Hos­pi­tals strug­gle with the dilemma of pa­tients hit by high de­ductibles

Modern Healthcare - - NEWS - By Dave Barkholz

OR­LANDO, Fla.—The rise of high­d­e­ductible health plans is driv­ing one Mis­souri hos­pi­tal to com­pletely re­vamp pa­tient registration, billing and col­lec­tion.

Mo­saic Life Care, a 297-bed hos­pi­tal in the town of St. Joseph north of Kan­sas City, is a peren­nial on Tru­ven Health An­a­lyt­ics’ an­nual 100 Top Hos­pi­tals list, which rec­og­nizes fa­cil­i­ties for pa­tient care, op­er­a­tional ef­fi­ciency and fi­nan­cial sta­bil­ity.

Yet last year, $23 mil­lion worth of self­pay pa­tient care ex­posed deep flaws in the pro­cesses and tech­nol­ogy the hos­pi­tal used to log pa­tient in­for­ma­tion, make in­sur­ance claims and ap­proach pa­tients for out-of-pocket costs, said Deb­o­rah Van­cleave, Mo­saic’s vice pres­i­dent of rev­enue cy­cle.

“We win all kinds of awards for pa­tient qual­ity, but our rev­enue cy­cle didn’t match that per­for­mance,” said Van­cleave, who spoke on the side­lines of the an­nual na­tional con­fer­ence held last month by the Health­care Fi­nan­cial Man­age­ment As­so­ci­a­tion.

In the past five years, health in­sur­ers went from pay­ing 90% of pa­tient-care costs to only about 70%, and that’s caus­ing mas­sive headaches for providers.

Van­cleave said the stark re­al­ity of high-de­ductible health­care—though on the radar of Mo­saic ex­ec­u­tives last year—re­ally hit home dur­ing the first four months of this year.

The hos­pi­tal, she said, stayed nearly full dur­ing that time, post­ing record cen­sus and gross rev­enue. But net rev­enue didn’t budge an inch from the prior year pe­riod be­cause pa­tients weren’t pay­ing their grow­ing share of the cost of care.

Pa­tients’ self-pay to­tal— the amount not cov­ered by in­sur­ance—was up 9% over the four months, she said.

That’s put Van­cleave on a quest for im­prove­ment.

Just a month ago, Mo­saic brought in ClearBalance to of­fer pa­tients fi­nanc­ing op­tions for their out-of-pocket costs.

ClearBalance and other health­care fi­nanc­ing com­pa­nies such as HealthFirst Fi­nan­cial ar­range loans with pa­tients that hos­pi­tals typ­i­cally cus­tom­ize. Often they in­clude a no-in­ter­est op­tion for 12 to 24 months but as long as 72 months de­pend­ing on what hos­pi­tals re­quire.

ClearBalance, which has been mak­ing pa­tient loans since 1992, has 150,000 pa­tients on credit at any one time at scores of hos­pi­tals, CEO Bruce Haupt said.

HealthFirst, whose cus­tomers in­clude Trin­ity Health, has $71 mil­lion in pa­tient loans at any one time at about 220 hos­pi­tals, physi­cian of­fices and am­bu­la­tory surgery cen­ters, said KaLynn Gates, the com­pany’s pres­i­dent.

Van­cleave said Mo­saic en­listed ClearBalance to re­cover more of the out-of-pocket costs owed by pa­tients and of­fer them a fi­nanc­ing op­tion.

Van­cleave, who joined Mo­saic a year ago af­ter years at rev­enue-cy­cle gi­ant Conifer Health So­lu­tions, said the small-town hos­pi­tal had tried a pre­vi­ous pay­ment plan for pa­tients. But it could only col­lect 20% to 30% of what pa­tients owed. That was be­cause of the has­sle of send­ing out monthly bills and the dif- fi­culty of em­ploy­ees try­ing to col­lect from their neigh­bors.

Since out­sourc­ing the job to ClearBalance, the hos­pi­tal has al­ready re­ceived a seven-fig­ure check from ClearBalance for out­stand­ing out-of-pocket bills, Van­cleave said.

