The rise of High Deductible Health Plans is a big change in patient responsibility, with implications for Ambulatory Surgery Centers (ASCs).
With the ASC market expected to top $40 billion by 2020, how ASCs handle this sea change has implications for healthcare overall.
From increased patient education efforts to best billing practices, ASCs—with their usual speed—must adapt to the shifting payer/provider landscape.
How Did We Get Here?
Acting on the assumption that HDHPs would stem a rumored over-utilization of healthcare spending, many employers embraced them for the first time in 2006.
In 2007, 85% of adults with employment-based health coverage were enrolled in a traditional plan, with an average deductible of $379 (adjusted for inflation) for single coverage. Today, only 56.6% have a traditional plan, with 43.4% enrolled in a HDHP. The average HDHP deductible stands at $1,350 today, or more than triple the 2006 figure for a traditional plan.
When patients access healthcare, it’s not likely they have the funds to meet even the lowest deductible before doing some major financial juggling. Wage growth hasn’t followed the increase in insurance premiums, as a study by the Los Angeles Times and Kaiser Family Foundation discovered. Complicating matters, federal data shows that while 61% of adults could cover an unexpected $400 expense, 39% would have to borrow, money, sell something or simply not be able to cover it at all.
The bottom-line impact on ASCs quickly becomes apparent when you examine the patient pay mix. Medicare and Medicaid are growing, but commercial pay still accounts for the majority of ASC payments. The mean percent of gross charges for ASCs, as measured in VMG Health's 2018 Multi-Specialty ASC Benchmarking Study., breaks down as follows:
- Commercial 61%
- Medicare: 20%
- Worker’s comp: 10%
- Other: 10%
- Medicaid: 7%
- Self-pay: 6%
If the 43.4% figure above is applied to the commercial pay percentage from the VMG study, 26% of the average ASC’s commercial payer mix relies on HDHPs. Physicians may have been worried about how they would be paid by the uninsured; now it’s the patient responsibility portion of any HDHP policyholder that’s keeping them up at night.
Here are three areas where ASCs should be making changes to accommodate HDHPs.
Patient Communication and Information
Patients need a solid understanding of their role in paying for their care. But unlike any other consumer purchase process, it’s hard for patients to get a clear picture of what they owe at the time of payment. ASCs—36% never discuss a patient’s ability to pay before delivering services—need to take a greater role in patient education. Proactive communication about co-pays, deductibles and coinsurance well before a patient’s procedure is critical.
Some have moved ahead of the game by directly addressing HDHPs with patients as part of their insurance and billing patient education. They provide clear direction on how patients can work with their insurer to determine current deductible status and related out-of-pocket responsibility.
Many with HDHPs may elect to schedule their surgery early in the year to quickly meet their deductible. Some centers may have already encountered this, but others should prepare for higher than usual patient volumes in the early months of the year.
Best billing practices for HDHPs
HDHPs are intricate cost-sharing agreements that can tax the skills of even the savviest revenue cycle management pro. Some policyholders have Health Savings Accounts—flexible healthcare spending dollars available to patients who set aside a pre-tax portion of their earnings—which can be used towards paying their deductible.
Still, flexibility is the watchword to successfully navigate billing and payments with HDHPs. Payment plans or flexible financial solutions, like the short-term payment plans offered by one center, are increasingly being used. A tiered campaign of letters and phone calls in the days and weeks leading up to a surgery to collect co-pays and deductibles also smooths the payment process.
HDHPs also up the ante for accurate coding. Now is the time to review billing and coding processes to avoid common coding mishaps that add to time and cost pressures.
HDHPs may be a wrench thrown into the dynamic surgery center environment, but given the "get-it-done" culture of most ASCs, HDHPs aren’t anything they can’t handle.
David Howerton is the CEO of Tennessee-based Simplify ASC, a software development company that provides a fully integrated clinical and business management platform to the ASC industry.