MEDICAL SERVICES

DEALING WITH DEDUCTIBLES AND COPAYS

CREATE A FINANCIAL AND CREDIT POLICY FOR BETTER BUSINESS PRACTICES AND HAPPIER CONSUMERS

Scot Morris, O.D., F.A.A.O. and John Rumpakis O.D., M.B.A.

THE AFFORDABLE Care Act, and other parts of health care reform, have created new challenges for most medical practices. One of these is high deductible health plans, a result of the industry shifting more of the total costs of care away from government programs and insurance companies to the individual consumer.

The bigger unseen challenge is that premiums continue to rise. For the 30 largest insurance markets, this is at an average rate of “6.3% for second lowest-cost silver plan, which is considered the benchmark plan used to determine tax credits. Across all markets in the 37 states using Healthcare.gov for 2015, the cost of the benchmark plan will increase an average of 7.5%,” according to “Healthcare.gov premiums have bigger increase for 2016” an October 2015 article in “USA Today.” Kaiser Family Foundation also provides the average increase of 4.4% for 11 major cities from 2015 to 2016 (see chart on p. 23).

Consumers continue to choose higher deductible plans to minimize their monthly payments. Annual premiums for employer-sponsored family health coverage reached $17,545 in 2015, up 4% from 2014, with workers, on average, paying $4,955 toward the cost of their coverage, according to the Kaiser Family Foundation/Health Research & Education Trust’s “2015 Employer Health Benefits Survey.”

Health care consumers are often shocked when they have some health event that requires them to pay these high deductibles. Unfortunately, many have not budgeted for these costs and are left confused, angry and, in some instances, unable to pay. This confusion plays out every day in health care practices throughout the country in conversations about the consumer’s financial responsibility, which comes in the form of monthly premiums, copays and deductibles.

Create a proper financial and credit policy in your practice to mitigate this confusion, run a better business and provide the very best experience for your consumers. Here, we explain how.

TERMINOLOGY

Let’s first review the terms, and establish the difference between a copay and a deductible.

• Premium: the cost of the insurance plan, paid in regular intervals by the covered individual and sometimes his or her employer. Medical service providers have little interaction with this portion of the consumer’s financial responsibility.

• Copayment (copay): the dollar amount that an insured party must pay toward a covered services at the point of care.

• Deductible: a specified amount of money that the insured party must pay before an insurance company will contribute to the cost of care in accordance with plan guidelines.

Source: Kaiser Family Foundation analysis of premium data from Healthcare.gov and insurer rate filings to state regulators.

COPAYS

Simply stated, it is your responsibility to collect all co-pays. Here are two great reasons:

1. Routine failure to collect a copay is a violation of most managed care contracts. In the case of Medicaid and Medicare, the Office of Inspector General and Department of Health & Human Services has clearly stated that routinely waiving copays or deductibles can be considered a violation of the Federal anti-kickback statute and a fraud because it misrepresents the true charges of services rendered. In the case of commercial third-party carriers waiving copays (or deductibles for that matter), can be considered a fraudulent activity because the business is technically misrepresenting charges to the commercial carrier. Is $20 worth your license — and all the legal fees related to a formal investigation?

2. In terms of practice finance, if the business fails to collect a copay, then it loses about 20% of the total fees paid. The costs of doing business continues to rise and not collecting 100% of what is owed to us is just bad business. Even in the best scenarios, it will cost us an average of $12 to collect a copay once a patient leaves the door. In many cases, where the co-pay is $10 or less, it actually costs more to collect the copay than the value of the copay itself after you consider the time to file, refile, contact the consumer multiple times, postage and — in some instances — work with a collection agency. This can take hours of a staff members time and multiple office resources.

One way to avoid failure to collect the copay at the end of the exam is to change your office protocol to collect it during check in. It costs you nothing to swipe a credit card a second time at check out if there are additional products or services that were prescribed or performed, respectively.

