Oct 23, 2017 | Laboratory News, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement
Push to expand the reach of health savings plans should help consumers pay for out-of-pocket medical laboratory services and other healthcare expenses
High-deductible health plans (HDHPs) continue to impact hospitals, clinical laboratories, and anatomic pathology groups due to the strain they put on healthcare consumers who struggle to pay their medical bills. Even worse, studies show patients are skipping doctor visits and scheduled medical laboratory tests to avoid paying the full costs of the visits. That’s why the market for Health Savings Accounts (HSAs) has grown in popularity. HSAs enable patients to take control of their healthcare and plan for the inevitable bills.
And grown it has! As of June 30, there were more than 21 million HSAs in the United States, with holdings of about $43 billion in assets. That’s according to a survey by Devenir, a healthcare account investment advisory and research firm. By the end of 2019, Devenir projects the HSA market will exceed $60 billion in assets held in nearly 30 million accounts.
This steep growth curve in HSA accounts is good news for medical laboratories and pathology groups because it indicates consumers are taking advantage of these tax-advantaged savings accounts to set aside funds needed to pay their high-deductible health bills.
HSAs Help Both Patients and Provider, including Medical Laboratories
According to the survey Devenir conducted in July 2017, which primarily reflected data from the largest 100 HSA providers, the typical HSA investment account holder has a $15,146 average total balance in deposits and investments.
“We continue to see impressive HSA growth, especially amongst those HSA assets held in investments as consumers begin to understand how HSAs can help them save for both their current and future healthcare expenses,” noted Jon Robb, Devenir Senior Vice President of Research and Technology, in a statement.
HSAs were authorized by the Medicare Prescription Drug Improvement and Modernization Act of 2003 and entered the market in January 2004. Ever since the major provisions of the Affordable Care Act (ACA) came into play in 2014, HSA accounts have grown significantly in size and popularity, as have HDHPs. From 2015 to 2016, HSA accounts recorded a 22% increase in assets year over year, Devenir reported.
HSAs Could Double Under American Health Care Act
Under current law, HSA accounts must be paired with an HDHP. For 2017, the IRS has defined “high deductible” as any deductible higher than $1,300 for an individual or $2,600 for a family, so a health insurance plan must meet that threshold for a consumer to qualify for an HSA. In addition, annual contributions are capped at $3,400 individuals or $6,750 for families. Those over 55 can contribute an extra $1,000.
Devenir’s study, which drew on data from the period ending June 30, 2017, illustrates the steep growth in HSAs since 2006, and projects the growth to continue well into the decade. (Image copyright: Devenir.)
But a boom in HSA accounts may be on the horizon if Republicans succeed in replacing Obamacare. Provisions of the GOP-backed American Health Care Act (AHCA), which stalled this summer after passing by a narrow vote in the House of Representatives, would nearly double HSA contribution limits and introduce other changes that would spur growth.
“Whatever direction healthcare reform goes, it is clear that the HSA will be a key component of consumers’ financial decisions in healthcare,” wrote Steve Christenson, Executive Vice President at Ascensus, in 401K Specialist. “After all, HSAs and HDHPs were market-driven prior to the enactment of the ACA and continued to be with its passage. The economy will continue to drive this trend as employers seek to attract and retain employees in this tight job market.”
HSA contributions can be invested and grow tax free as long as withdrawals are used for qualified medical expenses. Because accounts move with healthcare consumers if they change jobs or insurers, HSAs are viewed as excellent investment options.
“HSAs offer tax breaks no other retirement vehicle can match,” stated Begonya Klumb, CEO of UMB Financial Corporation Healthcare Services, in a CNBC interview.
HSAs Great Opportunity for Elderly to Control Their Healthcare
Even if Republicans fail to revamp healthcare, HSA industry leaders are expected to continue to look for ways to expand into additional markets. According to a Kaiser Health News article, companies that manage HSA accounts are “eager to reach new markets, including baby boomers in Medicare and enrollees in the military’s Tricare system, for whom—under current law—HSAs are off-limits.”
Eric Remjeske, President and co-founder of Devenir, believes those over 65 would seize upon an opportunity to use an HSA account to help offset Medicare’s cost sharing expenses.
“That is a great population that has the potential to save and really take more control over their healthcare,” Remjeske told Kaiser Health News.
Industry officials are confident HSAs will continue their upward trajectory, attracting new customers and additional healthcare dollars.
“The political and economic winds are favorable and most definitely pushing HSAs,” Kevin Robertson, Senior Vice President and Chief Revenue Officer for HSA Bank, the industry’s third-largest company, told Kaiser Health News.
What’s good for the HSA industry also may prove to be good for medical laboratories. If more healthcare consumers turn to HSAs to pay their out-of-pocket medical costs, including clinical laboratory services, the fear that increased enrollment in high-deductible plans will cause a reduction in the utilization of clinical lab tests may prove to be unfounded.
