Working with patients to identify and secure sources of insurance—such as COBRA—can help hospitals reduce bad debt and better comply with coming healthcare legislation.
Hospitals looking for creative options to assist patients during job transitions may want to consider paying healthcare insurance continuation premiums. Under COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985), workers can continue their employer-provided health insurance―assuming they were enrolled―for 18 to 36 months, as long as they pay the premiums. They must enroll in the program within 60 days of layoff, termination, or another qualifying event. The U.S. Department of Labor’s “Frequently Asked Questions: COBRA Continuation Health Coverage” includes additional information on eligibility and qualifying events.
“When a financial counselor is discussing payment options with a patient, the counselor may uncover the fact that the patient was recently unemployed,” says Christine Fontaine, CHFP, CPAM, vice president, revenue cycle solutions, OptumInsight. “This could launch a screening process in which the counselor determines if the patient is eligible for COBRA, has no other existing insurance, and is able to make the premium payments. COBRA premiums are very expensive, and some patients may not be able to afford to make them. Depending on the results of the screening and the reasons for the patient’s hospital visit, it may make sense for the hospital to pay the patient’s COBRA premium for a month or two.”
This strategy could be appropriate if the patient’s treatment involves high-cost drugs, such as chemotherapy drugs or infused antibiotics. Lengthy inpatient stays may also warrant this approach. “Hospitals need to weigh the cost of the treatment with the cost of paying the COBRA premium,” says Kristen Shoup, MBA, RHIA, manager, revenue cycle, Wooster Community Hospital, Wooster, Ohio. “A patient admission is going to have a much heftier price tag than a COBRA payment or two.”
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The Potential Benefits
There are several benefits to paying a patient’s COBRA premiums. “First, it ensures the patient has adequate insurance coverage for the services the hospital provides,” says HFMA’s Suzanne Lestina, FHFMA, CPC, director, revenue cycle MAP. “It also serves as a community service because patients receive complete coverage for all their health care, such as services provided by physicians or rehabilitation facilities―in addition to the hospital.”
Paying a COBRA premium can also enhance patient satisfaction and build loyalty. It can solve the patient’s short-term insurance needs, while supporting continuity of coverage for patients, which is helpful should they find new employment and want to go on a new employer’s health plan.
“Enrolling in COBRA can be confusing and intimidating, and some patients avoid it until there is an emergency,” says Shoup. “Hospitals that agree to not only pay the premium for a short term, but help the patient understand and navigate the enrollment process can engender patient goodwill while receiving reimbursement for services. Streamlining the COBRA process for patients can also possibly encourage them to make future payments on their own.”
A Formal Policy
Before committing to paying patients’ COBRA premiums, hospitals should develop a formal policy that addresses the topic. “Policies should be vetted by your legal department,” says Fontaine. “Although paying COBRA payments is legal and acceptable, organizations should define the process and make sure they follow the policy they have in place.”
Access related tool: Sample Policy for Paying Patients' COBRA Premiums
Keep in mind that paying a patient’s COBRA premium is a temporary solution because the coverage will only last as long as the premiums are paid. “If a patient re-enters the hospital six months after the initial visit and has not maintained the premium payments, there could be a lapse in coverage,” says Shoup. “Plus, when the 18 to 36 month timeframe elapses, the patient may be without insurance if he or she has not found employment.”
To address coverage issues over the long term, it may be beneficial for the hospital to seek additional options for the patient, such as state and federal insurance programs, including Medicaid.
Identifying potential sources of insurance, such as COBRA, is more than just a good idea; it is becoming necessary in the new healthcare environment. The Affordable Care Act requires hospitals to get involved in researching insurance options, says Lestina. “For example, the legislation requires hospitals to fully explore all possible third-party reimbursement vehicles and document this effort before starting the collections process.”
Determining whether patients are eligible to extend their healthcare coverage under COBRA is one option. It can help ensure that patients receive necessary care and that the hospital limits bad debt from unreimbursed care.
Kathleen B. Vega is a freelance healthcare writer and editor who contributes regularly to HFMA Forums (Kathleen@kbvega.com).
Interviewed for this article:
Christine Fontaine, CHFP, CPAM, is vice president, revenue cycle solutions, OptumInsight, Baltimore, and a member of HFMA’s Maryland Chapter (firstname.lastname@example.org).
Kristen Shoup, MBA, RHIA, is manager, revenue cycle for Wooster Community Hospital, Wooster, Ohio, and a member of HFMA’s Northeast Ohio Chapter (email@example.com).
Suzanne Lestina, FHFMA, CPC, is director, Revenue Cycle MAP, HFMA (slestina@HFMA.org).
- Forum members: Please add your questions or comments about this article—in the comment section below, or via the Revenue Cycle Forum LinkedIn discussion board.
• What is your organization’s policy on paying patients’ COBRA payments?
• What other ways is your organization partnering with patients to find financial assistance opportunities?