Some readers may ask the question, “What if I change the exam from medical to vision or vice versa?” The answer is simple: It is a violation of CMS guidelines to do so.

The type of examination performed and the subsequent financial responsibility for that exam is generally determined by the reason the patient is seeking your services and not what you find during the exam. Therefore, it is a prudent business policy to find out this reason when the patient contacts the office to make the appointment. If you have to spend time training your staff to know what kind of questions to ask when making the appointment, it will be time well spent. Knowing this reason upfront, can prevent many problems.

DEDUCTIBLES

Deductibles, which do not include copays, can be more challenging. Yet there are ways to better understand whether a deductible has been met. For example, if the average patient has a deductible of $5,000 and he or she hasn’t had a major health event during the calendar year or if it is the beginning of the calendar year, chances are that he or she has yet to meet his or her deductible.

Source: Kaiser Family Foundation

There are two strategic ways to handle the deductible challenge.

1. Be proactive with patients by clearly explaining costs and options before and during the exam. This helps to increase transparency of health care costs. First, prior to the exam, the staff should notify the patient that it is his or her responsibility to know what his or her deductible is and how much, if any of it, has been met. If the patient is unaware of the deductible at arrival, then he or she will be required to pay for the exam in its entirety as though he or she has not yet met it.
The patient must be educated that the office will submit the claim on his or her behalf. Once the explanation of benefits is received, any sum of money subsequently due to the patient will be refunded within XX business days. Choose a feasible number of days, and spell it out in your plan: for example, five to seven business days. The disadvantage of this system is that the business puts the responsibility on the patient, who may or may not make the effort to find the correct information or may not correctly relay that information to the staff. In instances of unreliable information, this may result in having to bill the patient for unmet deductible fees. This creates the possibility for a negative patient experience and could result in the inability to collect fees due to the business.

2. The practice can invest in a monthly membership through one of the clearinghouses that will search the patient’s insurance status one to two days prior to the exam. Programs, such as ZirMed, ezVerify or Emdeon, offer similar programs for a monthly fee in comparison to writing off any amount of uncollected deductibles.
With this information, your office can set a clear expectation regarding payment for products and services, with an open and honest conversation about costs before the fee collection process takes place. This way, there is less opportunity for miscommunication, misunderstanding and a bad patient experience.
This conversation could occur as a provider gives the patient options as to what services or products could be right for him or her and what treatment options and associated costs may be. For example: “Mrs. Smith, we want to make the financial transactions today as easy and clear as possible. We have a print out of exactly what your plan covers. We are required, by our contract with your insurance carrier, to collect all necessary copays and deductibles for the plan that you chose. How will you be paying for today’s services?”

As a provider, it is our responsibility to help our patients understand what the plan they chose covers. Whichever method you select to implement in your practice, spell out the steps in an office protocol for financial and credit matters to ensure consistent messages to your patients.

For those patients who may not have planned for the expenditure, there are patient finance options, such as CareCredit, CitiHealth and PrimaHealth. Include information about these options within your office protocol.

VALUABLE BUSINESS PRACTICES

As physicians, we all walk that line of providing good quality care and limiting the financial burden of our patients. Though ultimately it is the health care consumer’s responsibility to know what his or her coverage entails, this “knowledge process” is still evolving in our health care system.

In the end, collecting the necessary fees due to the business is a function of the value of your business. Failure to collect these fees not only puts the business at legal risk, but also creates financial challenges. By following an outlined policy, great communication and great clinical care will always exceed patients’ expectations and allow your business to thrive in a very competitive — and often confusing — market. OM

	DR. MORRIS is chief optometric editor for OM, director of Eye Consultants of Colorado and managing partner of Morris Educating and Consulting Associates.
	DR. RUMPAKIS is founder, president and CEO of Practice Resource Management Inc. and author of OM’s “Coding” column. Visit tinyurl.com/OMcomment to comment.