—Andrea Downing Peck
Related Information:
Health Savings Account Assets Reach 42.7 Billion in June
2016 Year-End Devenir HSA Research Report
What Health Care Confusion Means for HSA’s Future
Health Savings Accounts Are the Big Winner as Republicans Hash Out an Obamacare Replacement
Companies Behind Health Savings Plans Could Bank on Big Profits Under GOP Plan
Hospitals, Pathology Groups, Clinical Labs Struggling to Collect Payments from Patients with High-Deductible Health Plans
Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service
Because of Expanded Numbers of Patients with High-deductible Health Plans, Patients Are Now Responsible for 30% of Hospital Revenues
Health Savings Accounts Change Collection Model for Doctors, Soon Pathologists
Sep 22, 2017 | Coding, Billing, and Collections, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement
Medical laboratories and pathology groups should expect point-of-service collection strategies to become increasingly important to their overall success
Not only is patient bad debt a growing problem for the nation’s hospitals, but it is now getting national attention within the hospital industry. This is bad news for clinical laboratories and anatomic pathology groups, because the same trends causing increased patient bad debt at hospitals are doing the same thing within the lab industry.
Much of the blame can be attributed to the increase number of patients with high-deductible health plans (HDHPs). The latest statistics reveal that patients’ out-of-pocket payments now make up 30% of hospital revenues. That is why hospitals desperately need strategies for successfully collecting payments from patients. And they’re not alone.
Kaiser Family Foundation (KFF) reported that more than half of all workers have deductibles and out-of-pocket liability of greater than $1,000. That is the reason why clinical laboratories and anatomic pathology groups also need a formula for collecting the total bill from their patients.
Jase DuRard, Chief Revenue Officer for revenue-cycle technology company AccuReg, told Modern Healthcare the increase in patient self-pay represents a seismic shift from roughly five years ago. At that time, patients paid only 10% of their hospital bills out-of-pocket and insurers paid about 90% of hospital claims.
Patient Responsibility to Blame for Revenue Loss at Nation’s Hospitals
A November 2016 study of 660 hospitals conducted by Crowe Horwath—an international public accounting, consulting, and technology firm—stated that “patient responsibility” was to blame for an overall managed care net revenue decline of 2.5% for outpatient care and 1.4% for inpatient care. Self-pay-after-insurance (SPAI) collection rates have improved slightly during the past 12 months—with the inpatient median rising 0.2% and outpatient median increasing 0.7%.
However, according to the Horwath report, “While seemingly a good sign for providers in the face of rising patient copays and deductibles, slight increases in patient collection rates are not enough to counter the larger increase in self-pay-after-insurance patient responsibilities.”
High-deductible health plans (HDHPs) are becoming the coverage of choice for healthcare consumers struggling to pay medical bills in full. The net effect is that revenues are declining at hospitals, clinical laboratories, and pathology groups, as well as other providers. (Graphic copyright: Consumer Reports.)
In a Modern Healthcare article, Crowe Horwath’s Managing Partner of Healthcare Services, Brian Sanderson, noted, “It’s imperative that healthcare organizations establish effective point-of-service collection programs by training and educating front-line staff.”
Complicating matters is that many patients faced with self-pay are unable to pay their medical bills at time of service.
“Higher deductibles and the increase in patient responsibility are causing a decrease in patient payments to providers for patient care services rendered,” John Yount, TransUnion Vice President for Healthcare Products, told RevCycle Intelligence. “While uncompensated care has declined, it appears to be primarily due to the increased number of individuals with Medicaid and commercial insurance coverage.”
Hospitals Offer Patients Financial Options for Paying Bills
Some hospitals are responding to this trend by rolling out programs that offer patients financing options for their out-of-pocket costs. A recent article in Modern Healthcare outlined the steps taken by Missouri hospital system Mosaic Life Care, as it realized the full impact that $23 million worth of self-pay patient care had on its bottom line. Though the hospital posted record census and gross revenue during the first four months of 2017, net revenue was flat because patient self-pay didn’t keep pace.
“We win all kinds of awards for patient quality, but our revenue cycle didn’t match that performance,” Deborah Vancleave, Mosaic’s Vice President of Revenue Cycle, told Modern Healthcare.
Since then, Mosaic has taken steps to improve the accuracy of information it gets at registration and how it makes determinations on patients’ ability to pay. In addition, it has joined forces with ClearBalance— a provider of patient loan programs to US hospitals and health systems—to offer zero-interest or low-interest revolving lines of credit to patients for their out-of-pocket medical costs.
According to Modern Healthcare, ClearBalance pays hospitals “upfront for the outstanding bills of patients who sign up for their financing program, but the hospital guarantees the money and repays lenders if patients default on their credit lines. The companies make their profit by getting a 10% to 15% fee for the outstanding amount of the loan.”
