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Out-of-Pocket Costs Catching up with Medicare Beneficiaries

Medicare beneficiaries are facing higher out-of-pocket costs that amount to a “substantial” share of their income, according to an issue brief from The Commonwealth Fund, “Medicare Beneficiaries’ High Out-of -Pocket Costs: Cost Burdens by Income and Health Status.”  There are 56 million people, or 17 percent of the U.S. population, who rely on Medicare, according to the report. By 2024, one-fifth of the population will have Medicare coverage. The benefits exclude dental, vision, hearing and long-term services coverage, and there is no limit on out-of-pocket costs for the covered services, it states.

As more consumers become eligible for Medicare, The Commonwealth Fund reports they will find the need to supplement their coverage, “since the program has relatively high cost-sharing and no limit on patient liability for covered benefits.”  Research on beneficiaries’ financial burdens for the brief is based on the 2012 Medicare Current Beneficiary Survey, with 11,299 responses and population and spending data projected to 2016.  The respondents shared their experiences with access to care, medical services and spending activity, including costs for services not covered by Medicare.

Overall, the survey shows beneficiaries spent an average of $3,024 in out-of-pocket costs each year, according to the report. Findings also include that 15 million Medicare beneficiaries spent 20 percent or more of their income on healthcare premiums plus medical care, including cost-sharing and services that are not covered, it states.  Medicare beneficiaries also face costs from a separate private plan for prescription drugs.

“If they want to buy private Medigap supplemental coverage for cost-sharing, they incur significant additional premiums,” according to the report.  “Even after they pay for supplemental drug and Medigap plans, beneficiaries face the cost of dental, hearing, vision, and long-term services—all excluded from Medicare. For beneficiaries with multiple illnesses or serious functional limitations, out-of-pocket costs can easily add up to thousands of dollars per year.”  Findings on costs for Medicare beneficiaries also include:

-Hospitalization costs for beneficiaries are $1,300 and they pay 20 percent of bills for physician care.

-They also pay a $1,600 annual premium for Medicare Part B medical services.

-Annual Medigap, the supplemental coverage for Medicare cost sharing, premiums are $2,000 per beneficiary, but can be significantly higher in some states. “Medigap has notably high overhead costs: administrative costs and profits absorb 20 percent of premiums on average.”

-Private Medicare Advantage plans are available for beneficiaries interested in opting out of traditional Medicare plans. While those plans have lower cost-sharing in general, it has increased significantly in recent years.

Overall, the report shows that 5.4 million beneficiaries with only Medicare and no supplemental coverage are subject to higher healthcare costs.  “These beneficiaries spent an estimated $5,374 on out-of-pocket costs in 2016 compared to $2,587 for beneficiaries who received supplemental coverage from Medicaid. With incomes too high to qualify for Medicaid but too low to afford supplemental coverage, 32 percent of Medicare-only beneficiaries spent 10 percent or more of their income on health care,” according to the report.

Financial burdens and unmet needs from Medicare leave beneficiaries at risk.  As Medicare enters its sixth decade and the Baby Boom population becomes eligible, the costs of the program will increase, likely placing it on the policy agenda,” the report concludes.  “Financial burdens and access gaps highlight the need to approach reform with caution.  Already-high burdens suggest restructuring cost-sharing to ensure affordability and to provide relief for low-income beneficiaries,” the report concludes.

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Repeal of Obamacare Likely to Grow Number of Self-Pay Patients 

While Congress moves forward in their effort to repeal the Affordable Care Act (ACA), a new report points out that the changes anticipated appear to point to an increase in the number of self-pay patients; meaning less revenue for medical providers historically.  This analysis has been provided by accounting and consulting firm Crowe Horwath.  The report, “Self-Pay Becomes Ground Zero for Hospital Margins: Lower Net Revenue Realization Impact Follows,” used data taken from their revenue cycle analytics platform.  The report made use of the analysis of a sampling of 357 hospitals in states where Medicaid had expanded.

Hospitals in states that had expanded their Medicaid coverage between 2013 and 2016 witnessed their number of patients who were covered by Medicaid increase from 12.3 percent to 18.3 percent during that time.  During that same time, patient self-pay dropped from 7.4 in 2013 to 3.5 in 2016; a drop of 4 percent.  Crowe Horwath is now pointing out that with so much uncertainty in healthcare, that medical providers should prepare for growth in self-pay patients.

