Hospitals and other providers are rolling out enterprisewide efforts to combat the rapid rise in the number of patients afflicted with a complex and debilitating condition: sticker shock.

Frank Danza, chief revenue officer at Long Island, N.Y.-based Northwell Health (formerly North Shore-LIJ Health System) says the health system is dealing with an onslaught of patients with high-deductible insurance plans that include copays, co-insurance and other financial complexities.

“Five years ago, most patients just had to worry about a $25 out-of-pocket copay when they showed up, but now they have to pay co-insurance, along with paying against a deductible, and these new layers are leading to a lot of sticker shock—many patients have no idea they’re on the hook to pay so much,” Danza says.

Northwell, which operates 17 hospitals, has had financial counselors on staff for years, but their jobs were largely to work with a small segment of the patient population to determine if they were eligible for Medicaid benefits, or if they qualified for significant discounts on their bills because of their income level. But in the past two years, that’s all changed.

“Now we have a lot of insured patients being treated who simply can’t afford their healthcare,” Danza says. “When many of those patients come into the emergency department, their health plans basically treat them like they’re uninsured. We’ve had to significantly staff up on financial counselors to communicate with patients who need help understanding how their health coverage works, how much they will be responsible for paying, and finding ways to pay for their care.

Katz Women's Hospital, Northwell Health
Katz Women's Hospital, Northwell Health Photo courtesy of Northwell Health Foundation

“The biggest challenge is not collecting the money—it’s about focusing, right at registration, on how to provide the best patient experience and inform them every step of the way how much the various services will cost and how much they will be responsible for.”

The insurance options under the Affordable Care Act as well as overhauls of insurance offered by employers have combined to create a huge rise in the number of patients with high-deductible health plans.

The National Center for Health Statistics found that nearly 37 percent of insured patients under the age of 65 were in high-deductible plans in 2014, compared with just 6.6 percent in 2009. In addition, a Kaiser Family Foundation survey of workers covered by company-sponsored health plans found that the average annual out-of-pocket costs per worker shot up 230 percent from 2009 to 2015.

Who pays what has always been a conundrum in healthcare, but current trends are putting immense pressure on providers to shift through the complexities of patient insurance and manage sticker shock. There are compelling business reasons to do so: Under the value-based purchasing program from the Centers for Medicare and Medicaid Services, a sizable portion of reimbursement is tied to patient satisfaction scores, and patients who unexpectedly face high out-of-pocket costs tend to be unhappy about their patient experience.

“Patient satisfaction is influenced by the patient’s perspective of whether or not the care received was ‘worth’ the price paid out of pocket,” says Kevin Ormand, a principal at the Chartis Group, a Chicago-based healthcare advisory firm. “Circumstances like this are an unfortunate byproduct of the multiple hand-offs inherent across the health system. Regardless, the onus is on the providers to do all possible to ensure a positive patient experience.”

As a result, providers are installing tools that enable them to get real-time information about where patients stand with their health insurance in terms of deductibles and co-insurance, as well as being more transparent about the costs of services. Some also are utilizing analytics to understand a patient’s financial situation and calculate their ability and propensity to pay higher out-of-pocket costs.

But bulking up on technology is just part of the response. Just as, if not more, important is providing the human touch to patient interactions, says Bob Shapiro, chief financial officer at Northwell.

“We have a lot of tools and information available to us and our patients, but the real critical component of these efforts is to make sure patients know there’s a person on the other end of the technology that can answer their questions and help them,” Shapiro says.

“Registration and other patient-facing staff in our hospitals are challenged to accurately check in each patient, provide them the best possible experience, and assure efficient patient throughput in a very busy environment,” says Northwell CIO John Bosco. “Adding an additional function and asking them to access yet another piece of technology to complete their work can often be a bigger burden than we realize. So, integration of patient access technologies to make them user friendly and efficient is probably the most important technical challenge to overcome. This can be difficult, as most of these technologies were developed independently and never intended to work seamlessly together. “

Technology can help staff prepare for the sticky discussion of patient responsibility for bills, Bosco says. “Our staff needs to accurately understand the patients financial responsibility as well as that patients propensity to pay that responsibility. There are multiple tools available to provide that information. However plan designs are becoming more and more complicated and delivering accurate and timely information of this nature to the point of service remains challenging. “

Hospital financial executives agree that one impetus behind their efforts is that patients footing those larger bills are getting smarter about their options, increasing competition in local markets. “The ‘why’ behind these new services is that consumers are demanding them,” says Steve Russell, director of patient financial services at Evansville, Ind.-based Deaconess Health System, comprising six hospitals and more than 40 outpatient facilities.

“They want to understand their portion of the bill and why they have to pay it,” Russell says. “In some cases, if the out-of-pocket costs are high, they’ll go back to their physician to find out about lower-cost treatment options. But they’re also in many cases shopping the market to see who can offer them the best price.”

Deaconess offers price estimation services that combine technology and patient/staff interaction. Patients scheduling high-ticket services like MRIs and surgical procedures can call the health system’s “Cost Line” and find out what their out-of-pocket costs likely will be.

