High deductibles are adding to bad debt
Many patients will be unable to pay
The type of health insurance tier level a patient chooses from the Qualified Health Plans offered through the Affordable Care Act’s (ACA’s) Health Insurance Marketplace could end up increasing a hospital’s bad debt, says Gwynne Mesimer, vice president of operations for Union, NJ-based Chamberlin Edmonds, an Emdeon company. Emdeon is a provider of revenue and payment cycle management and clinical information exchange solutions.
"Many hospitals are quite concerned about the patient’s choice of high deductible plans," she adds. While they look quite appealing initially to the consumer due to lower premiums, says Mesimer, the cost of healthcare might be quite high just when a patient needs it most, such as an inpatient stay or extensive emergency department visit.
"The question is whether patients will really pay that high deductible or their share of the hospital bill," says Mesimer. It’s unlikely, for example, that a person living on the edge of poverty with a "bronze" plan with a $4,000 deductible and 40% co-insurance will be able to afford his or her out-of-pocket responsibility.
"If a patient perceives they are unable to pay those costs, will this expense be considered charity care, or will it just add to the hospital’s bad debt?" Mesimer asks.
Burden is on hospitals
While hospitals expect to see fewer self-pay patients, especially in states that have opted in to Medicaid expansion, Mesimer notes that many eligible patients are non-compliant with the steps required to obtain Medicaid today.
"It remains to be seen whether the publicity surrounding the ACA will change this behavior in a substantial manner that will have hospitals seeing fewer uninsured or underinsured," she says.
Bad debt could be increased due to the mix of plans being selected by new enrollees, says Joel Gardiner, principal of New York City-based Deloitte Consulting. "High out-of-pocket responsibilities will burden hospitals in collecting for amounts owed," he says.
In addition, some patients no longer have employer-sponsored coverage and are now eligible to purchase through the exchanges, but often with higher out-of-pocket expenses. Gardiner says hospitals are using these approaches to address the trend toward high-deductible plans:
• prioritizing upfront collections for estimated liabilities owed prior to service;
• establishing policies to defer non-urgent services;
• implementing technologies that predict a patient’s propensity-to-pay.
"Providers are also utilizing deep analytics to better understand self-pay patients and utilization patterns," says Gardiner.
