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Health plan coverage gaps give hospitals sunburn

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U.S. hospitals are having much less trouble with collecting payments from uninsured patients, but a little more trouble than they did a year ago with collecting from insured patients.

Problems with collecting from the insured patients could sneak up on those hospitals, because many have poor systems for tracking patients with high-deductible health coverage.

See also: Underinsurance may drive up hospital costs

Analysts at Crowe Horwath LLP, an accounting firm, present data supporting those conclusions in a report based on billing data from 444 hospitals located throughout the United States. The analysts looked at how the hospitals’ accounts receivable changed between June 2014, when the Patient Protection and Affordable Care Act (PPACA) coverage expansion programs were starting to take full effect, and June 2015.

PPACA sharply reduced the uninsured population in many states by expanding access to Medicaid starting in January 2014 and helping some residents for private plans through the PPACA public exchange system. Some consumers had exchange coverage in place in January 2014. Others got coverage in place and working later in the year.

Thanks to coverage expansion programs, the share of hospital accounts receivable linked to uninsured patients fell 22 percent during the study period, the analysts say.

For uninsured patients, the share of accounts receivable that were 180 or more days late fell 11 percent.

The numbers went in the opposite direction for the insured patients.

The share of the hospitals’ accounts receivable billed directly to insured patients rose 13 percent.

The percentage of those insured patients’ payments that were at least 180 days late rose 2 percent.

Some hospitals have told Crowe Horwath the write-offs associated with the insured patients’ bills could start to climb toward the end of 2016, the analysts say.

The analysts say problems with the insured patients’ payment problems could catch many hospitals by surprise, because only 16 percent of the hospitals in the study database have billing codes they can use to distinguish between patients with traditional health coverage and patients with deductibles of $5,000 or more.

Insurers have been trying to encourage consumers to be better health care shoppers since the mid-1990s, when they reacted to concerns about how the old health maintenance organizations had affected patient behavior by using higher deductibles, co-payments and coinsurance percentages to give enrollees “more skin in the game.”

See also: HC Providers Increasingly Accept Financial Risk

PPACA plan design rules now encourage insurers to hold premiums down by setting out-of-patient maximums at $6,600 for an individual and $13,200 for a family.

Growing problems with billing insured patients could hurt hospitals, even if billing the uninsured patients continues to go well, because U.S. hospitals have been collecting an average of $22 directly from insured patients for every dollar they collect directly from uninsured patients, the Crowe Horwath analysts say.

“Patient-access staff responsible for financial discussions should be well-versed on HDHP (high-deductible health plan) types and equipped to determine which patients have the ability to pay,” the analysts say. “Processes should be in place to qualify HDHP patients who do not have the ability to pay into financial assistance programs.”

See also: 3 ways patient credit programs could grow

In some cases, the analysts say, hospitals should give patients with HDHP coverage prompt-pay discounts, and, possibly, require them to make deposits for elective services.