How to Protect Your Practice
by AJ Riviezzo
There are a variety of moving parts with the Affordable Care Act (ACA) that can impact your practice ranging from changes in payer reimbursement to your own individual or small group health insurance plan. One aspect that has not been covered much in the media is the potential negative financial impact to a physician’s practice.
As you may have heard, the policies being offered under the ACA are given a ‘metal’ designation to help easily identify cost and patient responsibility. These metals are Gold, Platinum, Silver, and Bronze. My concern is mostly with the lower level plans.
These lower level plans have high to very high deductibles. They also contain relatively high coinsurance rates (ranging from 20% up to 50%). They also have high out of pocket maximums. In short, the patient will have a significant out of pocket expense should they seek any sort of care.
My assumptions on the patient that has these lower tiered plans are:
1. They may be entering the insurance market for the first time in a while, and;
2. They likely do not understand how deductibles, copayments, coinsurance and out of pocket maximums work, and;
3. They have selected these lower tiered plans due to cost, and;
4. The government subsidy provided pays for the majority of the plan cost, and;
5. They will have unreasonable expectations on what the insurance actually covers (see point 2 above).
What this means to you, as a provider of healthcare, is an increase on the amount the patient will have to pay… and a patient that is ill prepared both financially and knowledgeably.
Here’s an example of a Silver Plan: $2,500 deductible, claims pay at 70/30 until and Out of Pocket Maximum of $6,000. If the allowed amount is $6,500 for their complete course of treatment, the patient will owe the deductible ($2,500) and 30% of the remaining allowed amount of $4,000 ($1,200) for a total of $3,700.00 not counting any copayments that may be owed.
For a patient with the potential expectation that they have insurance and that insurance should ‘cover’ their care, the bill at the end of the course of treatment for $3,700 may come as a complete shock.
Please keep in mind this is a Silver plan. Bronze plans have deductibles that can range from $4,000 to $10,000 per year with even higher out of pocket maximums.
What Should You Do?
While many practices may be uncomfortable discussing the potential out of pocket expenses that a patient may owe, I believe it is essential. Informing the patient about their course of treatment, the expected allowed amounts, the expected out of pocket amount, and establishing a payment plan needs to become routine rather than the exception if your practice is to maintain solvency. Yes, the downside is that the patient may delay or seek care elsewhere. Given the costs in providing the care, it is likely financially beneficial for the practice to have this happen rather than be owed thousands of dollars later. Commercial plans already shifted the burden onto the provider. These new plans exacerbate the situation.
You should put a plan in place now for the first of the year to address how you will inform the patient, collect deductibles, and what sort of payment arrangements you are willing to accept. You may want to consider an external patient financing credit company as well. While their fees to the provider can be a bit high, being paid most of the money now rather than little of it over a long period of time, makes good financial sense. Healthcare providers are able to deliver value based care to each patient.
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