Medical provider cash flow is likely to be adversely affected, according to the report, as the average self-pay patient remains in the AR cycle for about 96 days whereas those with Medicaid balances typically only do so for about 64 days.  Not to mention the current trend of insureds moving to high-deductible health plans, an insurance model with a mix of self-pay and insurance coverage, is set to continue growing.  The Crowe Horwath analysis plainly states that the combination of growth in HDHP insurance policies added to a full repeal of the ACA will cause an increase in self-pay patients of 4.2 percent.  The report also points out that this situation will decrease revenue by 2.8 percent.

Crowe Horwath recommends several common-sense practices for providers in dealing with self-pay.  One thing that can be very helpful is to make use of tools that determine a patient’s capabilities for paying.  Another good practice is to create positive interactions pertaining to the financial portion of patient experience.  It is also valuable to train attention on those patients who have the ability to pay for their out-of-pocket expenses.  Providing multiple payment options, affordable payment plans, discounts and even help with Medicaid enrollment forms will all be beneficial.

Lastly, giving patients the advantage of price transparency and the opportunity to shop around and even the ability to negotiate prices will all help providers weather the storm on the horizon that’s been created by the rise of HDHP’s combined with the effects of the likely ACA repeal.


News & Notes


Access to Care, Health, Improve under Medicaid Expansion

A Journal of Health Affairs study of states that expanded Medicaid under the Affordable Care Act shows declining uninsured rates and annual out-of-pocket-costs, Fiercehealthcare reports. For example, in Kentucky, the uninsured rate dropped to 7.4 percent in 2016 and low-income consumers in Kentucky and Arkansas saw a $337 decline in annual costs, according to the article.

Pace of Healthcare Job Growth Continues to Slow

Healthcare job growth has slowed compared to the past two years, according to the monthly report from the Altarum Institute. There were 19,500 new healthcare jobs in April and the average for the first four months of this year is just under 20,000 jobs each month, “a considerable decrease from the 32,000 per month seen in 2015 and 2016,” according to the report.

The State of Hospital Employee Turnover

A “Leaders for Today” survey on hospital staff hiring and turnover shows a high rate of turnover in the industry. For example, 42.8 percent of respondents said they have worked with their current hospital for fewer than two years and 65.7 percent said it’s been fewer than five years.





Hospital Merger Activity Continues to Increase

Hospital merger and acquisitions continue to increase, including a notable rise in transactions among large healthcare providers, according to an analysis of industry activity by Kaufman, Hall & Associates LLC.  In the first quarter of 2017, hospital and health system transactions increased 8 percent from 25 to 27 compared to the first quarter of last year, according to a news release from the firm.

“The increase follows another year of continued growth, with transactions climbing from 66 announced deals in 2010 to 102 in 2016. The overall trend illustrates that healthcare organizations across the country continue to seek new efficiencies and capabilities for a transforming industry,” it states. “The first quarter was particularly notable for an uptick in transactions among large organizations, with three announced deals targeting organizations with nearly $1 billion or more in revenues. 2016 saw four such deals announced in 12 months.”  Additional transactions among the larger organizations are expected.  

“Hospitals and health system executives are looking for strategic opportunities to ensure the continued growth and success of their organizations amongst disruptive forces, including innovative competitors, declining payments, flat or decreasing inpatient volumes, and increasing price sensitivities among consumers,” said Anu Singh, managing director at Kaufman Hall, in the news release. “As the number of independent hospitals declines, organizations are seeking to build new capabilities and economies of scale through partnerships.”

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National Poll Shows Healthcare Costs Top Financial Concerns


While Americans always seem to have something to be concerned about; a new national poll from Gallup shows that Americans are most concerned today with healthcare costs when considering ALL financial concerns for those living in the United States.  The poll further went on to show that a majority of those living in America believe that the Federal government should also make it possible for all Americans to have healthcare coverage.

Two other polls that were recently published also point out that most citizens of the United States are concerned about healthcare coverage for themselves and their families.  In fact, a growing number of poll respondents now appear to be favoring a single-payer healthcare system.

Gallup points out that some of the anxiety around the topic of healthcare could be due to all of the uncertainty regarding the current healthcare policy and the effort to repeal and replace the law.  In 2010, healthcare concerns spiked as the ACA was being signed into law and many Americans made clear that the costs of healthcare were their top concern.

While healthcare costs were the top anxiety for Americans at 19 percent, other financial concerns cited by those who responded to the poll included high debt at 11 percent, college expenses at 10 percent and lack of money at 10 percent.

