out of pocket costs

Who Should Be Allowed to Help Patients Pay Health Costs?

By M2|2018-06-06T17:07:51+00:00June 6th, 2018|Health care spending, Health Care Trends, Health Reform, Insurance, Medicaid, Medicare, Out-of-pocket spending, Reimbursement, State Health Initiatives, Uncategorized|

Who Should Be Allowed to Help Patients Pay Health Costs?

If you can’t pay your health insurance premium, should you be allowed to have someone else pay it for you? What about your deductible? Your co-insurance or a copayment? These might seem like trick questions, but no. There really are circumstances when a person can’t receive help for health care costs. In the past few years, this has become a hot topic in health policy circles as health care costs continue to rise. At issue is a fundamental question we have considered before: whose health care costs should be managed, those of the healthy or the sick? Is it better to have sick people pay more so that healthy people who buy insurance can keep their premiums low? Or is it better to spread catastrophic health costs across larger pools of people so everyone pays a little in order to avoid ever paying a lot?

Third-party payments: Friend or foe?

When the Affordable Care Act was being debated nearly a decade ago, the American Enterprise Institute correctly pointed out, the entire U.S. health care system “relies on a third-party payment system.” That is, either individuals or employers make payments to insurers who in turn make payments to health care providers, or taxpayer money is used to pay health care providers who care for people covered by Medicaid, Medicare, TriCare or other public programs.

While the big picture debate of how to finance and provide health care services and for whom continues, this blog is focused on a more specific type of third-party payments (TPP). Right now, states and the feds are being asked to weigh in on which third parties should be allowed to pay insurance premiums or healthplan-required cost sharing, for example, a deductible or a health care service or product copayment. The debate at this moment is focused on people with chronic, severe, or expensive health care needs – people who need kidney dialysis, for example. The feds have been trying to work out guardrails since 2013 related to whether a third-party organization can pay for a person’s premiums in the state insurance exchanges. (For a deeper dive, go here). California has also joined the fray and is considering a bill, SB 1156, “Health care service plans: 3rd-party payments,” setting forth who will be allowed to make TPP for health insurance premiums.

Representing the “foe” side is America’s Health Insurance Plans (AHIP). A recent brief titled “How Third-Party Premium Payments Can Harm Consumers and Destabilize Markets” argues that TPPs from “entities steering Medicare and Medicaid eligible beneficiaries into qualified health plans (QHPs) sold through the Affordable Care Act (ACA) marketplaces…can increase the number of older and less healthy individuals in the individual market risk pool, resulting in higher premiums for all consumers and further destabilizing the market.” In support of SB 1156, the California Labor Federation presents a similar point-of-view, arguing that allowing TPPs of premiums for individuals with chronic or severe illnesses “also shifts costs onto commercial plans, driving up health care spending and increasing premiums for Californians already struggling with rising costs.” Who should pay when a person is sick? Is it always the better choice to shift costs to taxpayers by requiring a person who needs dialysis to enroll in Medicaid or Medicare, as AHIP suggests? How should we balance the interests of individuals and employers who want low health care premiums with the needs of patients with high health care costs?

Representing the “friend” side is The Commonwealth Fund in “Assessing the Promise and Risks of Income-Based Third-Party Payment Programs.” Their brief acknowledges the policy debate outlined above regarding TPP programs serving patients with specific health diagnoses, but focuses on TPP programs that address health care costs for a different population, noting, “History suggests that TPP programs can address low-income consumers’ affordability concerns on a large scale.”

Many of the guardrails set forth by The Commonwealth Fund parallel the California bill, including basing eligibility for TPP on income and paying “consumers’ premium shares from the point of enrollment through the end of the coverage year, thus preventing short-term enrollment that ends once a course of treatment is complete.” These guardrails seem to address several of the foe’s concerns. First, basing TPP on income means both the healthy and the sick can gain access to health insurance, which makes it much less likely that premiums rise due to a sicker risk pool. Second, AHIP argues consumers can be harmed “particularly if the third party stops making premium and cost-sharing payments once initial treatment is received, which could result in serious or life-threatening interruptions in access to care.” Requiring entities that provide TPPs to pay for more than just initial treatment addresses the foe’s concern.

I’m an aunt. Can I pay for my nephew’s prescription drug cost sharing?

