Pulse
Driven to Doubt
Consumer-driven health plans are gaining traction with cost-conscious employers. But what effect are they having on the bottom line of medical practices?
Like the newest car model on the showroom floor, consumer-driven health care is generating a lot of buzz among policymakers, patients, physicians, and employers.
In Minnesota, a growing list of companies such as Target and Medtronic now offer workers the option of a consumer-driven health benefit that combines a high-deductible health plan with a personal account for out-of-pocket medical expenses.
The theory behind the model is that giving workers a financial stake in their health care decision-making will help restrain the growth of health care costs and keep coverage affordable for both employers and workers.
Although consumer-driven health care is still relatively new, there are early indications that some employers are seeing a moderating effect on their health care costs. Less clear at this stage is the impact that these plans will have on physicians and their patients.
Many physicians support the concept of consumer-driven health care, which is designed to give patients more choice, flexibility, and responsibility than traditional forms of health insurance. “It puts the incentives in line for people to take control of their health again,” says Stephen Hodgson, M.D., an endocrinologist at Mayo Clinic and a proponent of consumer-driven health care.
But as more consumers move into the driver’s seat, there are signs that doctors and clinics—as well as patients themselves—could be in for a bumpy ride, at least initially. “It does put new demands on an already-stretched system of care,” says Bobbi Daniels, M.D., chief medical officer of University of Minnesota Physicians, a 650-member group made up of faculty physicians.
One of those new demands is that patients in consumer-driven plans often need more financial counseling than patients in traditional ones. Instead of just having a co-payment to worry about, some patients are suddenly confronted with significant out-of-pocket expenses as a result of their high deductible. That can come as a shock to patients, says Daniels. “It’s not what most people are used to with conventional health insurance.”
Ideally, patients enrolled in a high-deductible plan have a Health Savings Account (HSA) or Health Reimbursement Account (HRA) funded by their employer that can be used to pay for costs incurred before the deductible is met. But that is not always the case.
Often there is a sizable gap between the balance in an individual’s account and the amount of their deductible. That gap can put patients on the hook for thousands of dollars in expenses not covered by their health plan. And that can have serious implications for doctors and clinics that are left holding the bag when services are not reimbursed.
At University of Minnesota Physicians, the staff provides financial counseling to a growing number of patients who are not covered by traditional health insurance plans, Daniels says. The practice employs about 10 full-time financial counselors who explain to self-pay patients and patients in high-deductible plans their potential financial responsibilities and the types of assistance available to them, including payment plans. The financial counseling program has paid off for patients and the practice by cutting patient bad debt by one-third during the past three years, says Ann Peterson, director of patient financial services. But she is concerned that the practice will need to put even more resources into financial counseling as more of its patients shift to high-deductible plans. “The potential for increased bad debt is definitely there,” she says.
The Waiting Game
Even when patients do have enough money in their account to pay out-of-pocket costs, physicians usually have to wait longer for payment under high-deductible plans than when patients have conventional health insurance.
With conventional plans, insurers typically process a claim, determine the amount they will reimburse based on their contract with the provider, and send payment within about two weeks. But if the patient has not yet met his deductible, the insurer processes the claim, determines the amount of reimbursement, and then notifies the physician’s office that it needs to bill the patient for that amount.
That process creates additional paperwork, cash-flow pressure, and uncertainty for clinics and doctors, says Kurt Neil, chief financial officer of Multicare Associates, a Fridley-based multispecialty physician group that operates three clinics in the metro area.
Once the bill goes out to the patient, it could take another month or longer for the payment to arrive, Neil says. “In the past, we would have the $80 from the health plan in two weeks, and we’d be done,” he says. “Now it takes two and a half months to get the same amount of money from the patient.”
Unfortunately, there is not much insurers can do to get patients to pay more quickly. “The only thing we can do is process the claim as quickly as possible when it comes to our door,” says Eugene Sako, manager of product development for PreferredOne, which provides a consumer-driven health plan to about 29,000 people in the insured group market. “But then it is up to the provider to pursue the payment.”
Insurers are working toward streamlining payment transactions, which they say should benefit both patients and physicians. “The vision is [to have] a point-of-service transaction,” says Melinda Pederson, product manager at Blue Cross and Blue Shield of Minnesota, which has more than 159,000 individual and group members enrolled in consumer-driven health plans.
The Blue Cross and Blue Shield Association, the umbrella organization for Blue Cross insurers in various states, has chartered a bank, called the Blue Healthcare Bank, that will provide members of the Blues’ consumer-driven health plans with an electronic card to pay for health care. That way, “members can see what costs were incurred, swipe a card, and get the funds out of their account at that point,” Pederson says.
The bank has applied for a license to begin operations in 2007.
HealthPartners, which has about 200,000 members in its consumer-driven health plans, is also looking into an electronic tool that will enable physicians to get payment up front from patients.