Both ClearBalance and HealthFirst are “re­course” lenders, which means they pay the hos­pi­tal up­front for the out­stand­ing bills of pa­tients who sign up for a loan.

But the hos­pi­tal guar­an­tees the money and re­pays the lender if pa­tients de­fault on their credit lines. The fi­nance com­pa­nies make their profit by get­ting a 10% to 15% fee for the out­stand­ing amount of the loan.

Van­cleave said the fee is worth the much higher rate of re­cov­ery that the hos­pi­tal has got­ten on out-of-pocket re­ceiv­ables.

Hos­pi­tal and ven­dor ex­ec­u­tives at the HFMA con­fer­ence said the strains from high-de­ductible plans are bal­loon­ing.

In 2016, for the first time, more than half of all work­ers (51%) with sin­gle cov­er­age faced a de­ductible of at least $1,000, ac­cord­ing to a study re­leased last Septem­ber by the Kaiser Fam­ily Foun­da­tion/Health Re­search & Ed­u­ca­tional Trust.

The study showed that 29% of work­ers were in high-de­ductible plans com­pared with 20% two years ear­lier.

Hos­pi­tals are strug­gling to col­lect the in­creased pa­tient share of the cost, ac­cord­ing to Crowe Rev­enue Cy­cle An-

“We win all kinds of awards for pa­tient qual­ity, but our rev­enue cy­cle didn’t match that per­for­mance.” Deb­o­rah Van­cleave Vice pres­i­dent of rev­enue cy­cle Mo­saic Life Care

alyt­ics, a unit of ac­count­ing and con­sult­ing gi­ant Crowe Hor­wath.

Data de­rived from about 660 hos­pi­tals show over­all man­aged-care net rev­enue has de­clined 2.5% for out­pa­tients and 1.4% for in­pa­tients based on un­changed con­tract rates over the past year. The cause was lower col­lec­tion rates for “pa­tient re­spon­si­bil­ity” dol­lars than for payer re­spon­si­bil­ity dol­lars.

About five years ago, in­sur­ers paid about 90% of hos­pi­tal claims, with pa­tients re­spon­si­ble for about 10%, said Jase DuRard, chief rev­enue of­fi­cer for rev­enue-cy­cle ven­dor Ac­cuReg. To­day, the mix is 70% by in­sur­ers and 30% pa­tient out-of-pocket, he said.

It’s cru­cial in that en­vi­ron­ment to pro­vide pa­tients with as much in­for­ma­tion as pos­si­ble up­front, be­fore their pro­ce­dures, said David Muhs, chief fi­nan­cial of­fi­cer at Henry County Health Cen­ter in Mount Pleas­ant, Iowa.

The 25-bed crit­i­cal-ac­cess hos­pi­tal

In the past five years, health in­sur­ers went from pay­ing 90% of pa­tient-care costs to only about 70%, and that’s caus­ing mas­sive headaches for providers.

uses Re­layHealth rev­enue-cy­cle soft­ware from Change Health­care to give pa­tients a solid cost es­ti­mate of their out-of-pocket costs, often in a phone call be­fore their care is even de­liv­ered, Muhs said.

That trans­parency al­lows them to con­cen­trate on their care or that of a loved one when it’s time for treat­ment rather than hit­ting them with a big bill after­ward, he said.

Van­cleave said Mo­saic re­cently turned to Ac­cuReg tools to but­ton down the accuracy of in­for­ma­tion the hos­pi­tal gets at registration and help the hos­pi­tal de­ter­mine whether in­di­vid­ual pa­tients can af­ford to pay for care, should be signed up for Med­i­caid, or should go straight to a char­ity write-off.

She said pur­su­ing col­lec­tion from peo­ple who can’t pay just causes them un­nec­es­sary angst and hurts the hos­pi­tal’s public per­cep­tion and pa­tient-sat­is­fac­tion scores.

Rev­enue cy­cle staff “are the first point of con­tact with a pa­tient and the last point of con­tact,” Van­cleave said. “That’s im­por­tant to keep in mind.”

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