,” stated Jim Mumper, MD, Chief Medical Officer, PartnerMD, a concierge medical practice he helped start in Richmond, Va. “This model allows the physicians to do the things that cause them to want to go to medical school and do all the training and all the sleepless nights—to feel at the end of the day that they’ve really helped a lot of people.”
Clearly, the healthcare and health insurance industries are under enormous pressure to address rising costs and evolve to better business models. Clinical laboratories are necessarily along for that ride, and in many ways, must be ready to react quickly to changes coming from both marketplaces.
—Donna Marie Pocius
Related Information:
Why Some Americans are Risking It and Skipping Health Insurance
Plans with More Restrictive Networks Comprise 73% of Exchange Market
Millions More Americans Were Uninsured in 2017
2017 Employer Health Benefits Survey
Premiums for the Benchmark Silver Obamacare Plan Will Soar 37%, on Average, for 2018, According to Federal Data
US Uninsured Rate at 12.2% in Fourth Quarter 2017
University of Michigan Fuels Debate on Retainer-Based Health Care
34% of Medical Practice Models Considering Membership Practice Models
A Different Kind of Practice
Back to the Future of Healthcare with A Higher Price Tag: Concierge Medicine Offers Patients Unique Care
Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories
Apr 20, 2018 | Coding, Billing, and Collections, Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing
Though ACA reforms may have slowed healthcare spending, rapidly increasing deductibles and cost sharing requirements have many experts questioning if patients can afford care at all, despite the increased availability of insurance coverage
Much of the debate surrounding efforts to replace and repeal the Affordable Care Act (ACA) has centered on premiums as a central facet of out-of-pocket spending. However, new data from a Kaiser Family Foundation (KFF) survey reveals that premiums are only one factor affecting consumers’ ability to pay healthcare bills. High-deductible health plans (HDHPs) are another culprit. This directly impacts clinical laboratories and anatomic pathology groups that find revenues down as more American’s avoid costs by delaying or opting out of testing and treatments.
The KFF report highlights both the complexity of managing healthcare costs and how the current focus on premium prices might miss other important considerations that make healthcare inaccessible to many Americans.
High Deductibles and Consumers’ Lack of Savings
An increasing number of insurance plans now include high deductibles—particularly in the individual markets, though employer-based insurance plans are experiencing steady increases as well.
This leaves consumers facing larger bills and making tough decisions about whether their healthcare is affordable—even with insurance.
When healthcare consumers cannot afford the out-of-pocket costs of healthcare, they are less likely to schedule wellness visits, adhere to treatments, or follow through on physician-ordered clinical laboratory tests they don’t consider essential to their well-being or simply cannot afford.
Even when they follow protocols and recommendations, that does not mean patients will be able to pay medical laboratories for tests performed, or anatomic pathology groups for specialized services, when the bill comes due.
The Ever-Growing Deductible Dilemma
In its 2017 study, “Do Health Plan Enrollees have Enough Money to Pay Cost Sharing?,” the KFF compares median data on liquid assets from 6,254 single and multi-person households—spanning a range of incomes and age brackets—to the average cost of both standard employer-based insurance and individual market insurance deductibles.
They further note that their data modeling and estimates present a “conservative estimate,” because chronic conditions might cause an extended period of out-of-pocket spending, and that median assets might not be available at a single time or throughout the year.
Concerning a previous 2016 KFF study on high-deductible insurance plans, the authors noted in a press release, “In 2016, 83% of covered workers face a deductible for single coverage, which averages $1,478. That’s up $159 or 12% from 2015, and $486 or 49% since 2011. The average deductible for workers who face one is higher for workers in small firms (three to 199 employers) than in large firms ($2,069 vs. $1,238).”
In the press release following KFF’s 2016 survey, Drew Altman, CEO (above), Kaiser Family Foundation, noted, “We’re seeing premiums rising at historically slow rates, which helps workers and employers alike, but it’s made possible in part by the more rapid rise in the deductibles workers must pay.” (Image copyright: Kaiser Family Foundation.)
In their latest look at deductibles and out-of-pocket spending, the KFF study authors note, “About half (53%) of single-person non-elderly households could pay the $2,000 from their liquid assets towards cost sharing, and only 37% could pay $6,000, which … was less than the maximum out-of-pocket limit for single coverage in 2016. For multi-person families, 47% could pay $4,000 from their liquid assets for cost sharing, while only 35% could pay $12,000.”
This sets the stage for the grim picture now facing many Americans. Despite increased access to medical insurance, being able to use the insurance to obtain care can be a struggle for a sizeable part of the lower to middle class population.
