Sep 7, 2018 | Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Managed Care Contracts & Payer Reimbursement
Healthcare revenue cycle consultant Jonathan Wiik suggests healthcare providers must prepare their organizations for patients who need help paying increasing medical costs
When patients cannot pay their bills, all of healthcare—including clinical laboratories and anatomic pathology groups—also struggle. And, according to experts, medical laboratories already complying with federal value-based payment programs and precision medicine directives should expect increased pressure from patients seeking ways to pay for their services.
A recent analysis of this issue by TransUnion Healthcare (NYSE:TRU) states, “patients experienced an 11% increase in average out-of-pocket costs during 2017, rising from $1,630 in Q4 2016 to $1,813 in Q4 2017.” It is a development that should send up red flags to clinical laboratory managers seeking ways to maintain and increase revenues.
“Given the increased payment responsibility, being able to determine a patient’s ability to pay is increasingly important for hospitals,” noted Jonathan Wiik, Principal, Healthcare Strategy at TransUnion Healthcare (TRU). “In order to allow patients to focus on getting the care they need healthcare providers need processes and tools in place to help patients meet their financial obligations and to establish funding mechanisms that will benefit both the patient and provider.” Obviously, this also applies to clinical laboratories.
According to a news release, “The [TRU] analysis also revealed that in 2017, on average, 49% of patient out-of-pocket costs per healthcare visit were below $500; 39% were $501-$1,000; and 12% were more than $1,000.”
For providers, patients’ swelling unpaid balances mean more uncompensated care, the analysis also showed. And that means more unpaid balances for clinical laboratories as well.
Patients Struggle to Pay Amounts Under $500
Each year, more healthcare consumers are forced onto high-deductible health plans (HDHPs) that make them responsible for thousands and even tens of thousands of dollars in upfront costs.
And according to another TRU news release, patients with commercial insurance plans experienced a 67% increase in their financial responsibility over five years. In other words, after insurance plans paid providers, patients still needed to pony up 12.2% of the total bill in 2017, as compared to 8% in 2012.
During the most recent year studied by TransUnion Healthcare, patients’ out-of-pocket costs increased 11%, rising to $1,813 in 2017 from $1,630 in 2016, a news release revealed.
And it doesn’t take a huge bill for patients to feel the pain. TransUnion’s data reveals that 68% of patients with medical bills below $500 did not fully pay what they owed, RevCycle Intelligence reported. This has major implications for clinical laboratories and anatomic pathology groups because many lab charges fall under $500 and TransUnion shows that almost 70% of patients do not pay the full amount of these bills.
According to TRU, medical specialties with the highest out-of-pocket estimated amounts due from patients include:
- Orthopedics, $1,663;
- Plastic surgery, $1,566;
- Urology, $1,415; and,
- Neurology, $1,241.
The average deductible was $1,200 in 2016, up from just $303 in 2006, a 176% increase, Healthcare Dive reported, citing a new Peterson-Kaiser Health System Tracker report.
And, as Dark Daily previously reported, affluent and self-employed people also feel the pinch, as deductibles can be as high as $5,000/year for individuals and more than $10,000/year for a families, whether plans are purchased through the Affordable Care Act (ACA) or employers.
What Happens When Patients Don’t Pay?
Dark Daily also reported on a 2017 TransUnion Healthcare analysis that showed 99% of hospital bills of $3,000 or more were not paid in full by the end of 2016. (See, “Hospitals, Pathology Groups, Clinical Labs Struggling to Collect Payments from Patients with High-Deductible Health Plans,” September 6, 2017.)
When patients cannot afford to pay their bills, hospitals’ bad debt and charity-care levels rise. Together, bad debt and charity care comprise a provider’s uncompensated care.
“A lot of patients can’t afford these bills, which is why uncompensated care has bounced,” Wiik told Modern Healthcare.
Indeed, uncompensated care was $38.3 billion in 2016, up $2.6 billion since 2015, according to an American Hospital Association (AHA) 2017 fact sheet.
Meanwhile, the Centers for Medicare and Medicaid Services (CMS) reported that Medicare bad debt (the effect of Medicare patients not paying deductibles and co-pays) increased to $3.69 billion in 2016 from $3.14 billion in 2012, a 17% bump, TransUnion Healthcare pointed out.
Consumers Say They Want Prices, Financing Plans
Consumers say healthcare providers are not transparent about costs for procedures, nor do they effectively offer financing options. That’s according to a HealthFirst Financial news release, which states, “More than three-quarters, or 77%, of healthcare consumers say it’s important or very important they know their costs before treatment and 53% want to discuss financing options before care. However, the vast majority of healthcare providers are not satisfying these consumer demands.”
