December 19, 2012|Categories: Analytics and Research
Welcome to our second installment of Cloud Analytics! Today, we’re delving into patient responsibility with regard to deductibles, co-pay and co-insurance – for patients with private insurance.
Across the country, total patient responsibility is on the rise, increasing financial stress not only for patients, but also for practices that now have to collect more money from patients.
How much has the patient payment burden been increasing? Calculated as a percentage of allowables (the contracted amount that insurers agree to pay providers, rather than the amount the providers charge), patient responsibility has increased in each of the last two years, rising from 18.6% in 2009 to 19.9% in 2011:
This points to patient responsibility increasing at an even higher rate than annual increases in total allowables.
What’s driving this increase? Deductibles, a fact that becomes apparent when we break out the data by types of patient responsibility. Between 2009 and 2011, deductibles have increased considerably, while co-pays have actually decreased and co-insurance has stayed flat:
Some believe that increasing deductibles are a good thing, acting as an incentive for consumers to take greater personal responsibility. Some think it’s a negative, penalizing those who are chronically ill and/or have lower incomes. Either way, rising deductibles affect both patients and practices.
Over the last three years, unpaid deductibles (deductibles not paid within a year), as a percentage of allowables, have increased. In contrast, unpaid co-pays have stayed constant:
In other words, practices are having more difficulty collecting what they are owed by the patient. This is hardly news; the more money patients owe, the harder it is to collect. A struggling economy does not help either. What is new, however, are the trends toward greater participation in high deductible plans, whether by experimentation or employer fiat.
As for co-pays, why are they decreasing? We’re not policy or plan design experts (if you are, we’d love to hear from you!), but we think the Affordable Care Act (ACA) may be an influencing factor. A key part of the ACA is a provision that brings the co-pay for preventative care visits to $0 for new plans, starting in September of 2010. And with the ACA extending subsidies to many new patients and allowing them to get lower-end individual plans from private insurance, many of these patients will end up in high-deductible plans over the next few years. Measuring the impact of the ACA is new territory for us so we’ll explore related issues in future posts.
In the meantime, let’s look at the most recent data we have: Is 2012 offering a reprieve from the rise in patient responsibility? It doesn’t appear so. Looking at the first three quarters, for 2009 through 2012, we see similar patterns (increasing deductibles, decreasing co-pays):
Note that percentages for deductibles in Figure 4 (Q1-Q3) are higher than in Figure 2 (full year), because payments towards deductibles are higher towards the beginning of the year. This is due to deductibles becoming reset every year, usually at the beginning of the calendar year, meaning practices have an uneven revenue stream beyond other seasonal variations:
If we break these numbers down by region and specialty, we also see rising deductibles. If you’re interested in drilling down further, you can see these numbers in our recent infographic, also published in Medscape. It appears this trend in rising patient responsibility is real, across regions and specialties.
The bottom line is that this is an extra burden for medical practices. Can patient collection be added to what’s needed to meet Meaningful Use requirements, as well as the additional responsibilities of being a Patient-Centered Medical Home (PCMH) or part of an Accountable Care Organization (ACO)? How will things change by region or specialty?
While we think about these questions, let us know what you think!
In our next installment, we’ll explore reimbursement differences between specialties. Thanks for reading!