Turning Bronze Plans into Gold Plans at Bronze Plan costs is a common but unspoken strategy……………
By Bill Rusteberg
Hospitals have been turning Bronze into Gold to the benefit of plan members unfortunate enough to be victims of cost shifting by plan sponsors. Facing double digit rate increases year after year plan sponsors, upon the advice of status quo brokers and consultants, have practiced the old tried and true strategies of cost shifting.
Lower premium rates come with reduced benefits as theory dictates. The higher the deductible and co-insurance patient responsibility the lower the rates become and thus savings to the plan, i.e, the plan sponsor. But is this really true?
Clueless plan sponsors don’t realize that reducing benefits actually increases costs.
Hospitals understand that the vast majority of insured Americans can’t afford to pay a $1000 deductible or more. Hospital accounts receivables are at an all time high, as much as 18-23% of gross revenue. They factor this in when negotiating contracts with managed care organizations (PPO’s).
Thus, as more and more employers continue to practice cost shifting, the higher medical costs become.
We know of a large hospital system in deep South Texas that knows how to play the game. It is well known to many in the community that this hospital does not require any kind of deposit up front. “Don’t worry, we will bill your insurance company first, and if you owe anything after insurance pays we will bill you”, wink wink. (Hospital Knows How To Play The System – Turning Cost Sharing Plans Into 100% Plans)
A C-suit executive at this hospital once admitted to me “Bill, we will bill the patient three times for balances owed. Then if we don’t hear from the patient, we simply write it off. We don’t even send to collections because that would create ill will in the community.”
School district employees in the community are well educated. They share common knowledge of how the game is played and know which hospital system to go to. As a result the employees select the plan option with the highest deductible (lowest rates) knowing that they can turn their Bronze Plan into a Gold Plan through willing hospitals.
In the meantime the district’s self-funded health plan pays more through their managed care contract, in effect paying down the patient’s share to the advantage of the hospital system. Plan costs increase despite essentially static health care costs. (]Hospital Costs Flat – But Plan Sponsors Don’t Benefit)
To change the status quo of ever increasing health care costs plans should improve benefits, not reduce them. More plans are realizing that better benefits always means lower costs. We have the empirical data to prove it.
An example is a small 135 life case in South Texas who negotiated a direct hospital agreement. In return for Medicare rates (100% of Medicare) the group agreed to waive all but $250 patient share (in-patient) and $150 patient share (out-patient). The hospital now has no need to chase patient share and was willing to reduce their rates well below managed care contracts. This can be duplicated in your community too. You should try it………………….