Mnet Health News delivers the latest news and information articles for the world of healthcare.

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Health Plans with Higher Deductibles Increase Necessity of Patient Financial Services

Obamacare is currently receiving a hefty amount of criticism throughout the country, with much of the melee surrounding the release of the new health care exchange and the technological issues that continue to arise from it.But even though the roll-out of the health care law has been anything but seamless, hospitals and surgery centers in the U.S. are finding they are faced with the reality that lower-cost insurance coverage with higher deductibles is likely to be the coverage of choice for a large cross-section of the country in the very near future.

A recent study implies that of those who are insured, one in five are likely to have problems paying their medical bills. But those percentages are expected to increase as more employees also turn to high deductible plans because many employers have shifted more health care insurance costs onto their employees. This shift is likely to result in employees choosing plans with higher deductibles to reduce their monthly expenses. 

Knowing what current studies now suggest, revenue cycle professionals should expect that about 20 percent of their patients will experience issues in paying for their medical bills. Maintaining a financially healthy hospital or medical practice will logically rely on the expertise of the medical center’s collection department or collection vendor and their effectiveness at collecting patient revenue in a timely manner.

To continue to remain financially sound, a medical center should strive to be as proactive as possible by reaching out to the patient shortly after treatment. Additionally, a provider should also choose solutions that allow them to screen patients regarding their ability to pay for services.

Patient predictive payment tools are not designed to be used to prevent patients with lower scores from gaining access to health care. However, by estimating the patient’s likelihood of paying their bill, the facility is better equipped to direct the patient toward mutually beneficial payment options.

“An array of payment options for the patient to choose from is extremely important for the financial health of a provider,” said Mnet Financial CEO David Hamilton. “Fortunately, the reality is that most patients have the ability to pay something toward their services, so it’s likely that we will have a viable solution to get the patient’s medical debt resolved,” said Hamilton.

Credit based health care financing, payment plan management systems, and call center accessibility are all important tools available to the health care provider of today. “At Mnet Financial, our MedDraft payment plan system secures a payment contract with the patient prior to service so the bill gets paid,” said Hamilton. “And if the patient defaults on their pay plan contract, the account is then forwarded to Mnet’s collection department to help get the patient back on track,” Hamilton said.

While it appears certain that the high cost of health insurance as well as new health care legislation will eventually cause self-pay portions of patient’s medical bills to rise, many options are still available to health care providers. By making proper use of the tools made available by a reputable financial services and collection vendor, providers can continue to thrive.

Private Health Insurance Coverage Decreased Nearly 4 Percent During Downturn

Most states saw private health insurance coverage decrease during the economic downturn between 2008 and 2010; then stabilize between 2010 and 2012, according to a recent Census Bureau report (http://1.usa.gov/15mc3bv).

Between 2008 and 2010, 45 states and Washington, D.C., had decreases in the percentage of residents under the age of 65 who had private insurance. In 32 of these 45 states, the loss of private insurance outpaced the gains in public coverage (which includes Medicaid and other medical assistance programs), resulting in an increase in the uninsured rate.

Nationwide, the percentage of Americans under the age of 65 who had private insurance decreased from 66.1 percent in 2008 to 62.5 percent in 2010. “In periods of economic downturn, the ability of individuals to access and afford private health insurance becomes more limited,” the report noted.

Between 2010 and 2012, the percentage of Americans with private insurance decreased by only 0.4 points as the economy began to improve. Most states (32) and D.C. did not have a statistically significant change in the percentage of residents who had private insurance.

Of these 32 states and D.C., 17 had increases in the public insurance rate, which in most cases caused a reduction in the uninsured rate. Nationwide, the uninsured rate increased by 1.2 percent between 2008 and 2010; then decreased by 0.8 percent between 2010 and 2012.

Between 2011 and 2012, the total number of Americans who had health insurance of any kind increased from 260.2 million to 263.2 million, according to a separate Census Bureau report released in September.

Study: Many Hospitals Slow to Prepare for Coverage Expansion

Most health systems have been slow in preparing for implementation of the new health insurance exchanges, and the newly eligible pose an enrollment challenge, according to a recent study. The study, “Health Exchanges: Open for Business,” released in September by PwC’s Health Research Institute, included feedback from more than 150 hospitals across 25 states, as well as national hospital associations and patient advocacy groups.

