Copayments and deductibles used to be a small issue. The $1 here or $20 there. Not anymore. Consumers now pay 30% of total health care costs (see 2019 Medical Billing Statistics). There are now health plans with $7,150 deductibles for individuals and twice that for families (see High-Deductible Health Insurance: The Good, The Bad And The Ugly). I was recently talking to one of my newly self-employed friends and was surprised when she told me she recently bought a short-term policy with a $22,000 annual deductible.
Overall consumer out-of-pocket (OOP) for hospital services rose 12% during 2018 across inpatient, outpatient, and emergency department services (see Consumer Out-Of-Pocket For Hospital Service Costs Rose 12% During 2018); average OOP costs rose from $1,813 in the fourth quarter of 2017 to about $2,030 in the fourth quarter of 2018. The share of consumers with average per-visit OOP costs above $501 also rose, from 51% in 2017 to 64% in 2018. The rising costs for all three settings were:
- Inpatient OOP costs averaged $4,659 in 2018, up 14% from $4,086 in 2017.
- Outpatient OOP costs averaged $1,109 in 2018, up 12% from $990 in 2017.
- Emergency department visit OOP costs averaged $617 in 2018, up 7% from $577 in 2017.
One of the results of these rising consumer costs has also surprised me—Americans are using crowdfunding to pay their bills. The Los Angeles Times recently reported on one family that resorted to “T-shirt sales, a home run tournament, a benefit concert and an online GoFundMe campaign” to raise funds for a boy who needed 53 surgeries and 800 days in the hospital (see Charity Becomes A Lifeline Even For Americans With Health Insurance As Deductibles Soar). Even the rich and famous are resorting to crowdfunding, as evidenced by the campaign launched for actress Valerie Harper, who has leptomeningeal carcinomatosis (see Valerie Harper’s Family Launches GoFundMe to Help with Medical Expenses Amid Cancer Treatment).
The rise in consumer payments has also gotten the attention of legislators and policy makers, including a push in Congress “to end surprise medical bills, curb high prices for medicines, and limit prescription copays for people with Medicare” (see Congress Has Ambitious Agenda Tackling Health Care Costs). The Trump Administration has also proposed new rules to provide consumers more transparency about the prices hospitals charge insurers (see Trump Administration Moves To Make Health Care Costs More Transparent), while a new California policy has stopped surprise medical bills (see California’s Surprise-Billing Fix Has Changed Provider-Payer Bargaining, Stakeholders Say), which are defined by The Brookings Institution as when consumers “receive care from out-of-network providers that they did not choose” and “receive a “surprise” out-of-network bill” (see What Is Surprise Billing?).
The question for many provider organization executives is how to factor a larger proportion of revenue coming from consumer OOP? How do you ensure that you can collect the payments? Most executive teams don’t think about consumers paying for services because we have long had a health care financing system that relies on third-party payment. In an environment that relies more heavily on consumer OOP, provider organizations need the ability to estimate those expenses, present a bill at the point of service, and collect immediately. Success relies on having policy and procedures in place that recognize why consumers might not pay, and identifying the right timing for the right assertiveness in collecting those payments (see Consumers Can & Will & Must Pay for Services: Mastering the Self-Pay Process Is A Necessity For Your Organization).
How to prepare? I touched base with OPEN MINDS Senior Associate Joseph P. Naughton-Travers, who noted that provider organization managers need to focus on three key elements:
Invest in a good electronic health record and billing system—Provider organizations can’t be successful at collections if they can’t keep track of exact amount consumers owe for their portions of payment.
Collect in real time—Policy and practice should be focused on collecting payment; in advance if possible, or immediately at the time of service.
Cash isn’t the only payment option—Invest in the infrastructure necessary to accept credit cards or other forms of payment. Provider organizations can also partner with a company that offers credit services to aid consumers in paying for services (this is commonly done in dentist and other doctor settings).
For more, check out these resources from the OPEN MINDS Industry Library:
- Integration, Interoperability & Consumer Engagement
- Keys To Incorporating ‘Self-Determination’ Into Your Services
- You Say Subscription-Based Health Care, I Hear Customer Service
- The Next Wave Of Consumer Price Shopping For Health Care
- What Do Your Consumers Want?
- Make Change Or Be Changed
- The Big Rewards Of Health Care Through The Consumer Lens
- Answering The Question – Who Can Afford Their Health Services?
- Customer Service, Consumer Experience & Consumer Engagement: Keys To Competitive Advantage
- Let Consumerism Guide Your Customer Service Efforts
For more, join me on September 10 at The 2019 OPEN MINDS Executive Leadership Retreat for the session, “Raving Fans: Transforming Organization’s Culture & Client Experience” featuring OPEN MINDS Senior Associate Paul Duck.