Medical Laboratories Slow to Respond to Consumer Demand for Price Transparency
As consumers shoulder more of the burden for their healthcare, they also will be demanding more price transparency from medical laboratories and anatomic pathology groups, which so far have been slow to respond to the trend.
“Patients expect cost estimates in every other retail industry, and are starting to demand them in healthcare as well. According to one recent study, for example, more than 90% of patients felt it was important to know their payment responsibility upfront,” TransUnion, a global risk information provider, stated in a white paper outlining the importance of precare cost estimates.
As hospitals struggle to collect from patients saddled with HDHPs, laboratory executives and other healthcare providers should take note. The change in payment mix means the ability to collect payments from patients at the point of service is becoming a critical success factor.
—Andrea Downing Peck
Related Information:
Hospitals Struggle with the Dilemma of Patients Hit by High Deductibles
Kaiser Family Foundation 2016 Employer Health Benefits Survey
The Impact of Consumerism on Provider Revenues
Patient Financial Responsibility On the Rise
Improve Revenue Cycles and Patient Engagement by Delivering Pre-Care Cost Estimates
68% of Consumers Did Not Pay Patient Financial Responsibility
Sep 6, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement, Management & Operations
Challenges getting paid likely to continue as high deductibles make patients responsible for paying much more of their healthcare bills
Rising out-of-pocket costs for healthcare consumers is translating into increasing amounts of red ink for hospitals and healthcare providers struggling to collect bills from patients with high-deductible health plans (HDHPs). Clinical laboratories and pathology groups are unlikely to be immune from these challenges, as increasing numbers of patients with smaller healthcare debts also are failing to pay their bills in full.
That’s according to a recent TransUnion Healthcare analysis of patient data from across the country. It revealed that 99% of hospital bills of $3,000 or more were not paid in full by the end 2016. For bills under $500, more than two-thirds of patients (68%) didn’t pay the full balance by year’s end (an increase from 53% in 2015 and 49% in 2014). The study also revealed that the percentage of patients that have made partial payments toward their hospital bills has fallen dramatically from nearly 90% in 2015 to 77% in 2016.
Increased Patient Responsibility Causing Decrease in Patient Payments
“The shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years,” Jonathan Wilk, Principal for Healthcare Revenue Cycle Management at TransUnion (NYSE:TRU), said in a statement.
Millions of Americans are in high-deductible health plans. And, as the graphic above illustrates, that number has been increasing since the ACA was signed into law in 2010. (Graphic copyright: Reuters.)
While the Affordable Care Act (ACA) has increased the number of Americans receiving medical coverage through Medicaid or commercial insurance, TransUnion noted in its statement that hospitals still wrote off roughly $35.7 billion in bad debt in 2015. By 2020, TransUnion predicts that figure will continue to rise, with an estimated 95% of patients unable to pay their healthcare bills in full by the start of the next decade.
“Higher deductibles and the increase in patient responsibility are causing a decrease in patient payments to providers for patient care services rendered. While uncompensated care has declined, it appears to be primarily due to the increased number of individuals with Medicaid and commercial insurance coverage,” John Yount, Vice President for Healthcare Products at TransUnion, said in the TransUnion statement.
Collecting Patients’ Out-of-Pocket Costs Upfront
According to Reuters, hospitals in states that did not expand Medicaid under Obamacare have witnessed a more than 14% increase in unpaid bills as the number of people using health plans with high out-of-pocket costs increased. For hospitals in those states, HDHPs are impacting their bottom lines.
“It feels like a sucker punch,” declared Chief Executive Officer John Henderson of Childress Regional Medical Center, Texas Panhandle Region, in a Bloomberg Business article. “When someone has a really high deductible, effectively they’re still uninsured, and most people in Childress don’t have $5,000 lying around to pay their bills.”
A recent report from payment network InstaMed found that 72% of healthcare providers reported an increase in patient financial responsibility in 2016, a trend that coincides with a rise in the average deductible for a single worker to $1,478, more than double the $735 total in 2010.
In response to the increase in patient responsibility, hospitals and other providers are turning to new tactics for collecting money directly from patients, including estimating patients’ out-of-pocket payments and collecting those amounts upfront.
Hospital Systems Offer Patients Payment Options
Venanzio Arquilla is the Managing Director of the healthcare practice at The Claro Group, a financial management consultancy in Chicago. In an interview with Crain’s Chicago Business, he stated that hospitals are working overtime to get money from patients, particularly at the point of service.
“Hospitals have gotten much more aggressive in trying to collect at time of service, because their ability to collect on self-pay amounts decreases significantly when the patient leaves the building,” Arquilla noted. “You can’t say, ‘Give me your credit card’ to someone in the emergency room bleeding from a gunshot wound, but you can to someone going in for an elective procedure.”