It found that few hospitals have developed comprehensive strategies to identify, educate and help enroll people in health plans sold through the new exchanges that opened to consumers last month as part of the Affordable Care Act. Coverage under these plans begins as early as Jan. 1, 2014.

Other key findings of the study include:

• Many providers have been slow to promote the expanded coverage options. Health systems attribute delays in their enrollment efforts to multiple factors, including: “Reform fatigue;” the need to finalize contracts with insurers; the slow trickle of information from regulators; and the desire for additional regulatory guidance, especially in the area of outreach designations and certification requirements.

• The newly eligible pose an enrollment challenge. If individuals do not understand which plan best fits their needs, it could impact the health of the patient as well as the revenue and reputation of the hospital. Many Americans do not fully understand the basics of health coverage, and exchanges will add another layer of complexity as 86 percent of individuals who purchase a health plan on the exchange will receive some government subsidy.

• Narrow networks could leave some hospitals out. Some health plans include only select hospitals and physician groups in their exchange offerings in an effort to hold down costs. This enables health plans to offer lower premiums, but also may lead to higher out-of-pocket expenses.

The full study is available at http://bit.ly/15Pwh0L.

3 Million More Americans Get Health Insurance in 2012, Census Bureau Finds

The number and percentage of Americans with health insurance increased in 2012, according to U.S. Census Bureau data released recently. The Census Bureau reported the following:

• The number of people with health insurance increased to 263.2 million in 2012 from 260.2 million in 2011, as did the percentage of people with health insurance (84.6 percent in 2012, 84.3 percent in 2011).

• The percentage of people covered by private health insurance in 2012 was not statistically different from 2011, at 63.9 percent. This was the second consecutive year that the percentage of people covered by private health insurance coverage was not statistically different from the previous year’s estimate. The percentage covered by employment based health insurance in 2012 was not statistically different from 2011, at 54.9 percent.

• The percentage of people covered by government health insurance increased to 32.6 percent in 2012, from 32.2 percent. The percentage covered by Medicaid in 2012 was not statistically different from 2011, at 16.4 percent. The percentage covered by Medicare rose over the period, from 15.2 percent in 2011 to 15.7 percent in 2012. Since 2009, Medicaid has covered more people than Medicare (50.9 million compared with 48.9 million in 2012).

• The percentage of children younger than 18 without health insurance declined to 8.9 percent (6.6 million) in 2012 from 9.4 percent (7.0 million) in 2011. The uninsured rates did not show a statistical change for all other age groups: 19 to 25, 26 to 34, 35 to 44, 45 to 64, and people 65 and older.

• The uninsured rate for children in poverty (12.9 percent) was higher than the rate for children not in poverty (7.7 percent).

• In 2012, the uninsured rates decreased as household income increased, from 24.9 percent for those in households with annual income less than $25,000 to 7.9 percent in households with income of $75,000 or more.

The full Census Bureau report is available at http://1.usa.gov/14zSZZR.

Report: Coverage Expansion to Spur Health Spending Growth in 2014

Health care prices have been growing slowly this year, but the growth rate is expected to increase in 2014 with the full implementation of the Affordable Care Act. Expected growth for 2014 is 6.1 percent, according to a report (http://bit.ly/18PnRZK) from the Centers for Medicare and Medicaid Services published in the September issue of the journal Health Affairs. That rate is about 2 percentage points higher than the projected growth rate for this year.

Much of next year’s projected increase will be due to major coverage expansions through the Affordable Care Act, the report noted. Over the long term, the growth rate is expected to be sustained more by the improving economy and an aging population requiring more care, with the health care law being less of a factor.

Between 2012 and 2022, national health spending is projected to grow at an average annual rate of 5.8 percent. During that same time, the Affordable Care Act is expected to only add about 0.1 percent to average annual health spending growth.

Another recent report also projected that the current lull in health care spending is unlikely to last. The report (http://bit.ly/19xmHx5), released in September by the Brookings Institute, found that health care sector spending is expected to continue to grow 1.2 percent above real GDP growth in coming decades.

That’s a slower rate than the recent average of 2.4 percent growth, but even exceeding GDP growth by 1.2 percent means that the health care sector will be close to 25 percent of GDP in 20 years. This means the health care cost curve is unlikely to “bend” dramatically in the near future, according to the report.

