With their $40 monthly premiums and $4,500 deductibles, high-deductible plans are sweeping the nation. Just 10 years ago, only 10% of Americans who got health insurance through their employers had a high-deductible plan, according to the Kaiser Family Foundation's 2014 Employer Health Benefits Survey (the IRS considers a plan to be high deductible if it has a minimum annual deductible of $1,300 for self-coverage and $2,600 for family coverage). Today, 1 in 5 U.S. residents are covered by high-deductible plans, and that number is expected to rise. This makes your job of ensuring good cash flow at your facility that much more challenging. From having conversations with patients on their out-of-pocket responsibilities well before the day of surgery to making a business office staff member responsible for day-of-surgery collections, there's much you can do to prevent high-deductible plans from taking too big a bite out of your case volume and revenue.
Putting off surgery
High-deductible plans took off about 10 to 15 years ago, after employers looked to tighten their belts and push rising premium costs onto employees, says Gail Wilensky, PhD, senior fellow at Project HOPE and former director of Medicare and Medicaid.
While $1,000 deductibles were once considered high, that's the norm now as patients pay $1,500, $2,500 or even more than $6,000 before their insurance kicks in. Add in co-pays and uncovered services, and patients are paying more now than ever before for their health care.
"People are taking these plans because of the lower premium," says Dr. Wilensky. "Whether they think it's as good of an idea when they face a large healthcare cost is another thing."
An unintended consequence of these plans is that patients are thinking twice before undergoing elective surgery, to avoid paying their sizable deductibles. Critics point to low-income patients forced to skip necessary medical care, and facilities facing higher debt and dwindling volumes, as major problems with the plans.
"People get in over their head," says Corrie Massey, MBA, administrator of the Foothill Surgery Center at Sansum Clinic in Santa Barbara, Calif. "They think they're saving money on the back end, but it comes back to bite them."
- Hurting it a lot 40%
- Hurting it somewhat 45%
- No change either way 14%
- Helping it somewhat 1%
- Helping it a lot 0%
SOURCE: Outpatient Surgery Magazine, April 2015, n=148
An old idea becomes popular
Many argue the Great Recession expedited the process, as more opted for plans with lower premiums and higher deductibles.
"With the recession, more employers were unable to afford to absorb the high premiums, and instead shifted them to the employees," says Blayne Rush, MHP, MBA, president of Ambulatory Alliances, a healthcare investment banking and M&A brokerage firm that also advises physicians and ASCs. "As employees became more responsible, they chose the higher deductibles over higher premiums."
The Affordable Care Act also played a part, says Mr. Rush. The exchange's bronze and silver plans — featuring lower premiums and higher out-of-pocket expenses — are currently the most popular choices. Bronze deductibles tend to average around $5,000, according to health insurance comparison website healthpocket.com, and typically only cover 60% of the costs for care.
The idea driving these plans, though, actually falls in line with old-fashioned notions about insurance, says Dr. Wilensky. "The rise of high deductible plans is keeping in line with what we traditionally thought of as insurance," she says. "It's a way to cover non-routine expenditures. That's why we use insurance for fires and floods and other events with a high economic burden that have a low probability of happening."
These "consumer driven" plans also help reduce wasteful healthcare spending and increase transparency as patients shop around for quality, reasonably priced care, says Dr. Wilensky.
Feeling the squeeze
However, because of these plans, you may be seeing holes in your surgical schedule. More than 4 out of 5 (85%) of the 148 outpatient surgery administrators we recently surveyed say high-deductible plans are hurting their case volume. A 2014 Moody's analysis shows a slowdown in hospital revenue and volume, which the investment company attributes in part to higher out-of-pocket costs. While you can also attribute the decline to a shift to outpatient facilities, researchers have found for the first time ever that outpatient visits are declining, too.
For many patients, the price of health care is too high. A recent survey by the Commonwealth Fund found that 40% of respondents admitted to skipping the doctor because they were worried about costs. While high-deductible plans can help cut wasteful spending, says Dr. Wilensky, there is concern that patients skipping necessary care could actually result in "more expensive and complicated health issues later on."
Kym Wise, CASC, administrator at The Skin Center in Pittsburgh, Pa., says patients are avoiding treatments because of cost. "Although varicose vein treatments are medically necessary and covered by most insurance plans, patients have been postponing procedures," she says.
For patients who do undergo surgery, paying thousands in medical bills is a big problem. Different studies have found that patients are anywhere from 50% to 70% less likely to pay remaining medical bills once the service is rendered, and Ms. Massey notes that 60% of bankruptcy cases are due to medical costs. "Once the procedure is done, and if they haven't paid, you're starting a fight," says Mike Lipomi, MSHA, president and CEO of Surgical Management Professionals in Sioux Falls, S.D.
Talking to patients about expenses
High-deductible plans "are the reality and aren't going away," says Mr. Lipomi, so it's best to implement some commonsense practices to attract cost-conscious patients to your facility. One idea is to cater to patients' desire for price transparency, says Mr. Rush. Consider posting average costs for procedures on your website, first making sure they're reasonable and competitive in your market (hint: try healthcarebluebook.com to see averages in your area).
Communicating with patients about estimated out-of-pocket costs early in the process is also important, says Ms. Massey. She suggests your staff do this shortly after scheduling the case, and that they set aside 20 to 30 minutes to thoroughly explain and answer any questions.
Getting the insurance information you need for these talks can take some work, says Mr. Lipomi. Patients coming to you likely visited a doctor recently, possibly affecting their deductible. "Sometimes you don't know if the deductible has been applied or not, so try to get as much detailed information as possible," he says. "Sometimes the patients can provide you with that information."