Creating a More Affordable Future for Healthcare
Data from the Q1 National Health Interview Survey (NHIS) conducted by the Centers for Disease Control and Prevention (CDC) show that growth in high-deductible plans might skew these numbers further still. They found that the number of persons under the age of 65 enrolled in HDHPs increased from 25.3% in 2010 to 40.0% in the first quarter of 2016 despite uninsured rates dropping from 22.3% to 11.9% over the same period.
In the 2017 study, KFF outlines the complexity of the issue: “There are significant differences across the income spectrum … For example, 63% of multi-person households with incomes of 400% of poverty or more could pay $12,000 from liquid assets for cost sharing, compared with only 18% of households with incomes between 150% and 400% of poverty, and 4% of households with incomes below 150% of poverty.”
While there are no simple answers to address today’s increasing deductibles, KFF emphasizes the importance of looking at the bigger picture.
“Much of the discussion around affordability has centered on premium costs. A broader notion of affordability will have to focus on the ability of families,” they note. “To adequately address the issue of affordability of health insurance, reform proposals should be evaluated on the affordability of out-of-pocket costs, especially for low and moderate-income families, and be sensitive to the financial impacts that high cost sharing will have on financial wellbeing.”
In the meantime, lack of access to preventative care and regular checkups can increase long-term healthcare costs and health risks, creating a spiral of financial concerns for patients as well as the healthcare professionals and the clinical laboratories serving them.
—Jon Stone
Related Information:
The Biggest Health Issue We Aren’t Debating
Do Health Plan Enrollees Have Enough Money to Pay Cost Sharing?
Average Annual Workplace Family Health Premiums Rise Modest 3% to $18,142 in 2016; More Workers Enroll in High-Deductible Plans with Savings Option Over Past Two Years
Americans Are Facing Rising Out-of-Pocket Healthcare Costs—Here’s Why
Americans’ Out-of-Pocket Healthcare Costs Are Skyrocketing
Americans Are Shouldering More and More of Their Healthcare Costs
Medicare Out-of-Pocket Costs Seen Rising to Half of Senior Income
Consumer Reaction to High-Deductible Health Plans and Rising Out-of-Pocket Costs Continues to Impact Physicians and Clinical Laboratories
Because of Sizeable Deductibles, More Patients Owe More Money to Clinical Pathology Laboratories, Spurring Labs to Get Smarter about Collecting from Patients
Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service
Nov 29, 2017 | Coding, Billing, and Collections, Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Sales and Marketing, Laboratory Testing, Management & Operations
Medical laboratories today struggle to submit clean claims and be promptly and adequately reimbursed as health insurers institute burdensome requirements and audit more labs
Across the nation, clinical laboratories and anatomic pathology groups of all sizes struggle to get payment for lab test claims. Veteran lab executives say they cannot remember any time in the past when medical laboratories were challenged on the front-end with getting lab test claims paid while also dealing on the back-end with ever-tougher audits and unprecedented recoupment demands.
These issues center upon the new policies adopted by the Medicare program and private health insurers that make it more difficult for many clinical laboratories to be in-network providers, to obtain favorable coverage guidelines for their tests, and to have the documentation requested when auditors show up to inspect lab test claims. This is true whether the audit is conducted by a Medicare Recovery Audit Contractor (RAC) or a team from a private health insurer.
Source of Financial Pressure on Medical Laboratories in US
Another source of financial pressure on medical laboratories in the United States today is the ongoing increase in the number of patients who have high-deductible health plans—whether from their employer or from the Affordable Care Act’s Health Insurance Marketplace (AKA, health exchanges). The individual and family annual deductibles for these plans typically start at around $5,000 and go to $10,000 or more. Many labs are experiencing big increases in patient bad debt because they don’t have the capability to collect payment from patients when they show up in patient service centers (PSCs) to provide specimens.
Some of these developments make it timely to ask the question: Is it a trend for payers to gang up on clinical laboratories and pathology groups and make it tougher for them to be paid for the lab tests they perform? Multiple factors can be identified to support this thesis.
“Is it a coincidence that, in recent years, so many payers are initiating numerous requirements that add complexity to how labs submit claims for lab tests and how they get paid?” asked Richard Faherty of RLF Consulting LLC. Faherty was formerly Executive Vice President, Administration, with BioReference Laboratories, Inc. “I can track four distinct developments that, collectively, mean that fewer lab claims get paid, expose clinical laboratories to extremely rigorous audits with larger recoupment demands, and heighten the risk of fraud and abuse allegations due to use of contract or third-party sales and marketing representatives who represent independent medical lab companies.”