Employer Cost for Health Insurance Expected to Increase at Smallest Rate in 5 Years

The cost employers pay to provide health insurance to employees is expected to increase next year, but at the smallest rate in five years, the Wall Street Journal reported recently (http://on.wsj.com/1bScOgT). Companies that provide benefits expect to pay 5.2 percent more for each employee in 2014, according to the 2013 Health Care Changes Ahead Survey (http://bit.ly/1d4XJf5), which was released on Aug. 21 by professional services company Towers Watson.

That’s less than the 5.9 percent increase businesses expect this year, the WSJ noted. It would also be the smallest increase in five years. A recent survey from the Kaiser Family Foundation (http://bit. ly/18HKYSH) showed that premium costs for employees are also expected to increase at a lower-than-average rate next year.

Nearly all companies (98 percent) expect to maintain coverage for their employees in the next two years, but many will look at private exchanges as a potential option, the Towers Watson survey found. This would allow them to maintain their roles as plan sponsors, but outsource certain aspects of plan management to exchange operators.

Private exchanges are expected to become more popular in coming years as insurers look to offer businesses something similar to the public exchanges opening up to individuals in October under the Affordable Care Act.

Study: Employer Mandate Delay Will Have Little Impact on Coverage, Revenue

A one-year delay of the employer mandate provision of the Affordable Care Act will have little effect on coverage and revenue, according to a new study from RAND Corporation. Only 300,000 fewer people, or 0.2 percent of the population, will have access to employer-sponsored insurance in 2014 because of the delay, the study found. And only about 1,000 fewer businesses will offer coverage.

That’s in part because less than 5 percent of businesses have 50 or more employees, which is the point at which the employer mandate kicks in (smaller businesses are exempt). Of these larger businesses, 95 percent already offer health insurance to employees, according to the study.

The study also found that the financial impact of the delay does not figure to be overly significant. Estimates show that the federal government will miss out on about $11 billion in revenue, which is far less than the total revenue the law is expected to generate. However, if the employer mandate was repealed completely, revenue would fall by $149 billion over the next 10 years because of lost penalties—about 10 percent of the total spending offsets being used to support the law.

“Our simulations show the one-year delay of the large-employer mandate will not have a substantial impact on either enrollment in health insurance or financial support for the Affordable Care Act,” said Carter Price, the study’s lead author and a mathematician at RAND, a nonprofit research organization. “However, eliminating the large-employer mandate would have a significant impact on financial support for many provisions of the Affordable Care Act.”

The Obama administration announced the delay in early July. Originally, the law required that employers with 50 or more full-time workers provide health insurance by the start of 2014, or pay penalties. Now, these businesses have until 2015 to comply.

The full study is available at http://bit.ly/16shiv7.

HOSPITAL MERGERS COULD SQUEEZE COLLECTION AGENCIES

Hospitals across the nation are merging at a rapid pace these days—a trend that will impact the health care collections industry in numerous ways. Mergers are occurring at the fastest rate since the 1990s, the New York Times reported in a recent article (http://nyti.ms/16S1nqe). Various factors are driving the trend, including implementation of many parts of the Affordable Care Act over the next two years.

In particular, hospitals find themselves being paid less on volume under the health care law and more on the quality of care they provide, the Times noted. That means there is less of an incentive to keep beds full, and more incentive to keep patients healthy and out of the hospital. This encourages providers to merge, reduce overhead costs, and focus instead on implementing expensive electronic medical records systems that allow them to more effectively track and evaluate patients.

Consulting firm Booz & Company predicts that 1,000 of the nation’s roughly 5,000 hospitals could seek out mergers in the next five to seven years, according to the Times. ACA International member Chris Becraft—who is president of Collection Service Bureau, Inc. in Phoenix, which specializes in health care receivables management—said the industry is going through its “biggest roll-up ever.”

“Large systems are needing to either grow organically, through opening up new facilities or services, or purchase others,” he said. “Independent facilities are unable to make a profit with the current state of government reimbursement so they either need to merge or go out of business. The independent regional hospitals are an endangered species and I predict there will be very few left in five to seven years.”

Becraft added that he sees some problems for collection agencies as a result of these mergers. “What this means is there are fewer clients for collection agencies to do business with today and there will be far fewer in the future,” he said. “There is very little hope for the smaller agency to remain viable exclusively in health care unless they are content with the ever-shrinking margin and market they will be getting from small providers.”

