Blame it on employers requiring higher deductibles of employees, often starting at $1,500 per year
Employers continue to increase the amount of deductibles and co-pays in their health benefit plans. This has a direct consequence for clinical laboratories and pathology groups, because it often creates the need to collect more money from patients at the time of service.
A recent survey showed that employers are changing health benefit plans to require workers to pay more money for both insurance coverage and medical care, a story in Modern Healthcare reported. Among such changes to employer-sponsored health plans are higher deductibles, higher premiums, greater employee liability for cost of care, and greater responsibility for health-impacting lifestyle choices.
For the fourth year, Modern Healthcare has conducted its Healthcare Purchasing Power Survey to inquire about large employer healthcare spending. Thirty-five companies participated in the survey, which required a minimum in U.S. annual revenue of $1 billion.
Bad debt from patients is a growing financial headache for hospitals, physicians, and clinical laboratories. That’s because a growing number of employers are raising the deductibles, co-pays, and out-of-pocket fees they require employees to pay as part of their health benefits package. (Photo from MedicalBillingResources.com.)
Large Employers Seek New Health Insurance Models to Slow Spending Growth
Large employers are now experimenting with health plans that combine high deductibles and significant exemptions from out-of-pocket costs for chronic disease management, noted Paul Fronstin, Director of Health Research and Education Programs, Employee Benefit Research Institute, in the Modern Healthcare piece.
For example, in its effort to slow spending associated with health benefits in recent years, GE moved its 85,000 salaried workers and their dependents into three high-deductible options. Then, in January, 2012, nearly all of the company’s 40,000 hourly and union workers and their 60,000 dependents also switched to the high-deductible options. In 2010, GE reported spending $1.7 billion per year for health benefits.
“The company previously made incremental changes to plans,” Ginny Proestakes, Director of Health Benefits at GE, told Modern Healthcare. “But health expenses continued to grow at a rate of two or three times that of inflation,” she noted. “We think we need a new model.”
It is the same at Englewood, Colorado-based Catholic Health Initiatives (CHI). CHI operates 73 hospitals in 19 states. The health system moved from a fixed copayment plan to one that requires employees to pay a percentage of their medical bills.
Similarly, Tyco International, an electronic security and fire safety company, upped employees’ share of health insurance premiums to 30%. This was an increase from the previous 20% to 25% share of premiums that its employees had paid.
In another interesting innovation, GE recently launched a mobile application which it developed with Thomson Reuters. The program allows workers to search for doctors and outpatient surgery centers by cost and quality.
Although not representative of the nation as a whole, the results of this health benefits survey offer a glimpse into health spending trends and changes to health benefits. It confirms what other surveys have found.
For instance, in its 2011 Employer Health Benefits Survey, the Kaiser Family Foundation reported that an estimated 12% of workers insured by an employer in 2011 had deductibles of at least $2,000. This was up from 7% in 2009.
High deductible plans among large insurers increased by 5% in 2011. This compared with a 3% increase in 2009 and a 1% increase in 2007, the Kaiser survey found.
The growth in high-deductible plans is even faster among small employers. Kaiser determined that such plans now cover around 28% of insured workers at these companies. That rate is up from 20% just two years earlier.
Increased Deductibles Contributes to Debt Collection Problems
Healthcare Finance News published an article that identified other consumer trends that make it tougher for hospitals, physicians, and clinical laboratories to collect money from patients. Healthcare Finance News reported that the escalating cost of health insurance for workers, when combined with the high unemployment rate, a record number of home foreclosures, and individual bankruptcies—are all reasons why healthcare providers are challenged to collect the revenues owed to them by patients.
“It’s obviously a big problem and it is getting worse,” warned Andrew Grobmyer, Managing Director for the Huron Consulting Group in Lake Oswego, Oregon. “It is creating an additional strain within the provider community, more so than in the past.”
“Patients have assumed responsibility for a greater portion of their healthcare debt, and there are some people who just can’t pay,” Grobmyer observed.
“Because health plans are shifting more financial responsibility onto the beneficiary, co-pay and deductible amounts have risen dramatically and collecting them has become much more consequential, said Tom Stampiglia, CEO of Medical Present Value, based in Austin, Texas. “Self-pay patients are presenting themselves in greater numbers. Patient responsibility for payments could rise to as high as 30% of a [medical] practice’s revenue in the near future.”
To get ahead of this potential source of increased bad debt, clinical laboratory managers and pathologists will want to put systems in place to maximize revenue collection from patients, particularly at the time of service. Already, progressive lab organizations are giving patient service centers the capabilities needed to accept cash or credit card payments from patients as they show up to have their specimens collected.
—Pamela Scherer McLeod
Related Information:
Healthcare Purchasing Power Survey
Kaiser Family Foundation 2011 Employer Health Benefits Survey