Faherty described the first of his four developments as prior-authorization requirements for molecular and genetic tests. “Health insurers are reacting to the explosion in molecular and genetic testing—both in the number of unique assays that a doctor can order and the volume of orders for these often-expensive tests—by establishing stringent prior-authorization requirements,” he noted.
More Prior-Authorization Requirements for Molecular, Genetic Tests
“At the moment, many clinical lab companies and pathology groups are attempting to understand the prior-authorization programs established by Anthem (which became effective on July 1) and UnitedHealthcare (which became effective on November 1),” explained Faherty. “Just these two prior-authorization programs now cover as many as 80 million beneficiaries. There are plenty of complaints from physicians and lab companies because the systems payers require them to use are not well-designed and quite time-consuming.
“One consequence is that many lab executives complain that they are not getting paid for genetic tests because their client physicians are unable to get the necessary prior authorization—yet the lab decides to perform the test to support good patient care even though it knows it won’t be paid.”
Richard Faherty (left), CEO, RLF Consulting LLC, and formerly with Bio-Reference Laboratories, Inc., will moderate this critical webinar. Joining him will be Rina Wolf (center), Vice President, Commercialization Strategies, Consulting and Industry Affairs, XIFIN, Inc., and Karen S. Lovitch (right), JD, Practice Leader, Health Law Practice, Mintz Levin, PC, Washington, DC. The webinar takes place Wednesday, December 6, 2017, at 2 p.m. EST; 1 p.m. CST; 12 p.m. MST; 11 a.m. PST. Click here to register. (Photo copyright: Dark Intelligence Group.)
Payers Checking on How Clinical Laboratories Bill, Collect from Patients
Faherty’s second trend involves how medical lab companies are billing and collecting the amounts due from patients. “Most payers now pay close attention to how clinical laboratories bill patients for co-pays, deductibles, and other out-of-pocket amounts that are required by the patients’ health plans,” he commented. “Labs struggle with this for two reasons.
“One reason is the fact that tens of millions of Americans currently have high-deductible health insurance plans,” said Faherty. “In these cases, medical laboratories often must collect 100% of the cost of lab testing directly from the patients. The second reason is the failure of many independent lab companies to properly and diligently balance-bill their patients. This puts these labs at risk of multiple fraud and abuse issues.”
Many Medical Lab Companies Undergoing More Rigorous Audits by Payers
Faherty considers trend number three to be payers’ expanding use of rigorous audits of lab test claims. “In the past, it was relatively uncommon for a clinical lab company or pathology group to undergo audits of their lab test claims,” he observed. “That has changed in a dramatic way. Today, the Medicare program has increased the number of private auditors that visit labs to inspect lab test claims. At the same time, private health insurers are ramping up the number and intensity of the audits they conduct of lab test claims and substantially increasing their demands for recoupment without audit.
“One consequence of these audits is that medical laboratories are being hit with substantial claims for recoupment,” noted Faherty. “I am aware of multiple genetic testing companies that have been hit with a Medicare recoupment amount equal to two or three years of the lab’s annual revenue. Some have filed bankruptcy because the appeals process can take three to four years.”
Are Contract Lab Sales Reps More Likely to Offer Physicians Inducements?
Faherty’s fourth significant trend involves the greater use of independent contractors that handle lab test sales and marketing for clinical lab companies. “This trend affects both labs that use third-party lab sales reps and labs that don’t,” he said. “Labs that use contract sales and marketing representatives do not have direct control over the sales practices of these contractors. There is ample evidence that some independent lab sales contractors are willing to pay inducements to physicians in exchange for their lab test referrals.
“This is a problem in two dimensions,” noted Faherty. “On one hand, clinical lab companies that use third-party sales contractors don’t have full control over the marketing practices of these sales representatives. Yet, if federal and state prosecutors can show violations of anti-kickback and self-referral laws, then the lab company is equally liable. In certain cases, government attorneys have even gone after executives on a personal basis.
“On the other hand, I am hearing lab executives complain now that a substantial number of office-based physicians are so used to various forms of inducement offered by third-party sales representatives that the lab’s in-house sales force cannot convince those physicians to use their lab company without a comparable inducement. If true, this is a fundamental shift in the competitive market for lab testing services and it puts labs unwilling to pay similar inducements to physicians at a disadvantage.”
These four trends describe the challenges faced by every clinical laboratory, hospital laboratory outreach program, and pathology group when attempting to provide lab testing services to office-based physicians in a fully-compliant manner and be paid adequately and on time by health insurers.
