High-Deductible Plans – Hospital Bad Debt & 75% Lower Utilization

chasingdollarsHigh deductible plans are creating new headaches for hospitals, including more unpaid bills and seasonal demand for some healthcare services as patients wait to hit their deductibles before seeking non-urgent care.

The bulk of the savings through high deductible plans, up to 75%, come from lower utilization. It’s not the value of the increased deductible per se, it’s the change in behavior. When it’s other people’s money it doesn’t matter, but when it’s your money it’s a completely different dynamic.

Instead of jacking up prices, hospitals should work with local health plans to achieve equitable solutions – lower reimbursement rates for lower deductibles and co-insurance. Is 250% of Medicare and chasing dollars better than 100% of Medicare and not chasing dollars?

Blog: High-deductible plans, less chronic disease care

By Beth Kutscher  | June 30, 2015

High deductibles have already been linked to an increase in bad debt at some health systems, but now they may be responsible for holding down volume as well.

People with high-deductible health plans are more likely to skip out on care for chronic conditions, a new report from Truven Health Analytics (PDF)found.

Health plans with high deductibles are increasingly popular among employers and in the individual insurance marketplace. The number of people enrolled in one has quadrupled between 2007 and 2013, according to Truven’s study.

But they’re creating new headaches for hospitals, including more unpaid bills and seasonal demand for some healthcare services as patients wait to hit their deductibles before seeking non-urgent care.

People with high deductible plans incurred healthcare costs that were lower than those in traditional health plans across all healthcare settings, Truven found. The cost difference was as much as $457 to $532 per member per month.

The bulk of the savings, up to 75%, came from lower utilization. People who had to pay out of pocket for their costs were less likely to go for imaging and lab tests, schedule doctor’s visits and fill prescriptions. They also had fewer nonmaternity-related admissions and were more likely to use generic drugs.

Although the Affordable Care Act mandates coverage for preventive care, gaps can still exist for chronic disorders. Enrollees in high deductible plans were less likely to receive care for common conditions like asthma, congestive heart failure, coronary artery disease, depression, diabetes, hypertension and osteoarthritis.

The challenges of getting people to come in for healthcare services has even prompted Ascension Health to consider creating an additional insurance product that would act as a stopgap for people with high deductible health plans.

“We have patients every day, my doctors tell me, where the doctors say they order three tests and the patient says I can’t afford all three. I hear that from doctors all the time,” said CEO Anthony Tersigni. “High-deductible plans are changing the way we’re thinking. It’s going to an underinsured population. They can’t pay the high deductible and copay. How do we mitigate that? We have to find an answer, and we don’t have an answer now.”

Earlier this year, a study from the Kaiser Family Foundation found thatAmericans are ill-prepared to meet the increasing financial obligations under their health plans. Even among nonpoor, non-elderly respondents, only 51% said they have enough liquid assets to cover a high deductible. Only 63% could cover a midrange deductible.

Ignoring these disorders could mean bigger problems for patients down the road—meaning those short-term savings could be erased by larger costs from poorly managed conditions, the Truven study warned.

Beth Kutscher

Beth Kutscher is based in Nashville and writes about healthcare finance. She leads the production of Modern Healthcare’s M&A Watch, a database and quarterly report tracking mergers and acquisitions in the industry. Before joining Modern Healthcare in 2012, she was a content editor and healthcare reporter for the New York-based Mergermarket Group. She previously was news and online editor for Pharmaceutical Executive and deputy news editor and healthcare reporter for PRWeek. She has a bachelor’s degree in English from Cornell University.