Deaconess staff uses a module linked to the health system’s electronic health record, from Verona, Wis.-based Epic Systems, to analyze historical data in the Deaconess databases to come up with an estimate. They then contact health plans to check on where the patient stands with insurance deductibles and co-insurance to come up with an out-of-pocket estimate.

The estimation service is on the health system’s website, but inquiries generate a phone call from Deaconess. Like Northwell, the health system has put a premium on the human touch. “To be honest, there’s a little bit of a sales effort going on. We really don’t want a patient’s first contact with us to be a web tool. Phone calls provide an opportunity to really work through a lot of payment confusion and also make sure they understand everything we can offer them. In some cases, our prices might be a little higher than competitor prices, but our level of service convinces them to come to our facilities.”

Having patients communicate directly with staff also helps clear up the confusion that can arise from use of estimation tools. While those tools can offer a number, they often don’t have the capability to analyze all the insurance and acuity factors involved, says Sandra Wolfskill, director of healthcare finance policy at the Healthcare Financial Management Association, a Westchester, Ill.-based membership organization for healthcare finance leaders.

“There’s a huge difference between the charges for service and what the patient actually pays, and it’s the latter that’s become really challenging for providers,” Wolfskill says. “You can come up with a reasonably accurate number for out-of-pocket costs at the beginning of the process, but things can change along the way, and that’s what HFMA is very concerned about.”

The association has developed a series of patient financial communications best practices, which provide detailed guidelines for the emergency department as they leave the ED and in advance of service.

According to Danza at Northwell, in this environment, timing is everything. “Because of the higher costs out of pocket, our staff is sometimes faced with having these difficult financial discussions with patients when those patients are sick and uncomfortable, or having them with a family member who is worrying about that patient,” he says. “We’ve deploying technology tools with the idea that they will enable us to have those conversations before the patient arrives or right at the point of service so they have a understanding of what their options are and how we can help.”

Northwell has implemented the ClearQuote patient estimation application, from Austin, Texas-based TransUnion Healthcare, to provide detailed breakdowns of out-of-pocket costs before or at the point of service. The software connects with health plan networks to combine information about patient benefits, payer contracts and historic charges to calculate the out-of-pocket responsibility.

Getting those numbers at the start of the care process enables not only Northwell to collect more at the point of service, but also to set financial expectations for the patient and enables the patient to plan to meet their responsibilities, Danza says.

The health system also uses analytics software, from TransUnion, to gauge the patient’s propensity to pay. The software has tailored thresholds, such as a range of credit scores that generate propensity to pay status messages. Patient demographic information is sent to TransUnion, which compares the registration information against multiple data sets and uses the patient’s credit report, available credit and other information to calculate a score. Based on that status, Northwell’s financial counselors can see if the patient qualifies for charity care or can be offered a loan to cover out-of-pocket costs.

But as the complexity of the insurance market increases, price estimation tools and other new technologies have room for improvement, says Andrew Ray, director of professional revenue cycle at Palo Alto, Calif-.based Stanford Children’s Health.

Located in the heart of Silicon Valley, Stanford offers a wide array of online tools for the parents of its pediatric patient population. But it has so far been reluctant to roll out patient price estimation tools, Ray says, because of a lack of accurate information to work with.

“You need really good reliable data from both providers and payers, as well as information about their specific network and the copays and deductibles and all that,” he says. “We have a really complex market here in Northern California, and the tools we’ve tested either miss the mark or give such a wide range of estimates that it’s basically useless. The way we look at it is that sometimes it’s better to say nothing at all than say the wrong thing.”

Stanford’s biggest challenge in the shifting healthcare environment is accurate registration, a challenge due in part to the push by health insurers to create narrow networks for new insurance products.

A number of insurers are offering plans on Covered California, the state’s health insurance exchange linked to the Affordable Care Act. Stanford is fully contracted with Blue Cross California, but the plans offered by the insurer over the health insurance exchange do not have Stanford in their networks, which is a surprise to many Stanford patients.

“We often have people calling in and asking if we’re in network for their Blue Cross PPO plan, but we are not for the plan offered on the health insurance exchange, which has been marketed as a PPO plan,” Ray says. “Insurers have every right to create narrow networks and other new products, but it really sows confusion when there are so many new plans on the market.

“As these new and more fractured networks come on the market and people have more out-of-pocket responsibility, we potentially become the big pain point, so we are constantly trying to find a way to take the guesswork out this and give patients the right answer to their financial questions,” Ray adds.

Stanford uses an electronic health record from Epic along with the full suite of the vendor’s revenue cycle management tools. It also uses the Passport application from Experian to do real-time eligibility checks, and has built in new edits to ensure it can flag the Blue Cross California health insurance exchange products as being out of network. Streamlining that on the front end, and increasing the amount of first-pass processing of its claims, enables the health system to focus on the hard stuff when it comes to payments, Ray says.

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Greg Gillespie

Greg Gillespie

Gillespie has spent nearly two decades in the healthcare technology field as an editor, reporter and content consultant.