Why Some Labs Continue to Be Successful and What They Can Teach You
These four trends may also explain why many medical lab companies are dealing with falling revenue and encountering financial difficulty. However, there continue to be independent lab companies that have consistent success with their coding, billing, and collections effort. These labs put extra effort into aligning their business practices with the requirements of the Medicare program and private health insurers.
To help pathologists and managers running clinical laboratory companies, hospital lab outreach programs, and pathology groups improve collected revenue from lab test claims and to improve lab compliance, Pathology Webinars, LLC, is presenting a timely webinar, titled, “How to Prepare Your Lab for 2018: Essential Insights into New Payer Challenges with Lab Audits, Patient Billing, Out-of-Network Claims, and Heightened Scrutiny of Lab Sales Practices.” It takes place on Wednesday, December 6, 2017 at 2:00 PM EDT.
Three esteemed experts in the field will provide you with the inside scoop on the best responses and actions your clinical lab and pathology group can take to address these major changes and unwelcome developments. Presenting will be:
· Rina Wolf, Vice President, Commercialization Strategies, Consulting and Industry Affairs, XIFIN, Inc. in San Diego; and,
· Karen S. Lovitch, JD, Practice Leader, Health Law Practice, Mintz Levin, PC, in Washington, DC;
· Moderating will be Richard Faherty of RLF Consulting LLC, and formerly with Bio-Reference Laboratories, Inc.
Special Webinar with Insights on How Your Lab Can Collect the Money It’s Due
To register for the webinar and see details about the topics to be discussed, use this link (or copy and paste this URL into your browser: http://pathologywebinars.com/how-to-prepare-your-lab-for-2018-essential-insights-into-new-payer-challenges-with-lab-audits-patient-billing-out-of-network-claims-and-heightened-scrutiny-of-lab-sales-practices/).
This is an essential webinar for any pathologist or lab manager wanting to improve collected revenue from lab test claims and to improve lab compliance. During the webinar, any single idea or action your lab can take away could result in increasing collected revenue by tens of thousands even hundreds of thousands of dollars. That makes this webinar the smartest investment you can make for your lab’s legal and billing/collection teams.
—Michael McBride
Related Information:
How to Prepare Your Lab for 2018: Essential Insights into New Payer Challenges with Lab Audits, Patient Billing, Out-of-Network Claims, and Heightened Scrutiny of Lab Sales Practices
Risk, Compliance, Pay—A Juggling Act for Labs
Continued ‘Aggressive Audit Tactics’ by Private Payers and Government Regulators Following 2018 Medicare Part B Price Cuts Will Strain Profitability of Clinical Laboratories, Pathology Groups
Threats to Profitability Causing Clinical Laboratories, Pathology Groups to Take on Added Risk by Entering into ‘Problematic’ Business Relationships and Risky Pricing Plans
Payers Hit Medical Laboratories with More and Tougher Audits: Why Even Highly-Compliant Clinical Labs and Pathology Groups Are at Risk of Unexpected Recoupment Demands
‘Death by 1,000 Knives’ Could Be in Store for Clinical Laboratories, Pathology Groups Not Prepared to Comply with New Medicare Part B Regulations
Sep 6, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement, Management & Operations
Challenges getting paid likely to continue as high deductibles make patients responsible for paying much more of their healthcare bills
Rising out-of-pocket costs for healthcare consumers is translating into increasing amounts of red ink for hospitals and healthcare providers struggling to collect bills from patients with high-deductible health plans (HDHPs). Clinical laboratories and pathology groups are unlikely to be immune from these challenges, as increasing numbers of patients with smaller healthcare debts also are failing to pay their bills in full.
That’s according to a recent TransUnion Healthcare analysis of patient data from across the country. It revealed that 99% of hospital bills of $3,000 or more were not paid in full by the end 2016. For bills under $500, more than two-thirds of patients (68%) didn’t pay the full balance by year’s end (an increase from 53% in 2015 and 49% in 2014). The study also revealed that the percentage of patients that have made partial payments toward their hospital bills has fallen dramatically from nearly 90% in 2015 to 77% in 2016.
Increased Patient Responsibility Causing Decrease in Patient Payments
“The shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years,” Jonathan Wilk, Principal for Healthcare Revenue Cycle Management at TransUnion (NYSE:TRU), said in a statement.
Millions of Americans are in high-deductible health plans. And, as the graphic above illustrates, that number has been increasing since the ACA was signed into law in 2010. (Graphic copyright: Reuters.)
