ACA's High-Deductible Plans Cause Headaches, Hurt Patient Care

Jeffrey Vacirca, MD

The growing popularity of high-deductible health insurance plans has created a range of increasing pressures on oncologists and hematologists. According to doctors and administrators at a number of practices, more and more patients find themselves unable to afford their deductibles, payment plans are routinely extended by years, bad debt and write-offs of losses are ubiquitous, practices must hire additional financial counselors and business staff, and patients are more dependent on financial assistance programs.

High-deductible plans, which require larger out-of-pocket spending by patients, are becoming more prevalent in part because of the insurance mandate and coverage requirements of the Affordable Care Act (ACA). Both employers and people buying individual insurance on the state and federal health exchanges have responded to rising costs by choosing plans with the lowest monthly premiums, which typically come with annual deductibles of a few thousand dollars that patients pay up front before their treatment begins.

At North Shore Hematology Oncology Associates in New York, bad debt now amounts to “hundreds of thousands of dollars per year,” said Jeff Vacirca, MD, the practice’s CEO and vice president of the Community Oncology Alliance. “It’s gone up 10-fold in the past decade. I probably get a half a dozen letters a week from patients who can’t afford their care and don’t know what to do.”

“Obviously, the first thing we do is call them and say, ‘We’ll take care of it, we’re going to work something out. The last thing we want is for you not to get treated,’” said Vacirca. “But in the end it’s a tough burden to carry. Doctors are having trouble staying in business.”

A New Norm in Insurance

High-deductible health plans, or HDHPs, were for years found mostly in the small market for individual insurance. They grew more common as rising medical costs led insurers to boost premiums in both individual and group plans, and became a new norm when the health exchange expanded the individual market. The law’s benefit requirements further pressured insurers’ bottom lines, accelerating the trend.

The number of Americans using HDHPs has risen about 15% a year since 2011, according to survey results announced last July by the insurance industry trade association America’s Health Insurance Plans.¹ Of the 17.4 million people enrolled in those high-deductible plans in January 2014, 74% were in large group plans.

“I understood going into this that we were going to be dealing with a lot more patients getting high-deductible plans. But what I didn’t take into account was the fact that so many employers would be switching over to these plans, including even hospitals,” said Ricky Newton, director of financial services and operations for the Community Oncology Alliance in Washington, DC.

According to the Large Employers’ 2015 Health Plan Design Survey by the National Business Group on Health, 35% of employers are considering moving retirees and active employees to private exchanges in 2016. The lure of private exchanges is in large part the savings that can be achieved through high deductibles.

Healthy people may ignore the fine print and simply buy the cheapest plan. Lower-premium plans can include narrow provider networks, drug exclusions, and higher deductibles, co-pays, and coinsurance requirements. Many buyers may not consider the possibility of serious illness.

“When you’re getting an insurance plan, you’re not thinking, I’m going to get cancer, or some kind of blood disorder,” said Newton, previously practice director at Cancer Specialists of Tidewater and Riverside Cancer Center in Virginia.

For a patient who assumed insurance would cover most expenses, the cost of a cancer drug regimen and their out-of-pocket obligation can come as a tremendous shock, amplified by confusion over how their policy terms dictate the payment calculation. Coming up with a $3000 copay so that a round of chemotherapy can begin, for example, is simply not in the cards for many patients, Newton said.

Yet physicians say such scenarios are common now and practices must be prepared if they are to provide the appropriate treatment and recover payment.

As a result, financial counseling has become “a big deal” in cancer practices, said Kenneth Adler, MD, vice chair of the American Society of Hematology’s Committee on Practice. Vacirca said his practice’s financial counselor went from part time to full time two years ago, while Thomas Gallo, executive director of the Virginia Cancer Institute, said each of his eight offices has a counselor.

“We have more people working in our office now—not that we’re getting paid to pay them—to counsel patients, saying this is what it’s going to cost to get this treatment, this is what your coinsurance is going to be, you have meet this deductible,” said Adler, a hematologist at Regional Cancer Care Associates in New Jersey. “Here we have somebody dealing with a leukemia or lymphoma, their head is spinning from the new diagnosis; and now, you have be a PhD to figure out what the heck it’s going to cost you.”