Revenue loss due to unpaid medical bills among states that complied with Medicaid Expansion under the ACA has increase so dramatically, some hospitals are now offering patients prepayment discounts and no-interest loans to ensure payments. Clinical laboratories and anatomic pathology groups should develop strategies to respond to the increase collections from patients at the time of service. (Graphic copyright: Reuters.)
Richard Gundling, a Senior Vice President at the Healthcare Financial Management Association (HFMA), told Kaiser Health News that an estimated 75% of healthcare and hospital systems now ask for payment at the time services are provided. To soften the blow, some healthcare systems are providing patients with a range of payment options, from prepayment discounts to no-interest loans.
Novant Health, headquartered in North Carolina, is among those healthcare systems offering patients new payment strategies. Offering no interest loans to patients has enabled Novant to lower its patient default rate from 32% to 12%.
“To remain financially stable, we had to do something,” April York, Senior Director of Patient Finance at Novant Health, told Reuters. “Patients needed longer to pay. They needed a variety of options.”
Providers Must Adapt to New Patient Procedures
“Doctors need to understand the landscape has changed. A doctor’s primary concern use
to be whether a patient had insurance. Now, it’s the type of insurance,” Devon M. Herrick, PhD, a Senior Fellow at the National Center for Policy Analysis (NCPA) in Dallas, told Medical Economics.
While clinical laboratories and anatomic pathology groups traditionally have not collected money directly from patients, Herrick says healthcare providers must accept that the rules of the game have changed. “Patients are more cost-conscious now. That means patients will question their physicians about costs for procedures,” he adds.
Dark Daily has advised clinical laboratories in the past to develop tools and workflow processes for collecting payments upfront from patients with high-deductible health plans (See, “Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service,” Dark Daily, July 28, 2014). Not doing so can amount to millions of dollars in lost revenue to the medical laboratory industry.
—Andrea Downing Peck
Related Information:
Bad Debt Is the Pain Hospitals Can’t Heal as Patients Don’t Pay
Out of More Pockets
Patients May be the New Payers, But Two in Three Do Not Pay Their Hospital Bills in Full
Feel Like the Hospital Is Shaking You Down Over that Bill? It Probably Is
The Seventh Annual Trends in Healthcare Payments Report Is Here
Doctors and Hospitals Say, ‘Show Me the Money’ before Treating Patients
Ballooning Bills: More US Hospitals Pushing Patients to Pay before Care
Growth in High Deductible Health Plans Cause Savvy Clinical Labs and Pathology Groups to Collect Full Payment at Time of Service
Higher Annual Deductibles and Co-Payments Cause Hospitals to Intensify Efforts to Collect Directly from Patients; Medical Laboratories Now Feel Similar Financial Squeeze
Because of Sizeable Deductibles, More Patients Owe More Money to Clinical Pathology Laboratories, Spurring Labs to Get Smarter about Collecting from Patients
Mar 17, 2017 | Coding, Billing, and Collections, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Consumers respond to high-deductible plans by using less healthcare services, which in turn leads to a decrease in doctor visits and clinical laboratory test orders
Are many Americans avoiding medical treatment because of the high-cost of their health plan deductibles? And if so, will such an underutilization of healthcare affect hospitals, independent medical practices such as pathology groups, and clinical laboratories?
Two separate studies: one a survey co-conducted by the Kaiser Family Foundation and the Healthcare Research and Educational Trust (KFF/HRET), and the other an analysis by the Health Care Cost Institute (HCCI), investigated the dynamics behind trends in the healthcare marketplace leading to these questions. (more…)
Jul 13, 2016 | Coding, Billing, and Collections, Compliance, Legal, and Malpractice, Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement, Management & Operations
The amount of patient debt healthcare providers face depends on multiple, complex factors, including whether they engaged in Medicaid Expansion
Often the challenges facing hospitals and medical pathology laboratories are similar. So it is with patient debt. Blame that on two trends. One is the increase in the number of patients with high-deductible health plans. The other is the increase in the number of people enrolled via the Affordable Care Act (ACA) health insurance exchanges with similar high-deductible health plans.
These two factors are contributing to increased levels of bad debt that confront the nation’s hospitals, clinical laboratories, and anatomic pathology groups. However, in some states where Medicaid programs have been expanded, hospitals have reported declines in the level of patient bad debt.
When President Obama signed the Affordable Care Act into law in 2010, many people thought that fewer uninsured people would mean less bad debt for hospitals. Now, six years later, the reality is not so clear-cut.
Hospitals, clinical laboratories, and other entities within the healthcare system are seeing different levels of bad debt depending on what part of the country they are in, what kinds of policies they have enacted, and probably most importantly, whether or not the state in which they are located has expanded Medicaid. (more…)
