Revenue cycle hit by rise in high-deductible health plans
Hospital-run insurance plans, patient education about tools to help cover expenses becoming more important as financial burden grows.
Photo of Ronald Reagan UCLA Medical Center, Los Angeles, CA from Facebook
The rise of patient deductibles is presenting a host of challenges to healthcare providers. But it also is bringing new opportunities for systems to engage with patients in the payment process.
Over the last 15 years, premium increases have significantly exceeded income growth for many Americans, sapping away money that would have gone to salary and wage increases. Average employee health plan premiums increased 60 percent between 2003 and 2013, with the employee share rising 93 percent, according to the Commonwealth Foundation. Meanwhile, average incomes in that time period grew by only 11 percent.
In every state except Arkansas, Alabama, Hawaii, Louisiana, Mississippi and Wyoming, deductibles have doubled since 2003, increasing on average by 146 percent, according to another Commonwealth Fund study. By 2013, average deductibles exceeded $1,000 in all but three states and the District of Columbia.
Given this reality, some health systems are trying to help patients avoid high cost bills altogether, by working with insurers to craft value-based plans that offer low out-of-pocket costs for staying in one network, or starting their own plans.
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On the small scale, health systems have options that don’t require a big transformation, such as prompt payment discounts, payment plans, pre-payment requirements and front-end outreach.
Patients “need to be educated on their options for saving,” said Allison Hofmann, vice president of account management of QualCare, a health plan started by 16 New Jersey hospitals that was recently acquired by Cigna. “There are some very good online tools that support education on the benefits of contributing to HSAs, HRAs and FSAs but it is essential education continues at the employer, health plan and provider level.”
On the larger scale, for health systems that want to experiment or take risks, there other options that could have a large return for both patients and providers.
In Los Angeles, seven hospitals, including UCLA Health and Cedars-Sinai, are partnering with Anthem Blue Cross to serve as a preferred network in a health plan called Vivity. Most notably, members on the plan will be responsible for only a copay with no deductible. In this kind of health plan, the physicians, hospital and health plan professionals “can really leverage off each other” instead of “duplicating costs,” said James West, president and CEO of PIH Health in Whittier, one of the seven partner providers. “Really in the end, we can get a better outcome.”
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Other health systems are building their own health plans in the model of Kaiser Permanente and the University of Pittsburgh Medical Center, which run the two largest provider-owned health plans in the country. An increasingly popular way for providers to test their own insurance is through Medicare Advantage, a government-sponsored health plan program that covers one-third of Medicare beneficiaries.
At least a dozen health systems are running or jointly running Medicare Advantage plans, including Catholic Health Initiatives, Gundersen Health System, Indiana University Health, Mount Sinai, the University of North Carolina Health Care and Health Partners, an HMO-owned by a group of hospital systems with Philadelphia’s fastest growing Medicare Advantage plan.
Commercial group insurance and individual Affordable Care Act plans are the main insurance plans with the highest deductibles, but Medicare Advantage offers a way to test the HMO network and cost-sharing designs that would also be used in commercial populations.
Mount Sinai Health System’s Medicare Advantage plans, for instance, are sold in two tiers. The second, more expensive one offers access to providers inside and outside of Mount Sinai – using the network of managed care company Healthfirst.
The preferred first tier plan gives seniors lower levels of cost sharing and some fringe benefits if they stay with Mount Sinai providers. Those include no copayments for primary care visits, annual eye exams, and Medicare-covered preventive services, and 12 free round-trip rides to and from medical appointments each year.
Twitter: @AnthonyBrino
