The landscape around the Affordable Care Act may continue to vacillate, but one constant remains; patients have greater pay responsibility due to high-deductible health insurance, and it is adversely affecting physician revenue. In this blog, we review patient debt origins and examine through current statistics how it is affecting physician revenue and practice stability.
Patient Financial Services and High Deductibles
Patients are carrying higher levels of medical debt due to high deductibles, which makes it harder for them to pay their bills. Together these factors can easily endanger physician practice and hospital revenue. The only protection against that is the implementation of proper systems to identify, verify and collect patient payments at the time of visit. Statistics from Aetna Health highlight the need to get patient pay services under control at your practice:
- Statistics show that people with mid-range to high-range deductible health insurance do not have enough money to pay the deductibles:
- For 49 percent of households with high range deductibles, $2,500 per person and $5,000 per family, deductibles exceed liquid assets.
- For 37 percent of households with mid-range deductibles, $1,200 per person and $2,400 per family, deductibles exceed liquid assets.
- Estimates show that patient pay can account for 16 to 18 percent of provider revenue
- 40 percent of providers leave more than $30,000 on the table each year by failing to collect patient payments
- The percentage of patient pay differs by specialty. For example, among those specialists who have patients with commercial insurance, the following percentage of their revenue depends upon patient pay:
- Orthopedists: 26 percent
- Primary care physicians: 24 percent
- Cardiologists: 22 percent
- OB/gyn practices: 17 percent
- Pediatricians: 13 percent
Medical debt can make it difficult for providers to collect the amounts due, especially from patients with health insurance plans with high deductibles. In fact, patients comprise 95 percent of the bad debt carried by physicians, and that includes uncollected amounts from Medicare and Medicaid patients.
- Orthopedic surgeons carried 8.7 percent
- OB/GYNs: 6.7 percent
- Cardiologists: 6.6 percent
- Primary care: 5.2 percent
- Pediatricians: 4.2 percent
Those may seem like small percentages, but if you are an average hospital-owned physician practice generating approximately $1.5 million, can you afford to lose $50,000 of that to uncollectibles?
According to Aetna Insight, bad debt is increasing.
Patients are increasingly unable to meet high deductibles. In rural areas of the United States, bad debt has increased eight percent in the past two years. In urban areas, it has grown two percent.
Recent reports show that Americans are behind on medical payments more than any other kind of bill. When the U.S. Consumer Financial Protection Bureau studied the issue, they found that 59 percent of people said that a collection agency contacted them because of medical debt.
It’s an issue that has attracted national attention and one that we reported on in April of last year. At that time the Consumer Financial Protection Bureau (CFPB) issued a report saying that problems with medical debt collection are “widespread and harm Americans across the country.”
Providers must address patient pay services in 2018
None of this bodes well for providers. When patient pay isn’t collected at the time of visit, it is more likely to turn into bad debt. The solution is to implement rock-solid revenue cycle management practices that address patient pay. It starts with patient financial services that incorporate rapid insurance verification and patient pay estimation. That creates a transparent approach that can engage patients in a payment plan at the time of visit, increasing the likelihood that they will pay. In fact, 90% of patients are likely to pay before they see their physician, 70% are likely to pay at checkout, 40% are likely to pay after they leave the medical practice, 11% never pay.
High deductible insurance plans aren’t going away anytime soon. The bad debt they create for physicians is an untenable situation. Addressing patient pay at the first point of contact between practice and patient is the only place where an effective solution can take place.