The cause falls to mandatory health insurance kicking in starting January 2014. That federal requirement, born out of the 2010 Affordable Care Act, has governments scrambling to create state health benefit exchanges — marketplaces for affordable health insurance.
“When Mr. Alabama goes to the exchange to select his coverage, which one do you think he’ll choose on a night when he’s in good health?” Stroud says. “The least expensive.” That cheaper option means higher copays and deductibles which will leave healthcare providers with greater patient-paid balances next year.
Stroud says several aspects of the Affordable Care Act will herd more and more people toward shopping at the exchange. “For one, the penalties on employers for not offering health coverage will be less than paying for health coverage,” Stroud says.
“That penalty runs $2,000 per employee after the first 30 employees,” he says. “You have to adjust for the tax savings of offering insurance, but the savings are still sufficiently low, which will motivate a number of employers to cut that benefit and tell their employees they’re free to go to the exchange to find coverage.”
The other pull toward buying from the exchange will come from the discounts. “Anyone with an income less than 400 percent of poverty level will qualify for federally subsidized discounts and tax credits for buying through the exchanges,” Stroud says. “For a family of four, that’s a $92,200 yearly income.”
In Alabama, 77 percent households fall below that level, according to Stroud. “In California or Connecticut, it’s probably a modest percent, but here it’s far and away the majority of families,” he says. So Alabama physicians may be seeing a far larger percent of their patient population choosing insurance from the exchange than other states.
Besides being underinsured, these patients may need more procedures and care, because they’ve been waiting to get conditions checked. And that means higher patient-paid bills. “My guess is that after the recession when they lost their jobs, if they had something minor they decided to wait until it’s major. So they haven’t gone to a doctor,” Stroud says.
Even cardiologists report that patients have put off visits. “And that’s a body part that if it fails, you’re deceased,” Stroud says. “So I’m guessing a lot of these patients will turn up at doctors’ offices once they have insurance again, and that will mean big numbers in the patient-paid balance.”
Practices and hospitals will also be serving patients who might have not had insurance in the last five or 10 years. “Instead of the HR department, the practice will now have to explain what their insurance covers and that the money is owed that day,” Stroud says. “Now days, practices may have one patient like that a day which isn’t too bad to handle. But next year, it may be half the patients in a day."
Unfortunately, physicians, unlike other services, have little recourse once the service is provided. “With utilities, if you don’t pay for a few months, although they can’t take back what’s been used, they do know you need them next month, so they can stop service. They have a stick to make you comply. Physicians don’t have a stick.”
Instead, practices will have to become savvier, more proactive and better trained in collecting fees. Patients who have been coming for years may now be switching to exchange-offered policies with $50 copays rather than their employer-policy copay of $15.
“There’s an element of entitlement in America today about healthcare,” Stroud says. “Patients may have paid out money at Target on the way to your office and paid at CVS for their prescription after they left your office, but they’ll do everything they can to not pay the copay.”
Because patient-paid dollars, says Stroud, are the last dollars hospitals or practices collect, they represent the profits. “If you don’t become diligent and artful in collecting the patient-paid portion of the bill, you’re going to be losing substantial profit,” he says.
Stroud believes that this will be such a big issue, that he and his partners at Warren Averett are putting together a seminar/webinar on patient-paid collections scheduled for this summer.