And, according to a HealthFirst Financial Patient Survey of 1,011 adults nationwide:
- “53% voice concern about the ability to pay a medical bill of less than $1,000;
- “35% worried about the ability to pay a bill of less than $500; and,
- “16% are concerned about the ability to pay a bill of less than $250.”
These numbers fall well into the amounts clinical laboratories charge for services rendered.
What Can Medical Laboratories Do?
To help their customers pay their bills and improve revenue, Dark Daily suggest labs:
- Use software that enables ordering clinicians to process advanced beneficiary notices and prior authorizations for services;
- Inform the customer prior to specimen collection about their financial responsibility for the test;
- Ask for payment-due at time of the patient encounter;
- Share key lab test price data in easily accessible and understandable ways;
- Keep credit card information securely on-hand for agreed-to balances patients are responsible for paying; and,
- Offer payment options, such as e-billing and financing plans.
As we’ve pointed out many times, because clinical laboratories are dependent on the physicians and hospitals they service, they are particularly vulnerable when patients stop paying their bills.
—Donna Marie Pocius
Related Information:
TransUnion Healthcare Analysis: Fight Rising Uncompensated Care
Patient Balances Continue to Increase in 2018, Driving Bad Debt and Uncompensated Care
Patient Payment Responsibility Increases 11% in 2017
Patient Financial Responsibility Increased 11% in 2017
It’s Never Too Soon to Communicate Pricing and Payment Options
Deductibles, Coinsurance on the Rise, But Cost of Copays Are Down
Growing Bad Debt Problem Illustrates Broken Billing System
American Hospital Association Uncompensated Care Cost Fact Sheet, December 2017 Update
From Millennials to Boomers, Patients Want to Discuss Healthcare Pricing and Payment Options Before Treatment
Even Higher Income Americans Are Frustrated with High Health Insurance Costs and Many Drop Coverage and Switch to Concierge Care
Hospitals’ Pathology Groups and Clinical Labs Struggling to Collect Payments from Patients with High Deductible Health Plans
Aug 28, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Managed Care Contracts & Payer Reimbursement, Management & Operations
Two different deals aim to bring a new style of healthcare insurance to individuals and small businesses
Designed to be a new model for health insurance, the much-watched Oscar Health (Oscar), founded in 2012, has just inked deals with both the Cleveland Clinic and Humana, Inc. What makes Oscar worth watching by pathologists and clinical laboratory managers is that the innovative insurer was founded and is run by Gen X and Gen Y (Millennial) executives.
Oscar Health is billed by its Millennial cofounders as a new type of health insurance—one that “curates” or coordinates members’ care with the help of health information technology (HIT) on the Internet, a smartphone app, and personalized services by concierge teams. So, it is interesting for pathologists and medical laboratory leaders to note that New York-based Oscar is partnering, through two different deals, with well-established Cleveland Clinic and rival Humana to enter the Ohio and Tennessee healthcare markets.
As Dark Daily reported in a previous e-briefing, Oscar aims to leverage sophisticated technology solutions and data to challenge complexity and costs associated with traditional healthcare insurance. An approach no doubt driven by the modern thinking of the company’s young founders. We alerted lab leaders that the insurance startup could be the latest example of technology’s power in the hands of Gen Y and Gen X entrepreneurs.
And while Oscar has reportedly experienced financial challenges, it is moving forward with the widely publicized new partnerships, as well as additional plans to expand insurance coverage in more states. Therefore, it’s important for clinical laboratory professionals to follow Oscar, which soon could be a healthcare payer of clinical laboratory and anatomic pathology services in more regions of the country.
Why Is Oscar Teaming Up with Cleveland Clinic, Humana?
In short, Cleveland Clinic is making its debut into the health insurance market with Oscar. And Oscar is moving into Ohio on the coat tails of this nationally prominent healthcare provider. The co-branded Cleveland Clinic/Oscar Health insurance plan will be offered to northeast Ohio residents in the fall for coverage effective Jan. 1, according to a Cleveland Clinic news release.
“This is a rare opportunity to work with the Cleveland Clinic to deliver the simpler, better, and affordable healthcare experience that consumers want,” said Mario Schlosser, Oscar’s Chief Executive Officer and cofounder in the news release.
Josh Kushner (left) and Mario Schlosser (right) cofounded Oscar Health, a New York-based health insurer that employs computer technologies, a mobile app, and concierge-style healthcare teams to provide members with a modern health plan experience and easy access to quality healthcare providers. (Photo copyright: Los Angeles Times.)
