The financial benefit to hospitals from the Affordable Care Act’s coverage expansion has been offset by the growth in patient deductibles, according to a recent hospital executive survey.

Nov. 28—Although saving for out-of-pocket expenses is common among those with high-deductible health plans (HDHPs), few talk to providers about costs and fewer compare prices or quality, according to new research.

A study in JAMA Internal Medicine of self-reported, cross-sectional data identified common characteristics among 1,637 HDHP enrollees. It found that most were employed (84 percent) and had employer-sponsored insurance (85 percent). Nearly half (42 percent) had a chronic condition, and the majority (58 percent) had an account, such as a health savings account, to pay for medical expenses. The authors defined HDHPs as plans with deductibles of at least $1,300 for individuals or $2,600 for families.

“One fundamental element that’s missing in many health systems is that at the point of care, providers often don’t know what a patient is going to be expected to pay out of pocket for a particular service,” said Jeffrey Kullgren, MD, a research scientist at the Center for Clinical Management Research in the VA Ann Arbor Healthcare System, and a study author. “Nor do they know that that patient has a high-deductible health plan.”

Among the HDHP enrollees, 40 percent saved for future healthcare services, but within the previous year, only 25 percent talked with a provider about the cost of a service, 14 percent compared prices, 14 percent compared quality, and 6 percent tried to negotiate a price for a service. The average amount of savings from price negotiating was not disclosed.

“There are indeed people who are out there and negotiating what they are going to pay for a service before they get it or after the fact,” Kullgren said.

Health systems know what each patient will owe out of pocket for any given service based on the patient’s insurance coverage, but that information frequently is not routed to clinicians at the point of service, Kullgren said in an interview. That informational disconnect can affect patients’ adherence to treatments that may not be affordable, potentially causing long-term costs to rise as untreated illnesses worsen. Such outcomes could carry negative financial implications for hospitals, which increasingly are accepting global risk for patient populations.

When clinicians know their patient is enrolled in a HDHP, that information can help them put together a treatment plan at a price the patient can afford, said Kullgren, who also is assistant professor of internal medicine at the University of Michigan Medical School.

“Increasingly, we need to be developing those linkages so that the right information can be with the right people at the right time,” Kullgren said.

As part of previous efforts, health systems have listed a benchmark price, such as the Medicare price, for a given service in patients’ electronic health records to help guide treatment discussions. But such programs have limited utility because they are not specific to an individual patient’s insurance coverage.

“The Medicare negotiated rate may bear little resemblance to what that patient is responsible for,” Kullgren said.

More Enrollees

The latest HDHP findings came shortly after news that the share of privately insured who are enrolled in HDHPs reached record highs in 2017, according to recent federal data.

In the first sixth months of 2017, 42.9 percent of the pre-Medicare population with private health insurance was enrolled in an HDHP, according to new data from the Centers for Disease Control and Prevention (CDC). The share increased from 39.4 percent in 2016 and from 25.3 percent in 2010.

“As more people are enrolling in these plans, we need to be better prepared to have clinicians and patients together be part of the solution for helping people better manage these often-difficult situations,” Kullgren said.

In September, a Moody’s Investors Service report warned for-profit hospitals about changing patient behaviors linked to HDHPs.

“Patients, who are now increasingly responsible for the cost of their care through higher co-pays and deductibles, are also seeking lower-cost care,” Moody’s analysts wrote. “This is resulting in a deferral of procedures and increased price sensitivity that is driving patients to have procedures performed outside of the hospital setting.”

Meanwhile, the Advisory Board’s annual revenue cycle survey, which was released in November, found that the financial benefit to hospitals from the Affordable Care Act’s (ACA’s) coverage expansion has been offset by the growth in patient deductibles. Specifically, unpaid patient obligations have increased across all states—regardless of whether states expanded Medicaid under the ACA—due to the spread of HDHPs, according to the survey, which included 90 hospital executives and spanned the second half of 2016 through the first half of 2017.

“This calls for an increased focus on patient collections, especially at the point of service [POS],” the Advisory Board authors wrote.

Benefits of Engagement

About half of HDHP enrollees who saved for healthcare services, compared quality, or discussed cost with a provider, according to Kullgren’s research, reported obtaining help with getting a needed service. About half who compared prices or tried to negotiate a lower price reported paying less for a service.

 “It’s one of those examples where it can’t hurt to ask,” Kullgren said. “We know that many people have experienced a lot of benefits from trying to negotiate a price. It’s clear that that is one of the strategies patients should consider when they are facing high deductibles.”

The Advisory Board’s survey found that organizations that collect a higher percentage at POS tend to offer patient discounts for full payment upfront, resulting in a 90 percent increase in POS collections compared to organizations that do not provide such discounts.

The average hospital balances for patients with HDHPs have been increasing, according to a Crowe Horwath analysis of balance sheets at 172 hospitals with more than 125 beds. And that’s bad news for efforts to collect on those balances. About 26 percent of patients with HDHPs paid their bills if their balances ranged from $1,451 to $5,000, compared with 10 percent when balances increased to between $5,001 and $7,500.

Among the steps Crowe advisers suggested for hospital finance leaders were:

  • Implementing a payer class structure that delineates HDHPs, including the separation of “true self-pay” from “self-pay after insurance”
  • Analyzing self-pay realization rates based on self-pay segmentation and dollar balance
  • Incorporating financial counseling in the POS collections program to assist patients in determining the appropriate course of action

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare 

Publication Date: Tuesday, November 28, 2017