Consumer-driven healthcare

Consumer-driven healthcare (CDHC) is rapidly replacing "managed care," and your dermatology or cosmetic surgery practice may already have experienced its effects.

If you have seen healthcare debit cards processed at your front desk or heard your business office complain about having to collect higher amounts of patient financial responsibility - and waiting longer to do so - you are already feeling the impact of CDHC. This new approach comes in different flavors, but the challenges are the same: Higher patient balances will represent a greater portion of accounts receivable and will take longer to collect.

Health savings accounts

Ushered in by a 2004 tax law, HSAs combine health insurance with features of a 401(k) plan. Holders of HSAs can invest their accounts, take balances with them to other employers, and even withdraw funds (but at a penalty). To hold an HSA, a patient must have a high-deductible health plan. Deductibles are set by the Department of the Treasury, and start at $2,100 for a family and $1,050 for an individual.

Most HSA plans offer patients the option of a healthcare debit card for disbursing funds from their accounts. But just because the patient's account contains funds doesn't mean you will get paid any faster. Here's how it works - or, rather, doesn't work - in your favor.

Payers have teamed with banks, credit card companies and companies promising to automate the transaction process. On the surface, that sounds like an efficient process to get reimbursed faster.

Think again. Even though you are supposed to swipe the patient's debit card at the time of service, you may have to wait weeks and weeks to get permission to pursue the transaction. Claiming that physicians submit untimely and often inaccurate claims, many payers refuse to allow physicians to collect from patients holding these high-deductible plans until the claim adjudicates. American Express' HealthPay, for example, operates on a "hold and settle" status. It sends out a "notice" about the amount of money that it is holding. Later, when the claim is adjudicated, it issues an explanation of the transaction.

When you ponder the volume of transactions, and the fact that those nondisbursed funds gather interest for the financial institutions holding them, it is no surprise that both United Healthcare and the Blue Cross and Blue Shield Association have chartered their own banks (Exante and Blue Healthcare Bank, respectively) to handle HSAs, flexible spending accounts and health reimbursement arrangements.

Other major health plans, including Aetna and CIGNA Healthcare, are going a slightly different route by offering a similar panel of integrated services through existing institutions, such as JPMorgan Chase. Industry researchers estimate that $2.5 billion will be spent in 2010 alone for account set-up, account management, asset management and transaction fees.

Delayed payments mean changes

Delaying HSA payouts may help the institutions managing those funds, but the delay will cost you extra.

And the cost to your practice isn't just aging accounts receivable. You will need to refurbish everything from patient registration to back-end claims processing to make sure those high-deductible patients pay what they owe. If the "hold and settle" approach remains a common practice for HSAs, then your practice will also incur more costs to mail more billing statements to more patients who owe higher amounts. And, no, there will be no corresponding increase in payer reimbursement.

Forrester Research expects one in seven privately insured Americans to be enrolled in some form of CDHC plan by 2008. Whether HSAs take off as projected or not, the reality is that patient responsibility is increasing. Research indicates that insured patients owe 12 percent of their total healthcare bill today, and by 2011, they will owe 22 percent of those costs, on average.