Consumer Reaction to High-Deductible Health Plans and Rising Out-of-Pocket Costs Continues to Impact Physicians and Clinical Laboratories

Because many Americans are ‘concerned’ about how they would pay an unexpected medical bill, they now are seeking upfront information about treatment costs and financing options

Clinical laboratories and anatomic pathology groups that depend on reliable sources of patient and test referrals are being impacted by a reduction in patients seeking care due to rising costs. Evidence continues to mount that high deductible health plans (HDHPs) and the overall rising cost of healthcare are straining Americans’ finances. This is causing them to delay payments, question treatment costs, and investigate payment options.

These trends underscore the need for clinical laboratories and pathology groups to have point-of-service collection strategies in place or risk declining revenues.

Study Highlights Increasing Consumer Healthcare Costs

JPMorgan Chase Institute’s Healthcare Out-of-pocket Spending Panel (JPMCI HOSP) recently studied the healthcare cost burden on 2.3-million de-identified Chase checking account holders aged 18 to 64. In a report titled, “Paying Out-of-Pocket: The Healthcare Spending of 2 Million US Families,” Chase noted the following key indicators that predict continued decline in healthcare revenues as patients’ costs increase:

·       “A clear correlation exists between timing of healthcare payments and an account-holder’s ability to pay, with the largest payments taking place in the years and months with increased liquid assets. This finding emphasizes the clear link between a family’s financial health and their access to healthcare services. The report found a clear spike in payments during the months of March and April, when nearly 80% of tax filers receive tax refunds.

·       “There is significant variation of out-of-pocket expenses among and within states, emphasizing the important role of states in shaping healthcare policy. Colorado families spent the most out of pocket, while families in Louisiana spent the most as a percent of income. California was among the lowest in terms of both raw dollar amounts and payments as a share of income. As part of this report, the JPMorgan Chase Institute has created online data visualization assets to illustrate these disparities and is providing downloadable payment data with information broken down to metro and county levels.

·       “Out-of-pocket payments grew each year since 2013, but have remained a stable share of income, also known as “burden.” However, women, low-income families and pre-seniors are bearing the highest cost burden. The finding merits further study to establish whether these higher payments represent broader healthcare utilization or a clear expense burden for populations that can afford it the least.

·       “Families that are in the top 10% of healthcare spend in a given year tend to remain the highest spenders on a year-over-year basis, emphasizing the substantial cost of chronic conditions and long-term healthcare needs.

·       “Doctor, dental, and hospital payments accounted for more than half of out-of-pocket payments. While doctor payments accounted for the greatest volume of expenditures, dental and hospital payments were much more significant in terms of expense.”

In a news release, Diana Farrell, President and CEO, JPMorgan Chase Institute points out that, “The reality is that many American families don’t have the cash buffer to withstand the volatility created by out-of-pocket healthcare payments, and we need to better understand the correlation between financial health and physical health.”

The JPMorgan Chase Institute report, released September 19, 2017, came on the heels of the Kaiser Family Foundation (KFF)/Health Research and Education Trust (HRET) 2017 Employer Health Benefits Survey. This annual benchmark survey indicates workers on average now contribute $5,714 annually toward their family premiums, which average $18,764, and that employees at firms with fewer than 200 workers contribute as much as $6,814 on average.

The findings of this survey will be useful for those clinical laboratories and anatomic pathology groups developing business and clinical strategies to serve the growing numbers of patients who are covered by high-deductible health plans. The KFF/HRET survey highlighted the impact growth of HDHPs is having on workers:

·       81% of covered workers were in plans with an annual deductible, up from 59% in 2007 and 72% in 2012;

·       The average deductible amounts for workers with employer-based coverage also is increasing steadily, rising from $616 in 2007 to $1,505 in 2017.

Jay Bhatt, DO, President of KFF/HRET, and Senior Vice President and Chief Medical Officer at the American Hospital Association, notes that while some cost increases appear to be slowing, policymakers should continue seeking ways to reduce the burden on healthcare consumers.

“This year’s findings continue a positive run of a slowing in premium increases and in the growth of healthcare costs overall,” Bhatt states in a KFF news release. “As policymakers and providers continue to work to improve healthcare, ensuring it remains affordable and accessible is critically important.”

Importance of Providing Pricing and Payment Options

These results help explain why 42% of respondents to HealthFirst Financial’s Patient Survey stated they are “very concerned” or “concerned” about whether they could pay out-of-pocket medical expenses during the next two years. For example:

·       More than half (53%) of those surveyed were concerned about how to pay a medical bill of less than $1,000;

·       35% indicated they would find paying a bill less than $500 difficult; and,

·       16% were worried about paying a bill less than $250.

Such financial worries will likely impact revenues at clinical laboratories as well as medical doctor’s offices. They also explain why 77% of healthcare consumers who participated in the HealthFirst Financial survey responded that it’s “important” or “very important” to know their costs before treatment.

Additionally, 53% of those surveyed want to discuss financing options before receiving care. However, according to the survey, just 18% of providers discussed payment options.

The study also found 40% of millennials would likely switch to a different provider offering low- or zero-interest financing for medical bills.

“These findings highlight a huge gap in what patients want and what hospitals, medical groups, and other healthcare providers are delivering,” KaLynn Gates, JD, President and Corporate Counsel of HealthFirst Financial, said in a news release. “Providers that care for the financial as well as clinical needs of their communities are much more likely to thrive in this era of rising out-of-pocket costs and growing competition for patients among traditional and non-traditional providers.”

Clinical Laboratories and Anatomic Pathology Groups Are Particularly Challenged

In “Hospitals, Pathology Groups, Clinical Labs Struggling to Collect Payments from Patients with High-Deductible Health Plans,” Dark Daily reported that clinical laboratories and pathology groups face particular challenges because, as patients become responsible for more of their healthcare bills, many labs are not prepared for collecting full payments from patients on HDHPs. Nor are they prepared for reduction in test ordering, as patients opt to not follow through with prescribed tests and treatments to save money.

These recent reports are another strong indicator of how critical it is for medical laboratories and pathology groups to develop tools and workflow processes for collecting payments upfront from patients with HDHPs.

—Andrea Downing Peck

Related Information:

Out-of-Pocket Healthcare Costs Straining Americans’ Finances

Paying Out-of-Pocket: The Healthcare Spending of 2 Million US Families

Here’s How Much People Spend on Healthcare by State

2017 Employer Health Benefits Survey

Premiums for Employer-Sponsored Family Health Coverage Rise Slowly for Sixth Straight Year, up 3%, but Averaging $18,764 in 2017

HealthFirst Financial Patient Survey: It’s Never Too Soon to Communicate Pricing and Payment Options

From Millennials to Boomers, Patients Want to Discuss Healthcare Pricing and Payment Options before Treatment

Hospitals, Pathology Groups, Clinical Labs Struggle to Collect Payments from Patients with High-Deductible Health Plans