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Providing Health Care in a High-Deductible World
By Steven Podnos MD, CFP®
With the increasingly common use of High Deductible Health Care Plans (HDHCP) (often combined with a Health Savings Account), health care providers are seeing a growing population of health care consumers that are paying “out of pocket” in some fashion for the first several thousand dollars of health care expenses each year.
Q: What is the impact of this for health care providers and hospitals?
Consider that historical pricing for health care services are much higher than providers expect to receive. Many “fee schedules” hark back to a day in which reimbursement bore some relationship to charged fees-almost unheard of now.
Let’s illustrate
Enter the consumer with a high deductible plan. Last year, with his old more traditional health insurance, he sees a physician for an initial visit. With ancillaries, the office bill might be $300, but the patient pays his $20 co-pay and leaves. The physician is contracted with the insurer to provide that level of service for a total of $110, and collect the remaining $90 from the carrier. Everybody is happy.
This year however, no one is happy. The consumer with the HDHCP gets a $300 bill for the same service that cost him $20 last year. He doesn’t know or doesn’t remember that his health care insurance premiums are lower than last year (as he may not pay them).
The result is one very unhappy patient. Clearly, health care providers need to adapt to the new world of HDHC plans. Hospitals and physician offices should have a list of charges for patients paying cash or having these plans. The charges would fairly approximate what they expect to receive from patients with Medicare and/or managed care plans for the same services.
Conversely, patients with these HDHC plans must learn to ask up front for a “cash” price on health care services.
Dr. Podnos is a fee-only financial planner in Brevard County, Florida.
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Filed under: Health Insurance | Tagged: High Deductible-HCPs |
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HDHCPs
We can take this scenario one step further. Not only should doctors post their charges, many believe so should hospitals, medical clinics and other healthcare facilities.
For example, just recently, thirty-three state legislatures called for the nation’s hospitals to make their prices transparent through the publication of charges.
The average charge for a hip, knee or ankle replacement is $38,443, while a heart valve operation is $124,561. Such trends indeed demonstrate advancing industry competition and patient empowerment thru P4P initiatives, Evidence Based Medicine, and Consumer Directed Healthcare, etc.
Interestingly, a random “secret shopper” call around our town for pricing information from docs and hospitals produced misguided comments like:
* It’s illegal to quote fees
* Don’t worry, we accept all insurance plans and HMOs
* We can’t give out that information
* I don’t have that information
* Why don’t you apply for Medicaid public assistance?
* We’ll get back to you
* etc.
Your own thoughts are appreciated?
The Editors
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I did some research on CDHCPs and physician charges. It seems that Torrance California based HealthCare Partners now notes on its Website that it charges $15 for flu vaccines, $61 for a chest X-ray, and $424 for a colonoscopy.
But, you are right. Thus far, docs and most clinics and hosptitals do not want to compete based on price, let alone quality, like the rest of capitalistic society. Not yet, anyway!
Ann RN
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Good comments, all.
But, the point of an interactive blog is to have a dialogue, to learn from others’ POV, to advance our collective knowledge, experience and wisdom, and to offer solutions or new options to various problems.
So, let’s keep up the chatter on this, related, or any other topics of healthcare administration modernity.
-The Moderators
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An anonymous private viewer sent me this report which appeared in Modern Healthcare magazine, in January, 2007.
“This week, the CEO of Boston’s Beth Israel Deaconess Medical Center did an astonishingly candid thing.
He posted his salary on his blog, discussed what his additional financial incentives were, described how his salary was set by board members and–get this–asked his readers, flat out, in all apparent humility, whether they thought he was overpaid. (Yes, the public can get these numbers on their own, through public not-for-profit documents, but still, how many CEOs take this extra step?)
The executive, Paul Levy, vowed to post any responses he gets to the question on his “Running A Hospital” blog, as long as they don’t contain unprintable language. Early feedback is quite thoughtful and nuanced.”
So, why not tell us what you think about this topic?
DEM
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How About Medicare Data Transparency?
In a decision that could have major implications for the fee and clinical outcomes transparency movement, HHS was recently forced to release Medicare claims data for physicians practicing in Illinois, Maryland, Virginia, Washington and Washington, D.C., according to the U.S. District Court for D.C.
The case was brought by to two organizations, Consumers CHECKBOOK and the Center for the Study of Services, which hope to use the data to analyze physician performance.
HHS argued releasing the data would violate physician privacy, but the court rejected that argument, noting Medicare claims constitute only a portion of physicians’ incomes. (The AMA hasn’t weighed in yet on how it feels about this ruling.) Under the terms of the decision, HHS released the data on Sept. 21 for online and public use. The groups involved have requested similar data for the other 46 states.
Your opinion counts?
-The Moderators
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Any CDHCP fee-schedule study for hospitals and clinics at the procedure-code level must present (1) an analysis of suggested rate changes designed to enhance the defensibility and transparency of proposed pricing, and (2) maximize the amount of revenue collected per dollar of rate increase.
This analysis must be designed to allow management to impose a variety of restrictions on rate increases. All things being equal, the following parameters should also be considered:
• Pricing transparency
• Cost-based pricing
• Across-the-board price adjustments
• Market-based pricing constraints
• Historic self-pay recovery
• Patient consumer demographic distributions, and
• Any other unique local situations.
Your thoughts on CDHCPs at the enterprise wide level are appreciated?
-Hope Hetico; RN, MHA, CMP
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Hospitals and Fee Schedules
Did you know that hospital chain Health Management Associates [HMA] has vowed to take a tougher line in collecting from self-pay patients, in a move designed to rid the chain of a reputation for being less aggressive than its competitors?
According to sources this week, the chain told the investment community that this loss comes partly from a higher volume of uninsured patients attracted by its generosity.
HMA, which has 59 hospitals, has taken a beating financially over the past year. Despite an 8.2 percent gain in revenue, net income for the third quarter ended Sept. 30 was $30.5 million, less than half of the company’s $74.4 million net income for the third quarter of 2006.
HMA, which already gives uninsured patients 60 percent discounts off of gross charges, will now begin asking patients to sign a promissory note before leaving the hospital and moving their accounts to collection agencies sooner.
How does this bode for CDHCPs and private pay patients?
And, as a patient, don’t forget an invoice review firm, like http://www.billadvocates.com
-The Moderators
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Did you know that here in the state of California, we have launched a Web site listing what discounts hospitals will offer uninsured patients. Applications for these programs are also available for download; and policies for about 82 percent of the state’s 405 acute-care hospitals are supposedly posted – to date – with more to come.
The site was enabled because of a 2006 law, the “Hospital Fair Pricing Program”, which prohibits hospitals from charging low-and moderate-income patients more than their highest rates charged to government insurance programs in which they participate.
Talk about price transparency – what do you think?
-Dr. Maurice
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More on UHC,
According to Modern Physician, New York Attorney General Andrew Cuomo just announced an industry wide investigation into an alleged scheme in which insurers and health information firm Ingenix® manipulated reimbursement rates.
Cuomo issued 16 subpoenas to insurers and plans to file a lawsuit against Ingenix®, its parent, UnitedHealth Group, and three UnitedHealth subsidiaries.
And so, it seems reasonable to wonder if there are any other shoes to drop on the whole UCH mess.
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