General Business Issues

Providers Ask Health Plans to Respond to High-Deductible Debt Problem

Reprinted from the March 5, 2007, issue of HEALTH PLAN WEEK (formerly Managed Care Week), the industry's leading source of business, financial and regulatory news of health plans, PPOs, and POS plans.

Providers are adopting new business practices to address the special collection challenges caused by high-deductible health plans (HDHPs). But they also urge MCOs to clearly identify these types of plans and get more involved in the collection of members' out-of-pocket costs.

The inability to identify patients covered by HDHPs and the difficulty of identifying whether the patient has a health savings account (HSA) is leaving hospitals vulnerable to bad debt. The solution to that, hospitals say, is more provider-plan coordination.

For example, hospitals could better manage patient accounts if member cards and verification of benefits notices identified plans as high-deductible, says Beth Petlak, vice president for managed care at Arkansas Children's Hospital.

Beyond that, hospitals contend, with many HDHPs it's hard for providers to learn just how much the patient is liable for. "There is not enough technology and information for a provider to get a full knowledge and understanding at the right time to talk to the patient about their obligation. I don't know that you have a $3,000 deductible until maybe I have already delivered care. There are all kinds of obstacles in the way," says Suzanne Lestina, technical manager for revenue cycle at the Healthcare Financial Management Association (HFMA).

Should Plans Collect Members' Share?

Lestina suggests that payers could actually take on the task of collecting the out-of-pocket expense from the member, saying payers need to take more responsibility for what she calls the "hidden cost shift" from plan to patient that occurs in HDHPs compared with traditional coverage.

Bill Thomas, former executive vice president of PerfectHealth Insurance Co., a company specializing in high-deductible insurance, counters: "It is absolutely not the role of the insurer to collect from the patient." Payers do not have a direct relationship with the patient; their contract is with the employer, he says, adding that "this cost sharing by the employee is inevitable." Thomas is now president of Internet Coupon Exchange, a consumer-directed health company specializing in drug discounts.

A more attainable goal, providers say, might be for managed care companies to allow for direct transfers of funds from HSAs to providers. "The managed care industry could help with provider collections [in claims involving HDHP plans with HSAs] by automatically routing claims to the HSA payer once the claims are processed by the insurance company. And payment should be directed to the provider instead of the [member]," Petlak says.

Providers would be best off if the HSA had a credit component, but employers are not interested in providing this feature to employees, Jeff Munn, a health management consultant for Hewitt Associates in Falls Church, Va., said in a December 2006 roundtable sponsored by HFMA.

HDHPs Are Now on Hospitals' Radar Screens

Hospital executives and health care finance experts say there's a firm linkage between HDHPs and increases in bad debt. But Thomas says this is not an actual problem, but a potential future problem. Only 3% of Americans have an HDHP, and they predominantly have well-paying jobs and are capable of covering their medical expenses, he says.

Thomas adds that the real problem is that annual deductibles for traditional, first-dollar coverage have increased to the $1,000 range. Another issue is that providers have no way of getting real-time fee information from payer data systems, Thomas says.

Catholic Health Initiatives (CHI) spends the same amount on charity and free care ($800 million) as it does on capital expenditures, CHI President and CEO Kevin Lofton noted in a panel discussion at the UBS Global Healthcare Services conference in New York last month. Lofton, who is also chairman of the American Hospital Association, and other not-for-profit hospital executives, attributed recent growth in free care to HDHPs operating in coordination with HSAs. Lofton said amounts saved in an HSA look substantial to beneficiaries, but by themselves don't come close to covering the coinsurance portion of most hospital stays.

"We believe a significant portion of the increase [in bad debt] is due to high-deductible plans," CHI Vice President for Finance Linda McDonald agreed in an interview with MCW.

Although HDHPs have not caught on enough to really impact collectibles, and the bigger problem for hospitals is uninsured patients, some in the hospital industry predict HDHPs to grow to cover as many as 20% or 30% of patient lives by 2010.

Some hospitals are asking for contract contingencies to protect them from rising debt related to HDHPs.

"It's brought up all the time," Thomas says. "The people who did the contracting [at PerfectHealth] told us that in almost all negotiations, the hospitals are raising their fear.that they're not going to get paid." This has been part of the hospital's national agenda since HSAs have been put into law, he says.

In the time he was there, PerfectHealth never agreed either to guarantee payment of patient cost sharing or to pay higher fees to make up for uncollectibles allegedly linked to HDHPs. Payment guarantees do not work because the health plan often has not received physician claims for pre-operative work at the time of admission, so the health plan has no way of knowing how much of the patient's deductible remains, Thomas says.

Calls for extra reimbursement are unreasonable because most HDHPs already are paying the highest tier of reimbursement for their PPO networks, he continues. Finally, Thomas contends that hospitals "have no data that they're getting stiffed by HSAs."

And in order to present to health plans evidence of HDHP harm, hospitals should begin tracking losses that stemmed from these types of plans, says Cynthia Fry, vice president of revenue for Catholic Health East, headquartered in Newtown Square, Pa. "We have to determine how to identify and record them: whether to create new insurance plan codes or track them by some other means," she said at the HFMA roundtable.

Advertise With AIS

Privacy

Site Map