Becraft said the mergers topic is frequently discussed among staff at his agency. “It’s a very big topic with staff,” he said. “When a change happens, that is when we can either gain business or lose it. More agencies will be losing business because of this than gaining, I can guarantee you that. We intend to be on the gaining side and are growing aggressively to be able to continue servicing these larger providers.”

Becraft added that it’s not just hospitals that are merging—many collection agencies are merging as well, in an effort to stay viable in the health care collections field.

“Larger health care providers will eventually only want to do business with other large entities because that is what will make sense to them,” he said. “The future of high volume health care RCM will be the exclusive domain of large companies because that is all that will exist eventually in both industries.”

Electronic Health Records Can Reduce Costs

Use of electronic health records can reduce the costs of outpatient care by roughly 3 percent, compared to relying on traditional paper records, according to a new study. The University of Michigan compared health care costs of 179,000 patients in three Massachusetts communities that widely adopted electronic health records with six control communities that did not.

The resulting study, “Effect of Electronic Health Records on Health Care Costs: Longitudinal Comparative Evidence from Community Practices,” was published on July 16 in the Annals of Internal Medicine. On average, the researchers estimated $5.14 in savings per patient per month in the communities with electronic health records versus those without electronic records.

“I think our findings are significant because we provide evidence to support the use of taxpayer dollars to invest in electronic health records,” said Julia Adler-Milstein, an assistant professor at the university who led the study.

“We really have not had compelling evidence that proved that they would save money. It was assumed, but there are a lot of skeptics. This study helps clarify whether there are cost savings and what the magnitudes of those are in the near-term.” The full study is available at http://bit.ly/18hILhf.

ACA International, HFMA Team up for New Task Force

ACA International has partnered with the Healthcare Financial Management Association (HFMA) to identify best practice recommendations for medical debt collection. The HFMA Medical Debt Task Force formed in February, a result of earlier discussions involving various stakeholders in the medical debt collection industry. Lucia Lebens,

ACA International’s director of federal government affairs said the idea was to develop clear guidelines that could be used across the healthcare industry.

“It was clear… that there was a lot of education to be done, as to how the process worked from when a patient left a Hospital or clinic all the way to the end of the billing cycle,” Lebens said. With HFMA and ACA International spearheading the effort, representatives from across the industry got on board, including health system CFOs, medical debt collection experts, credit reporting representatives and consumer advocates.

Lebens said members wanted to be proactive and establish recommended best practices, limiting the chance of government regulators laying out their own set of rules without any kind of input. “If we don’t do this, it’ll be done for us,” Lebens said. When the task force first met, members broke up into smaller workgroups to develop initial ideas. “That was a good starting point,” Lebens said. “Then we came together and meshed the ideas.” Using the tenets of HFMA’s Patient Friendly Billing project—that health care financial communications should be clear, concise, correct and patient-friendly—the task force developed a draft flowchart that could be adopted industry wide.

The flowchart lays out a step-by-step guide to how, ideally, medical debt collections should be handled, from the initial billing through potential legal actions for delinquent debts. Along the lines of being patient friendly, the task force recommends that providers be clear with patients about what they owe early and often. Other recommendations include identifying eligibility for public programs and/or financial assistance earlier in the process, and allowing patients to have 120 days to pay a bill before reporting delinquent debt.

The task force hopes that developing a uniform process will simplify things for patients, which should ultimately lead to better account resolution statistics. As it stands, health care providers often use different processes to resolve accounts, which contribute to patient confusion and increase the likelihood that medical debts go unpaid. Lebens said a lot of agencies in the industry already use a lot of the best practices that have been laid out, but added it was important to identify and define them in one place.

What the task force has produced so far is just a draft, however. Following a presentation at ACA’s recent annual convention, task force members brought the draft back to their respective organizations. Comments and suggestions will be gathered from these stakeholders, and the draft will be edited as needed. Lebens said she hopes a final document gets ACA and HFMA approval in the fall. From there, Lebens said she hopes that the final product can be used as an educational resource in Washington, D.C. According to Lebens, a Congressional briefing could be scheduled before the end of the year, which would provide great positive exposure for the medical debt collection industry.