Training staff to talk finances with patients is also crucial. Give your front desk staff a basic script to talk to patients about what they owe, says Mr. Lipomi. Employees should also have scripts for different scenarios, including one for patients who want a payment plan and another for those who say they can't pay. Those speaking with patients on finances should be knowledgeable, yet offer a personal touch. "We sought out someone friendly and outgoing," says Ms. Massey. "You're looking for a patient advocate who also can deal with finances."
If during this conversation you feel like the patient might cancel for financial reasons, Ms. Massey suggests letting the patient make a discounted deposit on the day-of-surgery with the rest put on a structured payment plan. For someone who can't pay the full amount on the day of surgery, Ms. Massey says she asks patients to deposit half of the full amount. If that's still too high, she then asks for a deposit to cover the basic cost of supplies and labor. "That way we know we're not losing money," she says.
The importance of payment plans
For those patients who can't pay up front, payment plans are essential. If the plan is handled by your facility, consider getting the patient's credit card on file and establishing monthly debits, says Mr. Rush. Write down the terms of the payment plan and ensure patients have a full understanding of their responsibilities. "For a lot of patients, this is new to them," he says.
At Mr. Lipomi's centers, patients can choose a 1-year-or-less monthly payment plan that requires a signed promissory note. "We just try to make it as easy as possible for the patient," he says. "We can't change the deductible, but we can make the experience as painless as possible."
But you don't have to function as a bank if you don't want to. Third-party companies that offer medical credit cards and loans pay you up front and in full while patients make monthly payments to the outside creditors. However, some have terms that can be complicated, says Ms. Massey, so read the fine print before offering them to patients.
Having options is the best way to stay successful in the world of high-deductible plans while providing good, quality care to patients who need it, says Ms. Massey.
"It's ultimately about patient care," she says. "You want people to have the surgery they need, so there's usually a way you can work it out."
PAID IN FULL
It's not a good idea to let patients leave your facility still owing out-of-pocket costs for their surgical care. Once patients walk out the door, studies show they're 50% to 70% less likely to pay their remaining bills. Here are 10 collection tips.
- Wait out their deductible. Since most health insurance plans work on a calendar year, a patient scheduled for surgery in January with a deductible of $5,000 may cancel because she can't afford the cost, says Kym Wise, CASC, administrator at The Skin Center in Pittsburgh, Pa. She suggests keeping in contact with these patients by creating a tickler file with their names, contact information and needed procedure. Around the end of August, when their deductible may have been met, reach out and get them back on track for their surgery.
- Help patients find better plans. Help patients with no or poor health insurance find better coverage, says Corrie Massey, MBA, administrator of Foothill Surgery Center at Sansum Clinic in Santa Barbara, Calif. Foothill often refers patients with no insurance — or insurance that requires sky-high out-of-pocket costs — to a trusted broker.
- Pay attention to insurance contracts. If you're an in-network provider, your insurance contract might prohibit you from charging patients on the day of surgery. For these patients, inform them verbally and in writing of the estimated amount that they'll owe after the procedure, and have them sign a document acknowledging that they take responsibility for the cost, says Martha Colen, RN, MBA, CASC, administrator of Virginia Beach (Va.) Ambulatory Surgery Center.
- Designate staff for specific financial roles. At Ms. Colen's center, an employee is in charge of dealing with patients' insurance to determine out-of-pocket costs, and another is responsible for collecting those costs on the day of surgery. Having assigned roles keeps things organized and running smoothly, she says.
- Sweat the small stuff. Don't just assume it will be too expensive or time consuming to collect smaller bills. Instead, take a look at possible costs of chasing the payment — like sending it to collections — versus what you gain if it's collected, says Gail Wilensky, PhD, senior fellow at Project HOPE and former director of Medicare and Medicaid. She says facilities often leave money on the table by presuming it won't be worth it to chase.
- Be aware of your timing. If your facility tends to send out claims to insurers quickly, there's a good chance that yours will be processed before those from other providers your patient may have visited around the time of surgery, says Ms. Colen. That means patients are more likely to owe you their deductible. If this is the case, be aggressive about collecting most or all of the deductible on the day of surgery. Naturally, you'd like to collect everything from patients, but you don't want to lose a case because you were overly aggressive, says Ms. Massey. "In some cases, we'll collect as little as half of the estimated amount on or before their day of surgery and establish a payment plan for the remainder," she says.
- Check on payment schedules frequently. Follow up on patients' payments a few days after they're due, says Ms. Massey. For example, if all payments are due on the 20th, make sure you're reviewing all payment plan accounts on the 25th to check if any are delinquent.
- Give plenty of notice. Don't just send a bill every 30 days, says Ms. Massey. Instead, try to send payment reminders a few weeks in advance to keep patients on track.
- Establish policies and follow them. Since collection attempts are highly regulated, Ms. Massey urges you to check that policies comply with local laws. Also make sure to document all financial interactions and phone calls with patients, she says, to protect both your facility and your patient.
- Collect co-pays as soon as possible. Co-pays, the fixed payment patients pay, should never go to collections, says Ms. Colen. Consider requiring that patients pay co-pays on the day of surgery. If a patient arrives without it, don't cancel the case. Instead, send out a bill the next day for the co-pay amount and consider calling the patient a few days after surgery with a gentle reminder. "The more personal the touch is, the more the patient is going to feel responsible," says Ms. Colen.