The coverage will be sold on and off the Ohio Affordable Care Act state exchange. Here’s what consumers will receive, noted statements by the Cleveland Clinic and Oscar Health:
- Access to primary care providers affiliated with the Cleveland Clinic, and an Oscar Health concierge team (a nurse and three care guides) that can refer patients based on their needs to other providers in the care continuum;
- Virtual care visits enabled by Cleveland Clinic Express Care Online and Oscar’s Virtual Visits;
- Smartphone technology to make it possible for members to explore their health needs, find options, and review costs.
“We are looking to build a new relationship among payers, providers, and patients. This relationship goes beyond the traditional approach of getting sick and seeing the doctor,” noted Brian Donley, MD, Cleveland Clinic’s Chief of Staff.
In an article on the partnership, Forbes suggested that narrow healthcare networks like the Cleveland Clinic/Oscar model might be just what the ACA exchanges need to remain operational.
However, a Business Insider article suggests that Oscar—already active in New York, Texas, and California health exchanges—could be adversely affected by a successful replacement of the ACA, currently being debated by Congressional lawmakers.
Nevertheless, Alan Warren, PhD, Oscar’s Chief Technology Officer, told Business Insider that the Cleveland Clinic/Oscar Health insurance plan would go forward even if Obamacare did not.
Formal Rival Humana Now Oscar’s Partner in Small Business Insurance
Meanwhile, the partnership with Humana takes Oscar, which launched Oscar for Business in April, 2017, further into the small business health insurance market. Humana and Oscar will sell commercial health insurance to small businesses in a nine-county Nashville, Tenn., area effective in the fall, according to a joint Oscar/Humana news release.
“The individual market was a good starting point. But it was clear from the beginning that the majority of insurance in the US is delivered through employers,” Schlosser stated in a New York Times article.
As to who does what, Beth Bierbower, Humana’s Group and Specialty Segment President, explained in an article in the Tennessean that Humana will contract with hospitals and doctors for small business insurance, while Oscar’s technology solutions will help small businesses and their employees manage healthcare benefits and gain access to providers. “These people [at Oscar] are on to something,” she noted. “They are doing something a little different. Maybe this is a situation where one plus one, together, might equal three.”
Future Growth Planned by Oscar
The New York Times called Nashville “a new step for Oscar,” and noted that it follows Oscar’s recent loss of $25.8 million during the first three months of 2017—47% less than Oscar lost during the same period in 2016. Since its inception, however, Oscar has raised $350 million in investment capital, much of it from Silicon Valley investors.
Also, Oscar’s small-business health insurance plans, which started in the spring in New York, might launch in New Jersey and California as well, an Oscar spokesperson stated in a Modern Healthcare article that also reported on Oscar’s intent to increase individual plans sold in the ACA Marketplace from three states to six in 2018.
Clinical Laboratories Benefit from Increased Consumer Access to Health Providers
Could Oscar succeed with its new Cleveland Clinic and Humana partners? Possibly. Both deals are pending regulatory approval as of this writing.
In any case, the whole idea of making insurance more palatable for consumers is something clinical laboratories, which are gateways to healthcare, should applaud and support. It is good to know that insurers like Oscar are using technology and personal outreach to ease consumers’ access to providers and help them explore options and costs.
—Donna Marie Pocius
Related Information:
Cleveland Clinic, Oscar Health to Offer Individual Health Insurance Plans in Northeast Ohio
Introducing Cleveland Clinic Oscar Health Plans
Oscar Health Partners with Cleveland Clinic on Obamacare Exchange
Oscar Health Partners with Cleveland Clinic
Oscar Health to Join Human in Small-Business Venture
Humana Oscar Health Pilot Small Business Insurance Partnership in Nashville
Oscar and Humana Team up to Sell Small-Business Plans
Insurance Start-Up Oscar Seeks to Shake Up Healthcare Through Its App
Gen Y Entrepreneurs Launch Oscar, A Consumer-Friendly Health Insurance Company in Bid to Disrupt Traditional Health Insurers
Mar 10, 2010 | Laboratory News, Laboratory Pathology
Appropriate use of clinical pathology laboratory tests to detect and treat cancer will be a scorecard factor
One primary goal of pay-for-performance programs is to reduce or eliminate the variability of care that physicians provide to their patients. Getting physicians to follow the recommended care protocols 100% of the time with 100% of their patients would contribute to improved outcomes, while reducing overall healthcare costs.
Pathologists and clinical laboratory professionals are well positioned to see this variability in care, since they regularly handle the laboratory test requests from client physicians. Over time, they can recognize the good and bad practice patterns of individual doctors, since it is reflected in both the lab test orders and the laboratory test results for that doctor’s patients.
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