One bright spot worth noting is that some financial anxieties have lessened in recent years.  While 10% of respondents say low wages are their families biggest financial problem; this percentage is the lowest number seen since before the financial crisis of 2008 began.



CMS Proposes Rule to Update Medicare Admissions Policies

The Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule that would update 2018 Medicare payment and policies when patients are admitted into hospitals.  “The proposed rule aims to relieve regulatory burdens for providers; supports the patient-doctor relationship in health care; and promotes transparency, flexibility, and innovation in the delivery of care,” according to a news release from CMS.

CMS also released a Request for Information (RFI) on ideas for regulatory, policy, practice and procedural changes to guide the discussion on future regulatory decisions for inpatient and long-term hospitals.  CMS is accepting comments on the proposed rule and RFI until June 13, 2017.

“Through this proposed rule we want to reduce burdens for hospitals so they can focus on providing high quality care for patients,” said CMS Administrator Seema Verma in the news release.  “Medicare is better able to support the work of dedicated hospitals and clinicians who provide the care that people need with these more flexible and simplified approaches.”

The news release also states, “CMS is committed to transforming the health care delivery system—and the Medicare program—by putting a strong focus on patient-centered care, so providers can direct their time and resources to patients and improve outcomes.”  CMS is also proposing a one-year moratorium on “the payment policy threshold for patient admissions in long-term care hospitals while CMS continues to evaluate long-term care hospital policies” and a reduction in reporting requirements for hospitals using electronic health records.

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Americans Worry Over Healthcare Uncertainty

Anxious Woman Worries About Healthcare

As the debate continues on Capitol Hill about the future of healthcare in the United States, the issue is also on the minds of many Americans as well.  Whether Obamacare continues to move forward in one form or another or is replaced by something completely different, a majority of Americans are now concerned about their ability to afford health insurance in the future.

A new study from shows that in the last year, one out of four families have chosen not to make use of medical professionals because they felt they couldn’t afford the expense even though they believed they needed it.  The fact that Americans are choosing not to get medical advice due to the cost is of great concern. also pointed out that 13 percent of those responding to their survey didn’t have any healthcare insurance at all; which is quite a risk when considering that medical bills have the capability of leading to large debt that could take many years to pay off.

The survey showed that a full 56% of Americans say that they are concerned that they might not have the option of affordable healthcare in the years to come.  This anxiety has led some to worry that they might be faced with the painful choice to not care for medical issues of a serious nature due to an inability to pay for their services.  In the meantime, as the healthcare debate continues; American anxiety continues to grow.


News & Notes


Poll: Healthcare Providers Delay Collections

Forty-three percent of healthcare providers surveyed by the Medical Group Management Association are waiting between 91 and 120 days before sending a patient’s account to a collection agency, Becker’s Hospital Review reports. Thirty-two percent of respondents said they wait more than 120 days.

Report Shows Benefits of Medicaid

According to a report from The Commonwealth Fund, more than 70 million people have Medicaid, and about 12 million enrolled when states expanded eligibility for the program under the Affordable Care Act.  The report “finds that the large majority of people who have Medicaid for the full year are able to get the healthcare they need.”

Healthcare Job Growth Slows

There were 13,500 new healthcare jobs in March 2017, making the first quarter of this year the slowest in job growth since the second quarter of 2014, according to the Altarum Institute and its Health Sector Economic Indicator report. First quarter growth this year, an average of 20,000 new jobs per month, is also “significantly” lower than 2015 and 2016.




How to Respond to Patient Demands in the Changing Healthcare Market

Patient Demands in the Changing Healthcare Market

The U.S. healthcare market continues to change based on patient demand for price transparency, the shift in patient responsibility for medical bills, data security among healthcare providers and more, according to a report from InstaMed, “Trends in Healthcare Payments Sixth Annual Report: 2015.”

The annual report includes data from more than “$165 billion in healthcare payments volume on the InstaMed Network, which connects over two-thirds of the healthcare market. The data represented was processed between 2012 and 2015.”  According to the report, consumers are influencing change in healthcare payments through sensitivity to how much they are spending on medical costs and how they receive information on what they owe.

The market is also influenced by the greater number of consumers with health insurance and how they are accessing it.  Open enrollment through the Affordable Care Act could reach 40 million consumers through the public and private exchanges by 2018, and many of those consumers will have health insurance for the first time, according to the report.  “This influx of consumers to the healthcare market, coupled with new [Affordable Care Act] plan requirements, has changed how payers do business,” it states.