One of the remaining concerns at the heart of TPP for health insurance premiums or health plan required cost-sharing (such as co-payments) relates to whether the organization making the TPP is motivated by financial gain or is steering patients to specific health care products, services, or providers. Federal law prohibits most TPPs in federal health programs, for example, Medicaid and Medicare, considering the TPPs to be in violation of one or another fraud and abuse law, such as the Anti-Kickback Statute and the Physician Self-Referral Law (Stark law).

While it makes sense that a health care provider should not be allowed to accept bribes, it is much less clear who should be allowed to help patients pay health costs. The way the U.S. health care system works today, if a person is not eligible for government-sponsored health care (for example, through Veterans Affairs, Medicare, or Medicaid) and they cannot pay for individual health care costs, whether premiums or cost-sharing such as copayments or deductibles, the person can usually be denied care. To be clear, AHIP is arguing that private entities, or groups of people, cannot come together and help such an individual make the health plan-required payments. The California bill says, “Any member of the individual’s family” can make a TPP, but then goes on to define “family” only to “include the individual’s spouse, domestic partner, child, parent, grandparent and siblings.”

This begs the question of what should be allowed when it comes to TPPs. What entities should be allowed to pay for patient’s health care costs?

Medical crowdfunding, such GoFundMe campaigns?
Health care sharing ministries?
Contributions gathered voluntarily by employees to help a co-worker with cost-sharing requirements? Or by a congregation to help a fellow churchgoer?
Employer emergency funds?
Family members helping family members, (let’s say Aunts, for example…)

It is quite clear that the alternative to the TPP being made is no payment being made, which certainly would cause an interruption in access to care for the patient who needs it. Like most health policy issues, TPPs can be either friend or foe and a one size fits all policy won’t work. Creating guardrails focused on allowing entities, including those in the list above, help patients pay their medical bills should be paramount.

Both Patients and Hospitals Tend to Avoid Care that Costs More – One Health Plan in MA is Trying to Address This

By M2|2018-03-01T20:30:49+00:00March 1st, 2018|Evidence-Based Medicine, Health care spending, Health Plans, Hospitals, Insurance, Out-of-pocket spending, Uncategorized, What do we pay for and why|

Both Patients and Hospitals Tend to Avoid Care that Costs More – One Health Plan in MA is Trying to Address This

Despite evidence that cervical cancer is most effectively treated with brachytherapy (a form of radiation), Medicare reimbursement for a less effective treatment, external beam radiation, is higher, according to an article in Healthcare Finance News. Additionally, the delivery costs of brachytherapy in hospitals is greater than for external beam radiation.

The lower cost of delivery combined with higher Medicare reimbursement means external beam radiation is four times more profitable than brachytherapy for a hospital – despite being the less effective treatment.

The study by Kristine Bauer-Nilsen, University of Virginia School of Medicine, et al., published in Radiation Oncology, evaluated the delivery costs, using time-driven activity-based costing, and reimbursement for definitive radiation therapy for locally advanced cervical cancer.

Brachytherapy for locally advanced cervical cancer “ends up costing hospitals money because it takes 80-plus percent more physician personnel time to administer brachytherapy than it does to deliver the increasingly popular external beam radiation,” the article says. Even though it costs more for hospitals to provide brachytherapy than it does to provide external-beam radiation, the reimbursement doesn’t reflect the difference. Which in turn means, “the comparatively poor reimbursement rates may mean some hospitals simply don’t offer brachytherapy or commit physician time to it” as Jeff Lagasse, the author of the Healthcare Finance News piece succinctly concludes.

Businesses naturally do the things that pay them more. This study highlights how reimbursement has to change before health providers will change. “Value based care,” envisioned by policymakers mean the system as a whole only pays for health interventions that are valuable. But what is of value to the system is different than what is of value to a health care business, for example, a hospital or physician group.

Similarly, what a patient values, might be different from every other entity in the health care system. Just as financial incentives may drive hospitals’ choice of therapies, they also affect patients’ decision making when it comes to managing chronic conditions. Now, a health plan in Massachusetts is aiming to remove the financial incentives that lead patients to avoid needed care. In order to incentivize patients to “manage their conditions optimally and proactively,” Neighborhood Health Plan (NHP) is waiving out-of-pocket costs for chronic conditions.

