High-Deductible Health Plans (HDHP) have become increasingly popular since the Medicare Modernization Act of 2003 authorized portable, tax-advantaged health savings accounts (HSAs) designed to be coupled with these plans. Supports of HDHP advocate that, these plans as an effective mechanism for controlling health care costs by creating cost-conscious health care consumers who will look for “health care value.
In theory, shifting the cost of health care from insurers to consumers is a simple and proven mechanism for moderating the cost of health insurance. Plans that feature higher levels of cost-sharing are more affordable, as employers and individuals exchange lower premiums for higher out-of-pocket costs for insured’s if and when they use medical services.
HDHP imposes a range of financial and other burdens on Physician Practices. First, and most importantly, physicians are concerned about the impact of cost-sharing on the health and well-being of their patients. In addition to this paramount concern, the rise of cost-sharing creates other issues for physicians:
Effect on the patient/physician relationship:
Research suggests that patients are often reluctant to discuss out-of-pocket costs with physicians and to question medical advice, even when they know that costs could be an issue. Though patients are reluctant to engage their physician in conversations about prices and costs, people in HDHPs are more likely to engage in cost-conscious behaviors than people in other plans. A 2015 study by Employee Benefit Research Institute found that people in HDHPs and high-deductible plans with health spending accounts were significantly more likely to discuss costs with doctors. As shown below, this included: asking for a generic drug instead of a brand name; talking to their doctors about prescription options and costs; asking a doctor to recommend a less costly drug; and talking to their doctors about other treatment options and costs.
The fact that most consumers do not have a good grasp of health insurance — specifically cost-sharing — creates confusion and misunderstanding, and imposes an administrative burden on provider offices, who must often explain features of health coverage, deal with patient requests for information about prices and costs, and deal with patients who are surprised and dismayed by unexpected bills. In addition, a growing share of billings is now the responsibility of the patient, rather than the insurer. One report estimated that from 2016 to 2018, the number of payments due directly from consumers to health care providers, rather than through insurers, nearly tripled. This has required medical practices to strengthen front-end collections, as the likelihood of collecting amounts due from patients drops significantly if payment is not secured before or at the point of service.
Financial risk for providers:
As noted above, many insured patients do not have the financial resources to pay their deductibles and other forms of cost-sharing. When patients are unable to afford their deductibles, copayments or coinsurance, physicians incur bad debt. Anecdotally, hospitals and physicians report that high deductibles and other forms of cost-sharing are resulting in growing bad debt, as well as the corresponding need to collect payments at the point of service.
In addition, many physicians and other providers who were optimistic that the ACA would reduce bad debt by reducing the number of people without insurance have expressed disappointment in the corresponding rise in health plans with deductibles that many people cannot afford.
Savvy providers are adapting their billing and collections practices to include new processes such as point-of-service collections, medical bill financing services, and an improved focus on consumer education to help offset the effects of HDHPs. Hospitals are also revisiting their charity care plans, incorporating patients who have insurance but are unable to afford the full deductible to pay for their care. And finally, many providers are incorporating cost information into their discussions with patients, which has been shown to increase payment collections and patient satisfaction.