Consumers are interacting more with payers directly instead of a third-party to manage payments. As a result, payers need to evaluate services to collect payments and issue bills to consumers. “Payers have to build the technical and operational infrastructure to receive individual premium payments and ensure accurate posting and reconciliation.  Consumers are faced with the addition of a new, monthly household bill with premium payments.”

Findings from InstaMed’s data analysis show consumer payments to providers included in the InstaMed Network grew 94 percent from 2012 to 2015 and by an average of 25 percent each year.  Patients also want to know their expected healthcare costs more from providers at the time of service.  In 2015, nine out of 10 consumers said it was important to know their expected costs before a visit to their healthcare provider, according to the report.

“The need is for consumers to understand an estimate of what they will actually pay based on their benefit information which can include variables like their deductible, copayments and coinsurance,” it states.  In 2015, the majority of consumers (77 percent) said they were confused by the Explanation of Benefits they receive from their health plan provider, according to the report.

“The confusion continues when the consumer receives a bill from their healthcare provider for their payment responsibility, which is often printed and mailed weeks or months after a visit and does not clearly indicate what is due or how to pay.”  Consumers also report they will switch healthcare providers based on the cost and bill information they have; 47 percent said they “will switch providers for the ability to understand cost upon scheduling and to easily understand and pay a bill using a preferred method,” according to InstaMed’s report.

Additional findings in the report show consumers prefer to pay their household bills through digital formats. “The digital experience offers consumers the freedom of choice to make payments whenever it is convenient for them,” according to the report. “Seventy-five percent of consumers opt to pay their household bills through an online channel, such as a bank bill pay portal, website or mobile app.”

InstaMed concludes in the report that consumers are a critical stakeholder in the healthcare market as their payment responsibility changes and payers and providers should focus on working together to simplify the payment process.  Healthcare providers should leverage best practices from other industries as a model for their patient payment systems. “Make it simple for consumers to understand what a service will cost and then offer multiple payment options including automatic payments. 

By adopting electronic and automated payment channels, payers and providers can set the expectation upfront at the same time enabling faster time to payment. As the industry continues to grow rapidly, paper in the healthcare payments process will be unsustainable to any business model,” InstaMed concludes. “There’s never been more of a need for payers and providers to work collaboratively.” 

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Lyft & Blue Cross Blue Shield Team Up to Provide Patients Free Rides to Doctor Appointments

Free Rides to Doctor Appointments

A strategic alliance between Lyft and Blue Cross Blue Shield (BCBS) has become a reality to help ensure that patients are able to arrive to appointments with their doctors; a service that is free to the patient.  BCBS is made up of 36 independent and locally operated companies with a total of more than 100 million members with the potential for service needs.  Lyft, a ride-sharing company based in San Francisco, is one of the fastest growing ride-sharing companies in the country, currently serving more than 300 cities.

Lyft has created similar alliances with other healthcare organizations in the last few months such as MedStar Mobile Healthcare, Logisticare, Executive Care, National Federation of the Blind and SafeRide Health to name a few.  The president and Chief Medical Officer of the BCBS Institute, Trent Haywood, MD, pointed out that eighty percent of all healthcare outcomes are shaped by “social determinants” including transportation.

Mr. Hayword further pointed out that transportation assistance is available for patients receiving Medicaid, but further stated that access to healthcare due to a lack of reliable transportation has put millions of Americans at risk.  This mindset clearly influenced the decision-making leading up to the partnership between BCBS and Lyft.  “A strategic alliance with Lyft will allow us to positively impact and improve Americans’ health nationwide” said Haywood.  He further stated that BCBS companies “have always been committed to local communities-and solving the most pressing healthcare challenges facing our country.”


Healthcare Cost Affordability Challenges Continue

Healthcare Affordability

Some affordability challenges continue among the population with health insurance as the debate about the future of the Affordable Care Act continues. Data from The Henry J. Kaiser Family Foundation’s recent Health Tracking Poll show that more people with health insurance report dif culty paying for healthcare costs since 2015. For example, when asked how easy or dif cult it is to pay the cost of health insurance each month, 27 percent of poll respondents said it was dif cult in 2015 compared to 37 percent in 2017. Additionally, 29 percent of adults in the poll reported a member of their household had troubles paying medical bills in the past year and had to cut back on other necessities (food, clothing or basic household items) to help.

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