The new comprehensive benefit design, called Care Complement, eliminates copays for 11 common prescription medications that treat conditions like high cholesterol, diabetes, high blood pressure, heart disease, and depression. The program also waives cost sharing associated with cardiac rehabilitation therapy and screenings to prevent diabetes complications, according to a recent AHIP (America’s Health Insurance Plans) blog.

“With certain chronic conditions, such as diabetes, there are often many recommended services to fully control the condition and reduce the risk of complications,” Dr. Anton Dodek, chief medical officer at NHP, says in the blog. “For diabetes, these recommendations include an annual routine eye exam, diabetic education, and nutritional counseling. Each of these office visits typically require a co-payment from the member, and can create a barrier to receiving care.”

The program also offers “affordable alternatives to opioids for chronic pain.” For example, it waives cost-sharing for medication-assisted therapies (MAT), as well as expenses for recovery coaches. And it gives physicians the resources needed to “help determine if their patients would benefit from alternative pain management treatments, such as physical therapy/occupational therapy sessions, chiropractic visits, and acupuncture visits.”

“By eliminating cost sharing, we hope that members will be encouraged to work with their doctors to manage their conditions optimally and proactively, which will result in healthier outcomes in the long run,” Dr. Dodek says.

Neighborhood Health Plan’s approach is exactly the kind of approach that we need more of; by adjusting financial incentives for patients to choose the most “valued” care for their chronic conditions, this plan is moving beyond looking at short-term costs, and instead is looking at the big picture. By helping patients with what they value – lower costs and higher quality – the health plan is likely to improve health outcomes in the long term.

Value based payment is harder than it looks. These examples shed light on what doesn’t work, and what does. Policymakers need to both copy success, and halt failure if they want to bend the cost curve.

While Most Consumers Want to Discuss Costs Before Receiving Treatment, Most Providers Do Not Bring Up Financing Options with Patients

By M2|2018-01-24T21:41:19+00:00January 24th, 2018|Health care spending, Health Care Trends, Insurance, Out-of-pocket spending, Physician-patient communication, Uncategorized|

While Most Consumers Want to Discuss Costs Before Receiving Treatment, Most Providers Do Not Bring Up Financing Options with Patients

Seventy-seven percent of health care consumers say it’s “important” or “very important” to know their costs before treatment; however, most providers are not satisfying these demands, according to a recent article in Healthcare Finance.

Only 18% of health care consumers said that “any of their providers had spoken to them, at any time, about patient financing options in the past two years.” The article summarizes the results of a survey conducted by ORC International and commissioned by patient financing company HealthFirst Financial.

The survey highlights consumers’ interest in financing options for health care services: 53% of the 1,011 U.S. adults surveyed would like to discuss financing options before they receive care, and 57% consider it important or very important that their provider offer ways to extend payments over time with no interest.

However, only 8% received zero- or low-interest financing from a provider. “These findings highlight a huge gap in what patients want and what hospitals, medical groups and other healthcare providers are delivering,” KaLynn Gates, HealthFirst Financial president and corporate counsel, says in the article. “Providers that care for the financial as well as clinical needs of their communities are much more likely to thrive in this era of rising out-of-pockets costs and growing competition for patients among traditional and non-traditional providers.”

Furthermore, “a full 40% of millennials 18 to 36 years old said they’d be very likely or likely to switch providers if a competitor offered low- or zero- interest financing for medical bills.” And among survey participants overall, 29% “said they’d move to different providers that offer attractive payment programs.”

Concerns about covering the cost of care exist in all income brackets; 42% are very concerned or concerned about their ability to pay out-of-pocket medical bills in the next two years, and the number increases to 54% for those with incomes of less than $35,000 a year. Among those with incomes of $100,000 or more annually, the number drops, but still, 24% in this bracket are very concerned or concerned.

Consumers are worried about their ability to pay for unexpected medical expenses; 53% of those surveyed expressed concern about the ability to pay a medical bill of less than $1,000; 35% worry about the ability to pay a bill of less than $500, and 16% are concerned about the ability to pay a bill of less than $250.

The survey was commissioned in order to “learn more about how consumers are coping with their medical expenses,” Gates says in the article. “Without providing and communicating these viable financing options, they are likely to delay care or switch providers to find financial help. In either case, providers will be hurt by those choices, and they need to develop a strategy to meet these consumers’ needs.”

Despite these findings, however, another survey, published recently in Health Affairs, finds that while most U.S. consumers support price shopping for health care services, most do not actually seek out information on pricing.

