Hayes' Healthcare Blog

Non-Medicare Payer Contracts and High Deductible Health Plans: 5 Things to Consider

Posted by Paul Fox on May 10, 2017 at 9:00 AM

Many non-Medicare provider contracts have unwritten ramifications of which you should be aware.  In High Deductible Health Plans Paul Foxtoday’s world of High Deductible Health Plans (HDHP) what you are really negotiating is your future self-pay liability until your patient’s deductible has been satisfied.  Do you have a viable strategy in place to understand what your organization’s options are and what you can/cannot do under your payer contract terms?  Additionally, should you insist certain clauses be present in the contract which will empower your facility to accurately collect at the time of service?

Here are five things to consider before entering into an agreement with a payer.

Know the Available Plan Types

For the covered lives in your facility’s geographic area, it is important to understand the type of plans being offered to the large employer groups.  These patient populations could include a large state workforce, public school systems, prisons and other large employer groups. I live in the capital city of New York state where there is a vast New York state employee workforce centered in the middle of town.  NY state employs 10,000 individuals who get their healthcare from the many Capital District providers.

When you sit at the negotiating table with a payer, it is always a good idea to understand which plans will be offered to those large employer groups in your region.  If all or most of the plans offered to that large state employer group or school district is in some form of HDHP, you now have additional things to consider when crafting the specific contract language.  Do you really want to discount your reimbursement rate to 30 percent of charges knowing you will have to eventually treat each HDHP patient as a self-pay after insurance patient?  There are significant added costs and risks associated with this type of patient liability.

What does that mean to you?  Patients selecting an HDHP will receive services within the facility and provider networks and will eventually be treated much like straight self-pay patients. This includes things like billing statements, credit letters, phone calls, etc. In many of the reimbursement analyses I have performed, there is a direct correlation between the self-pay population you serve and the amount of uncompensated care (bad debt) reported in your cost reports.

Another way to look at the issue is to ask how easy will it be for the patient to come up with $2,000 - $4,000 in cash to satisfy his or her HDHP deductible?  Surprising the patient with a self-pay bill following their services can be confusing for the patient and a daunting task for your staff, and can put you in the hot seat when it comes to public opinion.  Counseling patients prior to services being rendered will prove much more beneficial to you and promote good will with your patients. Even if they are not happy with the bill they will eventually receive, they will be grateful to at least be aware of it up front. Often the hardest part of the process is getting the patient to understand how their insurance plan is constructed and what is/is not covered.  

Educate your Team
To make these conversations more efficient and patient friendly, focus on educating your pre-admission team to allow them to better counsel the patient about upfront collection expectations and coverages. 

For example, make sure everyone understands your organization’s fee schedules and contract agreements. Knowing that a patient is scheduled for a chest MRI will have a negotiated reimbursement of $2,500 is a key point to share with the patient at the time they are booking the appointment.   

Further explaining to the patient that he or she has yet to meet his or her $4,000 HDHP deductible improves your chances of collecting at the time of service.  Even a partial collection at the time of service is better than no collection attempt at all.

Develop a Strategy
In today’s ever-changing healthcare environment, contract clauses should be included in your payer negotiated contracts indicating you will be attempting to collect at the time of service.  A company I once worked for went to a HDHP and we were told not to pay anything at the time of service and instead wait until the final payer adjudication was made and the provider billed us.  Not long after payers started asking us for partial payment at the time of service.  Times have changed and you need to update your contract terms and patient expectations.

Payers are changing the reimbursement rules every year and you need to develop better strategies to collect prior to the date of service as often as possible. Include specific language and intent in your contracts that outline that requirement. Dentists – who have a much simpler pricing, billing and collection model – do this very well. You can almost never see a dentist without having to make payment on the date of service.  On top of that, I expect to be asked for that payment before services are rendered based on being conditioned by the dentist office to pay at the time of service.  

Consider adopting a dentist-like strategy to condition your HDHP patients to expect to provide some payment at the time of service.

Communicate with Your Payers
Ongoing communication with your payers can help streamline the process of providing you with the patient deductible status. Having this information available allows you to conduct appropriate patient financial counselling prior to his or her appointment.  As a consultant that has helped numerous clients build their eligibility codes sets, I know many payers provide a wealth of information in the return eligibility messages that, if developed correctly, can indicate exactly how much of the High Deductible has been satisfied for that calendar year. Couple the eligibility information with understanding your contracted rates and you have a powerful tool to present to the patient for pre-admission counseling and point-of-service collections.   

Store Special Payment Account Data (Health Spending Accounts and Flexible Spending Accounts)
Being able to quickly access account balances for patients self-funding a Health Spending Account (HSA) or Flexible Spending Account (FSA) from your billing system can prove especially valuable. I know I have a HSA account that I can either pay with a Visa card or direct payments via the HSA administrator’s web page.  With the healthcare industry becoming more consumer-driven and transitioning from fee-for-service to value-based care, storing HSA and FSA debit card information should be standard operating procedure. Educating your patients is key in developing this type of policy.

Consumers have no qualms with storing a charge card information with retail companies like Amazon, EBAY, QVS and Netflix.  There should be no issues doing the same thing storing HSA or FSA card information within your billing system.  You can later use these accounts to satisfy any patient liability not collected at the time of service. Having the patient provide this information and having your organization charge the patient liability portion will save you the additional cost of producing statements and making calls to patients in an attempt to collect this information post discharge.

I have performed multiple revenue cycle assessments and “valued” a facility’s self-pay aged receivable only to find out that the account originated as a HDHP commercial payer.  Worse yet, many of these patients result in bad debt with all the associated costs incurred during your collection attempts.  In some cases, those patients further negotiated a settlement (reduced liability) of their self-pay debt.  The negotiated payer contract amount is further reduced once the patient receives a statement for the HDHP.

Payers in general are in a constant state of flux trying to maintain a profit margin for shareholders and comply with legislative rules and guidelines.  This in turn forces them to layer more financial responsibility upon the patient and the provider community in the form of HDHP.

As the healthcare environment evolves, you, along with your providers, have to be creative to ensure proper billing and put yourself into a position of reducing your uncompensated care. Taking these five considerations into account will help you now and in the long run. 

For more information on healthcare insurance, download our roadmap, 6 Keys to Efficient Insurance Carrier Setup.

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Topics: high deductible health plans, Healthcare insurance

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