To further adoption, the president proposed tax breaks for HSA spending and premiums for HSA-compatible insurance plans, as well as the ability for consumers to take any HSA-qualified insurance plan with them if they change employment. He asserts that HSAs and the consumer-directed health plans that accompany them will reduce healthcare costs by making it easier for consumers to afford insurance and exercise control over their healthcare dollars.
Putting off care
But critics worry that healthcare organizations are not ready for this kind of fundamental change. They suggest that consumer-directed health plans might decrease healthcare utilization — leading consumers to put off elective procedures or avoid preventative care.
“It's going to impact utilization to a degree,” says Ann Hynes, director and senior analyst, healthcare services, at Leerink Swann and Company, Boston. “I have a friend who brings her children to the doctor if they sneeze, but consumer-driven health weeds out that type. Instead of rushing in, they'll just wait and see. Instead of having that elective procedure, maybe they'll wait a year or two.”
Jane Keller, CEO of the Indiana Orthopaedic Hospital (IOH), a 42-bed orthopedic surgery hospital in Indianapolis, says that IOH saw a substantial increase in volume in the last few months of last year. “We offer primarily elective procedures. And I think why we saw patients put off procedures until the end of the year is that they met their deductibles and that affected how they used their HSA dollars.”
Managing debt collection
Detractors also say that with consumers responsible for more of their healthcare bills, hospitals will have to become experts in debt collection.
“In the past, hospitals have proven to be not so good at collecting consumer debt,” says Devon Herrick, Ph.D., a senior fellow at the National Center for Policy Analysis (NCPA) in Dallas. “But as consumers control more of their healthcare dollars, hospitals are going to have to be.”
Joseph Quagliata, president and CEO of South Nassau Communities Hospital, a 441-bed acute care facility in Oceanside, N.Y., is concerned that many don't appreciate just how much goes into running a proper medical facility, and the costs involved.
“If you understand what goes into providing a service in a hospital, we have enormous overhead,” he says. “The emergency department has huge standby costs associated with it. For instance, it is staffed 24/7, has all kinds of equipment ready to respond to people's needs. And, of course, heat, light, power, all of the things that go into running a sophisticated facility.”
Currently, pricing for any hospital service involves recapturing some of those costs. But Quagliata worries that with the higher deductible insurance plans that accompany HSAs, consumers will decide to go to a lower-priced ambulatory care center instead of the emergency room, reducing the ability of hospitals to bring in cash.
Asking for payment upfront
Analysts have stated that to weather these changes, hospitals need to move to point-of-service collection. But Hynes says that the switch is difficult. “The culture is not to collect money upfront. But hospitals have to institute upfront collection policies for non-emergency care.”
IOH has recently implemented this kind of upfront collection strategy, and Keller says it has been a big change. “We call patients, see if they might incur a large out-of-pocket expense, and then work with them before admittance to help them manage that.”
Chip Giffin — vice president of revenue cycle for Pennsylvania Mountains Health Alliance (PMHA), an association of 15 independent rural hospitals in the Lehigh Valley area of Pennsylvania — says that his organization is taking things one step further by developing automated systems at the point of care to determine how much a patient has to pay. “The intent is two-fold. We want to know both a patient's ability to pay, as well as their propensity to pay. At the front end, we need to know about ability first.”
PHMA is in the process of implementing a database with a rules engine that takes in a patient's insurance and financial information, and provides hospitals with an idea of what co-pays, deductibles or other costs are involved. The system would also provide credit scoring. With that information in hand, staff can determine how much a patient should pay upfront and set up a payment plan before services are rendered.
Hynes agrees that having that kind of knowledge upfront is critical to getting reimbursed. “Once a patient walks out, the chance of collecting the money they owe decreases by 80 percent,” she says. “As consumer-driven healthcare increases, collecting debt is only going to get more difficult. Hospitals need to invest a lot of money in upfront collections and start doing it now.”
