Fewer self-pays and less bad debt?
Many patients have high deductibles
It is too soon to tell how the Affordable Care Act (ACA) is affecting the number of self-pay patients seen by patient access areas, says Jeff Goldman, the American Hospital Association's vice president of payment policy. Fewer self-pays are anticipated, but many will have high out-of-pocket expenses.
"Prior to the implementation of the ACA, hospitals were seeing more patients with high-deductible plans," Goldman says. "We believe this trend will continue."
It is too early to tell exactly how the financial demographics are changing for hospitals, says Christopher Ricaurte, senior vice president of revenue cycle operations at Accretive Health, a Chicago-based consulting firm that helps hospitals manage revenue. "We expect that hospitals will see a shift in patient mix away from self-pay toward insurance coverage —either Medicaid or health insurance exchange plans," he says.
Patient access areas at Nationwide Children's Hospital in Columbus, OH, already had a very small self-pay population because most children already qualified for the state's Medicaid program. However, Michael Hester, vice president of revenue cycle in the Finance Department, doesn't believe hospitals with a big increase in former self-pays now covered by exchange plans will see a decrease in their bad debt.
"Patients qualified for the ACA plan because they didn't have high enough income to buy their own insurance," Hester explains. "They will have insurance, but it will still be more out-of-pocket than they can afford. I just don't see the mathematics of that relationship."
Exchange health plans are likely to reimburse at lower rates than existing commercial plans, says Ricuarte. "We are continuing to advise hospitals on the importance of helping patients understand and satisfy their patient-pay obligations." he adds.
By 2016, health insurance exchanges are expected to cover 24 million Americans, many of whom would otherwise not have had coverage, he notes. "This will eventually reduce the burden of bad debt for hospital clients," says Ricuarte.
Early signs "not necessarily positive"
It is too early to determine how the ACA will financially impact hospitals, "but many early signs are not necessarily positive," according to Joel Gardiner, principal of New York City-based Deloitte Consulting. Here are some reasons:
- Bad debt could be negatively impacted, based on the mix of plans selected by new enrollees. "High out-of-pocket responsibilities will burden hospitals in collecting for amounts owed," explains Gardiner.
- Exchange-plan providers narrowing their delivery networks could result in reduced volume.
- The disproportionate share payments have been reduced by the ACA, but the number of enrollees needed to offset the lower payments has not yet been realized.
- Some patients have lost employer-sponsored coverage. "They are now eligible to purchase through the exchanges, but often with higher out-of-pocket expenses that may turn into bad debt," says Gardiner.
Proliferation of high-deductible plans from private and exchange-based insurance plans is a significant issue in revenue-cycle management, says David Betts, principal of New York City-based Deloitte Consulting. "It is perhaps one of the top two or three challenges facing health systems, as they attempt to collect receivables," he adds.
The portion of bad debt resulting from the patient/guarantor liability after insurance is increasing dramatically, says Betts. He recommends that patient access leaders use these approaches to address this trend:
- putting more emphasis on upfront collections for estimated liabilities owed prior to service;
- establishing policies to defer non-urgent services;
- implementing new technologies that predict propensity-to-pay and that prioritize collections;
- utilizing deep analytics to better understand self-pay patients and utilization patterns;
- assisting uninsured patients to enroll in exchange-based plans.
Adding an upfront patient liability estimator as part of the access process is "a must," says Betts. "One of the top reasons patients don't pay on time is the failure of hospitals to accurately tell the patient what their share of the bill is before service is delivered."