While the Affordable Care Act (ACA) has increased the number of Americans receiving medical coverage through Medicaid or commercial insurance, TransUnion noted in its statement that hospitals still wrote off roughly $35.7 billion in bad debt in 2015. By 2020, TransUnion predicts that figure will continue to rise, with an estimated 95% of patients unable to pay their healthcare bills in full by the start of the next decade.
“Higher deductibles and the increase in patient responsibility are causing a decrease in patient payments to providers for patient care services rendered. While uncompensated care has declined, it appears to be primarily due to the increased number of individuals with Medicaid and commercial insurance coverage,” John Yount, Vice President for Healthcare Products at TransUnion, said in the TransUnion statement.
Collecting Patients’ Out-of-Pocket Costs Upfront
According to Reuters, hospitals in states that did not expand Medicaid under Obamacare have witnessed a more than 14% increase in unpaid bills as the number of people using health plans with high out-of-pocket costs increased. For hospitals in those states, HDHPs are impacting their bottom lines.
“It feels like a sucker punch,” declared Chief Executive Officer John Henderson of Childress Regional Medical Center, Texas Panhandle Region, in a Bloomberg Business article. “When someone has a really high deductible, effectively they’re still uninsured, and most people in Childress don’t have $5,000 lying around to pay their bills.”
A recent report from payment network InstaMed found that 72% of healthcare providers reported an increase in patient financial responsibility in 2016, a trend that coincides with a rise in the average deductible for a single worker to $1,478, more than double the $735 total in 2010.
In response to the increase in patient responsibility, hospitals and other providers are turning to new tactics for collecting money directly from patients, including estimating patients’ out-of-pocket payments and collecting those amounts upfront.
Hospital Systems Offer Patients Payment Options
Venanzio Arquilla is the Managing Director of the healthcare practice at The Claro Group, a financial management consultancy in Chicago. In an interview with Crain’s Chicago Business, he stated that hospitals are working overtime to get money from patients, particularly at the point of service.
“Hospitals have gotten much more aggressive in trying to collect at time of service, because their ability to collect on self-pay amounts decreases significantly when the patient leaves the building,” Arquilla noted. “You can’t say, ‘Give me your credit card’ to someone in the emergency room bleeding from a gunshot wound, but you can to someone going in for an elective procedure.”
Revenue loss due to unpaid medical bills among states that complied with Medicaid Expansion under the ACA has increase so dramatically, some hospitals are now offering patients prepayment discounts and no-interest loans to ensure payments. Clinical laboratories and anatomic pathology groups should develop strategies to respond to the increase collections from patients at the time of service. (Graphic copyright: Reuters.)
Richard Gundling, a Senior Vice President at the Healthcare Financial Management Association (HFMA), told Kaiser Health News that an estimated 75% of healthcare and hospital systems now ask for payment at the time services are provided. To soften the blow, some healthcare systems are providing patients with a range of payment options, from prepayment discounts to no-interest loans.
Novant Health, headquartered in North Carolina, is among those healthcare systems offering patients new payment strategies. Offering no interest loans to patients has enabled Novant to lower its patient default rate from 32% to 12%.
“To remain financially stable, we had to do something,” April York, Senior Director of Patient Finance at Novant Health, told Reuters. “Patients needed longer to pay. They needed a variety of options.”
Providers Must Adapt to New Patient Procedures
“Doctors need to understand the landscape has changed. A doctor’s primary concern use
to be whether a patient had insurance. Now, it’s the type of insurance,” Devon M. Herrick, PhD, a Senior Fellow at the National Center for Policy Analysis (NCPA) in Dallas, told Medical Economics.
While clinical laboratories and anatomic pathology groups traditionally have not collected money directly from patients, Herrick says healthcare providers must accept that the rules of the game have changed. “Patients are more cost-conscious now. That means patients will question their physicians about costs for procedures,” he adds.
Dark Daily has advised clinical laboratories in the past to develop tools and workflow processes for collecting payments upfront from patients with high-deductible health plans (See, “Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service,” Dark Daily, July 28, 2014). Not doing so can amount to millions of dollars in lost revenue to the medical laboratory industry.
—Andrea Downing Peck
Related Information:
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Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service
Higher Annual Deductibles and Co-Payments Cause Hospitals to Intensify Efforts to Collect Directly from Patients; Medical Laboratories Now Feel Similar Financial Squeeze
Because of Sizeable Deductibles, More Patients Owe More Money to Clinical Pathology Laboratories, Spurring Labs to Get Smarter about Collecting from Patients
