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
Jan 24, 2018 | Coding, Billing, and Collections, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Because many Americans are ‘concerned’ about how they would pay an unexpected medical bill, they now are seeking upfront information about treatment costs and financing options
Clinical laboratories and anatomic pathology groups that depend on reliable sources of patient and test referrals are being impacted by a reduction in patients seeking care due to rising costs. Evidence continues to mount that high deductible health plans (HDHPs) and the overall rising cost of healthcare are straining Americans’ finances. This is causing them to delay payments, question treatment costs, and investigate payment options.
These trends underscore the need for clinical laboratories and pathology groups to have point-of-service collection strategies in place or risk declining revenues.
Study Highlights Increasing Consumer Healthcare Costs
JPMorgan Chase Institute’s Healthcare Out-of-pocket Spending Panel (JPMCI HOSP) recently studied the healthcare cost burden on 2.3-million de-identified Chase checking account holders aged 18 to 64. In a report titled, “Paying Out-of-Pocket: The Healthcare Spending of 2 Million US Families,” Chase noted the following key indicators that predict continued decline in healthcare revenues as patients’ costs increase:
· “A clear correlation exists between timing of healthcare payments and an account-holder’s ability to pay, with the largest payments taking place in the years and months with increased liquid assets. This finding emphasizes the clear link between a family’s financial health and their access to healthcare services. The report found a clear spike in payments during the months of March and April, when nearly 80% of tax filers receive tax refunds.
· “There is significant variation of out-of-pocket expenses among and within states, emphasizing the important role of states in shaping healthcare policy. Colorado families spent the most out of pocket, while families in Louisiana spent the most as a percent of income. California was among the lowest in terms of both raw dollar amounts and payments as a share of income. As part of this report, the JPMorgan Chase Institute has created online data visualization assets to illustrate these disparities and is providing downloadable payment data with information broken down to metro and county levels.
· “Out-of-pocket payments grew each year since 2013, but have remained a stable share of income, also known as “burden.” However, women, low-income families and pre-seniors are bearing the highest cost burden. The finding merits further study to establish whether these higher payments represent broader healthcare utilization or a clear expense burden for populations that can afford it the least.
· “Families that are in the top 10% of healthcare spend in a given year tend to remain the highest spenders on a year-over-year basis, emphasizing the substantial cost of chronic conditions and long-term healthcare needs.
· “Doctor, dental, and hospital payments accounted for more than half of out-of-pocket payments. While doctor payments accounted for the greatest volume of expenditures, dental and hospital payments were much more significant in terms of expense.”
In a news release, Diana Farrell, President and CEO, JPMorgan Chase Institute points out that, “The reality is that many American families don’t have the cash buffer to withstand the volatility created by out-of-pocket healthcare payments, and we need to better understand the correlation between financial health and physical health.”
The JPMorgan Chase Institute report, released September 19, 2017, came on the heels of the Kaiser Family Foundation (KFF)/Health Research and Education Trust (HRET) 2017 Employer Health Benefits Survey. This annual benchmark survey indicates workers on average now contribute $5,714 annually toward their family premiums, which average $18,764, and that employees at firms with fewer than 200 workers contribute as much as $6,814 on average.
The findings of this survey will be useful for those clinical laboratories and anatomic pathology groups developing business and clinical strategies to serve the growing numbers of patients who are covered by high-deductible health plans. The KFF/HRET survey highlighted the impact growth of HDHPs is having on workers:
· 81% of covered workers were in plans with an annual deductible, up from 59% in 2007 and 72% in 2012;
· The average deductible amounts for workers with employer-based coverage also is increasing steadily, rising from $616 in 2007 to $1,505 in 2017.
A JPMorgan Chase Institute study of family healthcare spending (not including premium payments) shows out-of-pocket costs varied widely in the US in 2016, both across and within states. Average spending ranged from a low of $596/year (California) to a high of $916/year (Colorado) in the 23 states where there are Chase retail banking branches. (Photo copyright: JPMorgan Chase Institute/Business Insider.)
Jay Bhatt, DO, President of KFF/HRET, and Senior Vice President and Chief Medical Officer at the American Hospital Association, notes that while some cost increases appear to be slowing, policymakers should continue seeking ways to reduce the burden on healthcare consumers.
“This year’s findings continue a positive run of a slowing in premium increases and in the growth of healthcare costs overall,” Bhatt states in a KFF news release. “As policymakers and providers continue to work to improve healthcare, ensuring it remains affordable and accessible is critically important.”
Importance of Providing Pricing and Payment Options
These results help explain why 42% of respondents to HealthFirst Financial’s Patient Survey stated they are “very concerned” or “concerned” about whether they could pay out-of-pocket medical expenses during the next two years. For example:
· More than half (53%) of those surveyed were concerned about how to pay a medical bill of less than $1,000;
· 35% indicated they would find paying a bill less than $500 difficult; and,
· 16% were worried about paying a bill less than $250.
Such financial worries will likely impact revenues at clinical laboratories as well as medical doctor’s offices. They also explain why 77% of healthcare consumers who participated in the HealthFirst Financial survey responded that it’s “important” or “very important” to know their costs before treatment.
Additionally, 53% of those surveyed want to discuss financing options before receiving care. However, according to the survey, just 18% of providers discussed payment options.
The study also found 40% of millennials would likely switch to a different provider offering low- or zero-interest financing for medical bills.
“These findings highlight a huge gap in what patients want and what hospitals, medical groups, and other healthcare providers are delivering,” KaLynn Gates, JD, President and Corporate Counsel of HealthFirst Financial, said in a news release. “Providers that care for the financial as well as clinical needs of their communities are much more likely to thrive in this era of rising out-of-pocket costs and growing competition for patients among traditional and non-traditional providers.”
Clinical Laboratories and Anatomic Pathology Groups Are Particularly Challenged
In “Hospitals, Pathology Groups, Clinical Labs Struggling to Collect Payments from Patients with High-Deductible Health Plans,” Dark Daily reported that clinical laboratories and pathology groups face particular challenges because, as patients become responsible for more of their healthcare bills, many labs are not prepared for collecting full payments from patients on HDHPs. Nor are they prepared for reduction in test ordering, as patients opt to not follow through with prescribed tests and treatments to save money.
These recent reports are another strong indicator of how critical it is for medical laboratories and pathology groups to develop tools and workflow processes for collecting payments upfront from patients with HDHPs.
—Andrea Downing Peck
Related Information:
Out-of-Pocket Healthcare Costs Straining Americans’ Finances
Paying Out-of-Pocket: The Healthcare Spending of 2 Million US Families
Here’s How Much People Spend on Healthcare by State
2017 Employer Health Benefits Survey
Premiums for Employer-Sponsored Family Health Coverage Rise Slowly for Sixth Straight Year, up 3%, but Averaging $18,764 in 2017
HealthFirst Financial Patient Survey: It’s Never Too Soon to Communicate Pricing and Payment Options
From Millennials to Boomers, Patients Want to Discuss Healthcare Pricing and Payment Options before Treatment
Hospitals, Pathology Groups, Clinical Labs Struggle to Collect Payments from Patients with High-Deductible Health Plans