“There’s been a lot of interest about this on Capitol Hill,” Lebens said. “It’s a very relevant topic.” Lebens added that by forming a proactive task force, industry stakeholders are trying to ensure that they have a seat at the table when lawmakers do address medical costs and debt. “Let’s help get the message out there that we’re working together and build some good will,” she said. If you are interested in learning more about this task force, please contact Lucia Lebens at lebens@acainternational.org.

CMS Releases Additional Data on Health Care Spending

In June, the Centers for Medicare & Medicaid Services released selected data on hospital outpatient charges as well as county-level data on Medicare spending and use for the first time. Among the data sets issued by CMS are one on Medicare spending and use (http://go.cms.gov/17RGVGP), and another on Medicare beneficiaries with chronic conditions (http://go.cms.gov/11dkxhP).

Both data sets will enable researchers, data innovators and the public to better understand Medicare spending and service use, spurring innovation and increasing transparency, while protecting the privacy of beneficiaries. The data is also available through an interactive state-level dashboard (http://go.cms.gov/16JU5lu) based on the spending information, allowing users of any skill level to quickly access and use the data.

Building on the previous CMS release of the average charges for the 100 most common inpatient procedures, CMS also released selected hospital outpatient data (http://go.cms.gov/130y8eT) that includes estimates for average charges for 30 types of hospital outpatient procedures from hospitals across the country, such as clinic visits, echocardiograms and endoscopies.

In May, CMS released data reflecting significant variation across the country and within communities in what hospitals charge for common inpatient services. For example, average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.

Even within the same geographic area, hospital charges for similar services vary significantly. For example, average inpatient hospital charges for services that may be provided to treat heart failure range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.

Historic Slowdown in Health Care Spending Growth Projected for 2014

Health care inflation in the U.S. is projected to dip to 6.5 percent in 2014, according to PricewaterhouseCoopers’ Health Research Institute (HRI) in its annual report, “Medical Cost Trend: Behind the Numbers.” The ongoing slowdown in the health care growth rate defies historical post-recession patterns and is likely to be sustained even as the Affordable Care Act adds millions more newly insured Americans to the health system next year.

The decline in spending growth is a signal of progress in the quest to bend the cost curve. At the same time, the slowdown presents financial challenges for the industry as it attempts to navigate in a rapidly changing environment. According to HRI, structural changes within the industry are helping to contain costs and deliver care more efficiently. Consumers, meanwhile, who are paying a greater share of the cost, are making spending adjustments. Many are delaying care, using fewer services and choosing less expensive options such as retail clinics, urgent care centers and mobile health devices “The health industry is at an inflection point as it rebalances, realigns and prepares for full-scale transformation from fee-for-service medicine to consumer-centered, accountable care,” said Kelly Barnes, PwC’s U.S. health industries leader. “Change of this magnitude takes time and will come in stages. Health organizations should learn to adapt to a market in which growth may be lower in the near term, and pursue new sources of growth often in unlikely places.”

Medical cost trend—or growth rate—reflects changes in the actual cost to treat patients and is influenced primarily by the cost of products and services and the number of services used, or per capita use. The trend is a key ingredient in setting insurance premiums. After accounting for likely changes in benefit design, such as higher deductibles, HRI projects a net growth rate of 4.5 percent in 2014.

According to HRI, health organizations that already have been hurt by a squeeze on reimbursement and a recession hangover should brace for additional financial pressure. Uncertainty about the impact of Affordable Care Act implementation and what to expect from a largely unknown, newly insured population are manifested in seemingly contradicting themes: a declining medical cost trend and rising insurance premiums, particularly in the individual market.

“Health care cost increases continue to exceed overall growth in wages, but the gap appears to be shrinking. The long term trends suggest that as the economy improves, the cycle of runaway cost increases will be broken,” said Michael Thompson, principal with PwC’s human resource services practice. “This is critical as employers strategically reevaluate the role of health care benefits to their organizations and step up efforts to engage employees more directly in value-based health care decision making.”

Major employers are beginning to contract directly with big name health systems to tackle expensive and complex procedures for employees, such as heart surgery and spinal fusion. According to PwC’s “Touchstone Survey,” 33 percent of businesses are considering high-performance networks over the next year. Early data suggests this could mean as much as a 25 percent reduction in costs. To explore the findings and watch video commentary, visit:

www.pwc.com/us/MedicalCostTrend.

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