The software will provide doctors’ offices with “real-time claims adjudication” that will calculate the amount of reimbursement they are owed for services they have just provided to the patient, says Babette Apland, senior vice president for health care management and provider relations. “It will show what the payment is, based on where the member is with their deductible and their account. That will allow the provider to collect payment from the patient right at the time of service.”
HealthPartners hopes to unveil this tool within the next three years, Apland says. “It’s an important need [providers] have to run their business office, and we do recognize that and are actively exploring it.”
The Transparency Challenge
One of the key principles of consumer-driven health care is price transparency. The rationale is that patients can’t make fully informed choices about their health care if they don’t know what services cost and if they can’t compare costs among providers.
But in health care, pricing is anything but simple. Multicare’s Neil says it’s “extremely challenging” to tell patients what certain services will cost them. “Quite honestly, the price that we charge means virtually nothing. The insurance company’s going to process it according to whatever fee schedule they come up with. The more important question is not how much we’re going to charge, but how much the insurance company is going to pay.”
Yet, more and more patients are asking for an estimate—in advance—of what services will cost them, according to Neil and other clinic administrators. The volume of inquiries has prompted some clinics, including Multicare Associates, to set up a special “pricing line” that patients can call with their cost inquiries. Neil estimates that the demands consume about three hours of staff time per week. For the 30-physician practice, that amounts to a cost of about $3,000 a year—an insignificant expense for now, but one that Neil says may grow in the future.
Canadian Health Care Going American?
Our northern neighbors are toying with privatizing their health care system.
Brian Day, M.D., wants to speed up Canada’s slow-moving public health care system. Day, owner of the Cambie Surgery Centre in Vancouver, the country’s most prominent private hospital, plans to open facilities in Toronto, Ottawa, Montreal, Calgary, and Edmonton, according to a
Feb. 23 New York Times article. His aspirations highlight a conundrum.
The problem? Canada is the only industrialized country that outlaws privately financed purchases of core medical services, according to the story. At the same time, patients are waiting weeks, months, sometimes almost a year, to see a specialist, receive diagnostic tests, or get treatment.
Day, who treats police officers, members of the military, and workers’ compensation clients—all of whom are allowed to seek care outside the public insurance system—takes the position that the law is illegal.
A Supreme Court ruling last June found Quebec’s ban on private health insurance unconstitutional because patients were suffering and even dying on waiting lists.
That decision appears to have been a turning point for the way health care is provided in the country. Quebec premier Jean Charest has proposed subcontracting hip, knee, and cataract surgeries to private clinics when patients are unable to be treated quickly enough in the public system.
Some private physicians aren’t waiting for changes in the law to launch American-style practices. Day told the Times: “In a free and democratic society where you can spend your money on gambling and alcohol and tobacco, the state has no business preventing you and me from spending our own money on health care.”—K. Kiser |
Insurers are also making a point of giving patients information about the cost of health care services before they head to the doctor’s office.
Blue Cross and Blue Shield of Minnesota offers its members an online information tool they can use to find out the average cost of certain procedures. Blue Cross, HealthPartners, and PreferredOne also allow members to go online to compare specific providers on the basis of cost and quality indicators.
MinuteClinic, which operates walk-in health centers and posts prices both at their clinics and on their Web site, has found that price transparency is one of the factors that attracts patients, along with lower prices and convenient hours and locations. The company has also found that many patients covered by high-deductible plans are prepared to pay immediately for the services they receive rather than wait for a bill, says Neil Rolland, vice president of payer relations. “With us, they know they just had a visit that cost $49, and that it will come through as $49” after the insurer processes the claim, Rolland says. Many patients choose to pay at the time of service and use their receipt to get reimbursed by their HSA rather than wait for a bill to come after the claim is processed.
A Mixed Outlook
With consumer-driven health care still in its early stages, many physicians say they don’t have enough experience yet to judge whether the new insurance model is good for their patients and whether it really will hold health care costs in check. Still, there is a degree of nervousness in the medical community.
Some physicians, such as Mayo Clinic’s Hodgson, believe consumer-driven plans will empower patients to take charge of their own health care.
But others have felt their enthusiasm wane as a result of personal experience with the insurance model. Daniels is in that category. “I was really enthusiastic about it a few years ago,” she says. But then her family enrolled in a high-deductible plan through the University of Minnesota and was hit almost immediately with more than $4,000 in out-of-pocket medical expenses.
“My daughter had an orthopedic injury and the out-of-pocket expenses were really high, even though the total cost of the insurance—for my employer and me—was quite high,” she says.
Daniels says her family was able to cover the out-of-pocket expenses, but she knows many families can’t. “I must admit that I am less optimistic that this will be the answer to what I think is a health-care crisis.”
Still, Daniels believes the goal of consumer-driven health care is right. “I think patients need to be aware of health care costs and be engaged in decision-making, and we need to help them do that. But maybe in some other way.”—Amy Snow Landa