The findings also come at a time when states are taking various measures to improve price transparency for consumers. For example, Ohio has enacted a law aimed at informing patients what health care procedures will cost prior to receiving care. However, the law is currently in limbo, after criticism from hospital and physician groups, who claim the law would slow down access to care.

This HealthFirst survey reinforces what we’ve said in the past and what other studies have shown; for example, we blogged earlier this year about a study published in Health Affairs showing that physicians are missing opportunities for communication to help reduce patient costs. We’ve also written about employers sending patients to high-quality, bargain-priced providers; sometimes these providers are out of town, or out of state, yet employers are still able to save money with this approach, which points to inefficiencies in the health care system.

Clearly consumers need price options, and talking with physicians beforehand about costs would help inform patient decision-making. However, it’s noteworthy that this new survey emphasizes consumers’ desire for financing options; thus, consumers appear to be seeking to base their costs decisions not on actual total costs of services, but on monthly payment options. They are therefore not necessarily taking a savvy approach to overall costs.

One area of cost concern that the survey did not cover, but which is coming up soon for most patients, is the annual deductible that most health plan enrollees must meet. Each year, consumers must consider the re-setting of the deductible on January 1, and factor that into health care choices. This is a particular concern for patients with chronic illness, and it points all the more to the need for consumers to know their costs upfront, before services are provided.

What would it take to shop for health care the way we shop for cell phones?

By M2|2017-10-08T11:40:29+00:00June 14th, 2017|Health care spending, Out-of-pocket spending, Uncategorized|

What would it take to shop for health care the way we shop for cell phones?

The “vast majority” of Americans – 95% – now own a cell phone of some type, as the Pew Research Center noted earlier this year.

Shopping for a cell phone is a pretty ordinary experience. We compare prices and features, evaluating phones in terms of the newest, biggest, fastest or the least likely to break; we have preferences, and we shop based on those preferences.

However, this is not the way most of us shop for health care. Why is that? Partly because it’s difficult to get one of the most important pieces of information: price.

Notably, if you’re shopping based on quality, you can find at least some information on quality at sites like Health Grades – but price information is harder to come by.

More than half of states have laws requiring at least some health care entities to publish prices for at least some health care procedures. For example, Florida has a website allowing people to compare hospital rates. Patients in California can use a site that provides information on average prices for common inpatient procedures. In New Jersey, consumers can check quality and prices at hospitals.

What is still missing, though, is a patient’s ability to know his or her cost specifically.

However, some health care organizations are now realizing it can be a competitive advantage to provide more accurate information to patients about their cost-sharing.

For example, Integris Health System in Oklahoma City, OK has created a tool that provides about 240,000 price estimates for outpatient procedures per year, according to a recent PwC report. Price quotes are highly accurate, coming in at +/- 3-5% of the final charge. The tool steers patients to lower-cost providers that are still within Integris’ system, and the net result is that Integris went from $1 million in point-of-service collections in 2008 to $18 million in 2015.

In another example, St. Clair Hospital in Pittsburgh, PA noted an increase in high-deductible insurance plans among its patients. The hospital was “hearing from consumers about how important it is to them to know how much they will owe in advance of a procedure,” the report notes. After conducing listening sessions with former patients and their families, St. Clair created an online tool that provides estimates for 105 procedures. With the new tool, the hospital receives about 100 estimates each week, as opposed to the six they had been receiving previously.

What’s interesting about this tool is that rather than providing an estimate of the overall cost of a procedure, the St. Clair tool creates customized estimates, for example factoring in a patient’s insurance coverage. Thus, patients receive a true estimate of their particular out of pocket costs.

In yet another example, Geisinger Health System, Danville, PA, offers consumers price quotes, a one-stop web portal for patient information and a single, easy-to-understand hospital bill under its “Proven Experience” program, the report says. Furthermore, if a patient is not satisfied with their care, the system will refund a portion of the cost to the patient.

So what would it take to enable patients to shop for health care the way we shop for other goods and services? Fixing it on the supply side is one approach, as these examples show. Hospitals can use their ability to “be more retail” in order to win customers. The bottom line is: Patients need very specific information about what their particular costs will be. Fixing it on the demand side comes next. Patients need to demand more cost information is made available by their health plans and providers, and then they have to vote with their feet.