High Deductible Health Plans: A Reality for Patient and Revenue Cycle Leaders
[*This blog post was originally published December 6, 2016 and it has been updated and republished since.]
High deductible health plans (HDHP) are a curious phenomena.
- For employers, they are good. As a cost sharing tactic, they enable employers to keep employee expenses in check and, frankly, stay in business.
- For consumers, they are good at least in theory. (And yes, we do think of patients as consumers; you should too.) They typically prefer the low up-front costs of HDHPs, but be aware that there is much more to understand.
- For hospitals and physician groups, they are a massive opportunity. Healthcare organizations must retool their strategy for self pay patients to include patients with high deductible health plans. The keys here are patient education and, quite literally, asking for payment.
The premise of HDHPs, of course, is that they reduce overall medical expenses by encouraging patients to make cost-conscious choices about medical care for themselves and their families. The reality of HDHPs is much different.
Acknowledging the rise in high deductible health plans and their impact on how much and when a patient pays is the eye-opener revenue cycle leaders need to create an action plan to not leave money on the table.
Our industry is full of twists and turns, and that’s why we have outcomes today from high deductible health plans that were previously unforeseen and are often surprising.
Accept the Reality of High Deductible Health Plans
About three-fourths of employers offer a HDHP as an option, but PwC Health Research Institute predicts that within the next three years, 44% of employers will offer HDHPs as the only benefit choice to employees. This isn’t surprising, as it follows a trend in consumer acceptance: the number of individuals choosing HDHPs rose sharply from 1 million in 2005 to 17.4 million in 2014. That’s a 1640% increase in just under ten years.
Deductibles are climbing: High deductibles really are high. Recent research states 46% of employees have deductibles of $1000 or more, and data from Kaiser indicates that individuals with deductibles over $2000 rose from 3% to 18% between 2006 and 2014. But how high is too high? According to Christopher Kerns, managing director at the Advisory Board Company, “Once a bill exceeds 5% of household income, a patient’s propensity to pay drops to nearly zero.”
The responsibility falls to the healthcare organization: According to Kerns, “Healthcare providers are collecting $0.18 to $0.34 on the dollar from patients with high-deductible plans.” There’s no question that the plans are complex. Most consumers do not understand their HDHP, prior to seeking care, and are therefore not prepared to meet their true financial responsibility.
The patient experience matters more today then it did yesterday: 80% of patients reporting positive billing/payment also said quality of care was positive. On the down side, 85% of patients reporting poor billing and payment experience also gave poor quality of care ratings. If nothing else is convincing, these two statistics should give you the impetus you need to make the vastly growing category of patients with HDHP’s a top revenue cycle priority, concentrating on when, how, and how much they pay.
What strategies can you put into place to help improve the patient financial experience when it comes to high deductible health plans?
Here are four "start-today" self pay strategies to help your patients understand the financial responsibility that comes with having selected a high deductible health plan.
Shift Payment Emphasis to the Front End
Start by identifying all of the patient touch points where there is opportunity to educate and/or collect payment. Traditionally, collection efforts begin after the care visit, but shifting the first financial conversations to the front end of your business operation is a major step in setting the expectation early. And, patients might not recoil like you’d expect. In fact, 52% of patients state they would be willing to pay their bill at the time of service if they were provided an upfront estimate for the cost of their care.
Then, check into price transparency laws (which vary among states) to find out what information regarding medical pricing needs to be disclosed in order to be in compliance. Patients often lament that they would not have sought care if they knew how much their patient responsibility would be, or they feel the charges are not congruent with the care received. Shifting financial conversations to early patient touch points, whenever possible, will minimize these grievances.
Use the numerous opportunities on the front end: scheduling, registration, check-in and check-out as opportunities to ask first for questions from your patients, and then for payment.
Invest in Cost Estimation Technology
Obtaining a great estimator technology solution can help tremendously in collecting more payments and reducing days in A/R.
The overarching goal here is to collect payment from patients with HDHPs and simultaneously to reduce days in A/R. With a traditional collection strategy Days in A/R is around 90 or more. If the process is automated by estimating of services and keeping a credit card on file to pay out of pocket costs after the claim is sent to insurance and remitted, this can decrease days in A/R to 30 or less.
Estimating is tough, but it’s important to get it close, at the outset, as well as to help the patient understand the variables. If too little is collected up front the patient may be confused as to why they are receiving a bill after they thought their visit was settled. If too much money is collected on the front end, then a refund must be issued, which costs your organization hassle.
Side note: You may think the jury is out on estimator technology, but stay tuned in. It’s a piping hot topic in healthcare. Demand is high, and the tools have — and still are — evolving quickly.
Automate Payment Plans and Keep Credit Cards on File
Simple solutions that other industries have considered standard for years are just now making their way into the halls of healthcare facilities. No one bats an eye at keeping a credit card on file for their Amazon account, phone bill, cable and internet, utilities, even with hotels or airlines, but in healthcare most organizations don’t keep credit card information on file.
Once you’ve ensured that the patient understands the charges on their expected responsibility, offer a payment plan to be paid in installments. You avoid sending costly paper statements as monthly reminders, and instead you leverage automatic payments through secure card on file. The main benefit of keeping a card on file through a PCI DSS compliant vendor (never store credit card information manually) is that it puts the healthcare organization in control of the payment process and increases revenue while providing the patient with an option to pay a big bill incrementally.
Launch an Online Portal and Inbound Payment IVR
Keep things simple and convenient. 60% of Americans prefer to pay their bills online because it is easy and hassle-free. By offering several convenient payment options, you’ll reduce unnecessary calls to the business office from patients just wanting to make payments, which frees up your best patient specialists to handle more complex billings issues.
When setting up an online payment portal make sure to consider options that are not user name and password based, accept multiple payment types (including Flex Spending and Health Savings Accounts) and use an intelligent negotiator so patients can set up a payment plan that is both “doable” and within established guidelines.
Consider an inbound payment IVR (interactive voice response) system. Paying from mobile or landline 24/7/365 is convenient for the patient, takes only a few minutes to complete a payment, and accelerates the rate in which payments are received while improving revenue cycle performance. This is the best option for the proactive patient who wants to control when and how their bill is paid, but who isn’t comfortable making automatic payments.
The Bottom Line
While HDHPs were created to make healthcare accessible and less expensive, they have created a few side tornados along the way: rising costs, patients delaying treatment, and so on. Yet, no one is saying they will go away any time soon, so revamping your revenue cycle strategy to receive as much as possible of the deductibles owed is a great place to start. Take a transparent and upfront approach with patients carrying HDHPs. The more they understand healthcare deductibles and out of pocket expenses, the more they are willing to pay. Your patients will show loyalty to an organization that both understands their financial needs and is willing to offer convenient and reasonable methods to pay their higher healthcare costs.