deductibles

Providers could face big squeeze in '09

Wed, 30 Apr 2008 06:59:59 -0400

Next year isn't likely to be pretty for providers. As a story in this week's newsletter notes, insurance companies have been watching profits fall, so they're likely to raise premiums in 2009. Then, the dominoes begin to fall: In an effort to save, employers will raise deductibles and co-pays, employees will carry bigger financial burdens and voilà--bad debt will rise. Worse, with health plans struggling to regain their profit levels, providers are likely to face tougher pressure to maintain, or even cut their rates. Then, of course, there's the crisis currently roiling the financial markets, which limits providers' ability to get loans, issue bonds and finance deals.

Add in the likelihood that health system reforms could be in play next year--when the U.S. swears in a new president--and you're looking at a scary 2009. If things don't play out just right, providers could face a serious squeeze, with patients who can't pay on one side and insurers who won't on the other.

Hospitals are particularly vulnerable here. With far too many operating on razor-thin margins (or losing money), next year could turn out to be a bloodbath, with the U.S. seeing an explosion of hospital bankruptcies and closures. Small wonder many are battening down and beginning to demand up-front cash payments for services where they can, though that, too has its down side. (This practice may slash bad debt, but it's not exactly warm and fuzzy, and besides, in a tough competitive market consumers may just go elsewhere.)

All that being said, providers aren't powerless. This is the year to begin partnering aggressively--one reason why physician-hospital JVs seem to be coming back into vogue--and to consider mergers and acquisitions that beef up your bargaining muscle quickly. After all, if I were a health plan negotiator, I'd try a "divide-and-conquer" strategy to get the best deals.

Now, it's your turn, readers. What strategies do you think providers (especially hospitals) need to pursue to survive the next year or two? Do you think their salvation lies in better managed care contracting? Building volume? Partnering? Attracting venture capital? Investing in new vehicles (say, medical real estate or biomedical start-ups)? I'd love to hear your thoughts. - Anne

'Facilities fees' for doctor visits startle patients

Wed, 19 Mar 2008 07:59:55 -0400

Healthcare billing is complex enough without throwing another factor into the mix. Increasingly, however, it seems that consumers are being caught off guard by a new bill--a "facility fee" for visiting doctors based in a hospital-owned building--which these days, they're usually expected to pay on their own. The issue isn't new, but it's hotter now that many patients struggle with high deductibles imposed by consumer-directed health plans.

As readers of FierceHealthFinance probably know already, patients who come into a hospital are billed not only for professional service, but also a facilities fee for use of the building. However, increasingly, hospitals are also imposing such fees for doctor visits in their buildings, something that insurance often refuses to cover. The fees vary enormously, from a relatively trivial $20 or $30 to a few hundred dollars.

While doctors' offices that charge such fees, such as Milwaukee's Froedtert & Community Health, usually post signs warning patients that a facility fee will be assessed, consumers aren't sure what the signs mean, and often end up arguing with insurance companies over the unexpected bill. Making the sting worse, some insurance companies treat the facilities fee at the doctor's office as the first dollar of what can be a high hospital deductible, rather than applying it to a physician deductible.

One Wisconsin legislator, Rep. Charles Benedict (D), has introduced a bill that would require physician offices to disclose facility fees in advance. The bill passed the state Assembly this month, and now Benedict hopes to find a co-sponsor in the state Senate. And at least two facilities--Seattle's University of Washington Medical Center and Virginia Mason Medical Center--settled suits in 2006 contending that patients should have been warned about much-higher charges by affiliated clinics.

To learn more about this issue:
- read this Milwaukee Journal Sentinel piece

Related Article:
Clinic "facility fees" spark legal battles. Report

NC system gets flack for collecting charges upfront

Wed, 12 Mar 2008 07:59:57 -0400

The UNC Health Care System has had a charitable mission since its founding in 1947. Owned by the state of North Carolina, it gets about 5 percent of its operating budget from the state, support that is supposed to help it care for the poor. That's why the hospital received a significant amount of flack when two years ago, it announced that it would collect patients' portion of their fees prior to providing care. So great was the outcry that critics mounted a petition drive to stop the move--and execs agreed to postpone their efforts.

Less than two years later, however, UNC has implemented the pre-care collection policy, under which it collects any moneys the patient will be responsible for paying. If patients aren't well-off financially, they may qualify for Medicaid or free or discounted care. Those who don't can also set up a no-interest payment plan, hospital leaders said. In their defense, execs have noted that if they don't collect on site, their odds of collecting drop 60 percent--and that collectively, even co-pays can contribute a lot of much-needed cash. In truth, their policy isn't that unusual, but in a day where patient co-pays and deductibles are skyrocketing, it's likely that patients will face some very significant bills. This kind of policy is becoming quite common, both in public and private facilities, but it's not hard to see why critics fear that it will drive some patients away.

To learn more about this issue:
- read this News & Observer article