More Work for Practice Staff

Counselors and business staff play crucial roles beyond helping patients understand their medical bills. For example, they take on the time-consuming task of seeking pre-authorizations from payers and appealing denials, which Vacirca and others said some insurers use as a delaying tactic, even when a patient’s treatment meets National Comprehensive Cancer Network guidelines.

To avoid creating even more work for staff and still losing out on payments, doctors need to avoid accepting exchange plans that throw up roadblocks, Vacirca said.

“I would make sure, if they’re going to look into any of the ACA plans, that they speak to someone who’s already in the plan to see what the plan’s track record is,” Vacirca said. “It’s really difficult to go at risk with a multitude of different plans. They should pick and choose the ones that they know are run the right way, so they’re not going to end up not getting paid, getting delayed, and going into debt.”

Once the insurance coverage is clear, counselors discuss the patient’s ability to pay his or her portion of the bill. A quarter of all non-elderly Americans with private insurance coverage do not have sufficient liquid assets to pay even a midrange deductible of $1200 for single coverage or $2400 for family coverage, according to a Kaiser Family Foundation study (see chart).² More than one-third can’t afford a higher-range deductible of $2500 single/$5000 family, and among households at 100% to 250% of the poverty line, 68% lack sufficient resources.

“We do have people that have issues with paying deductibles, and we do set up a payment plan and don’t charge interest,” said George Kovach, MD, a hematologist-oncologist with Iowa Cancer Specialists and past president of the Association of Community Cancer Centers. “We give them statements monthly and ask them to try to make a payment, and sometimes it’s five bucks a month! It’ll take 20 years, but at least they’re making some effort toward it, rather than not doing anything. We certainly don’t want to deny them care.”

Practice staff must continuously monitor a long list of individual payment plans, tracking multiple streams of micro-payments and contacting patients when they fall behind. At that point, using third-party collection agencies is an option, as reflected in figures showing that medical expenses account for more than half of overdue debt on credit reports.³

Newton said his former practice would send nonpaying patients collection letters to prod them to contact the office, without officially putting them in collections. Doctors said they preferred not to use third-party firms because of the risk of alienating patients, and beca use yields are extremely low and are shared with the agency.

One worrisome twist is that the ACA gives subsidized enrollees a 90-day grace period before their insurance coverage can be canceled for failure to pay the monthly premium. If it is canceled, the insurer is responsible for the first 30 days of medical costs and the provide s for the rest, retroactively eliminating coverage for 60 days of past treatment. Vacirca said the rule has created challenges in his practice, while Newton and others said it has not yet become a significant problem.

As greater financial demands are being made of patients, more of them need financial help from foundations and pharmaceutical company assistance programs, which creates even more work for counselors, practices find.

“The demand has increased over the past few years, particularly with the cost of some of the new agents out there,” Gallo said. “It’s quite often the case that our financial counselors will get aid from multiple places to cover pieces of it, and try to put together a package for the patient. On the business office side, there is a higher administrative expense to track the payments from the foundations and apply them correctly to the different individuals.”

Asking for Help

While bringing on counselors to manage the trend of greater patient financial responsibility boosts payroll costs, meeting those challenges helps ensure steady cash flow and provides other benefits.

“We found it to be advantageous to the practice to hire those people,” Kovach said. “When you assist a patient who has financial difficulties, there is a very positive feedback to the community. Those people go back and say, ‘You know, they helped me get my coverage. They were interested in helping.’ It has a positive impact on the appearance of the practice.”

If all else fails, a smaller practice or group that cannot afford to eat the cost of a cash-strapped patient’s drug treatment may instead have the patient undergo infusion therapy at a hospital that has access to higher reimbursements. Adler sometimes sends patients to his neighboring hospital, but like other doctors, he would much prefer to keep their therapy under his nurses’ direct supervision.

Every practice eventually has to write off bad debt, but there are ways to keep it in check. One is to take care of billing and insurance before treatment begins in order to prevent reimbursement problems, instead of struggling to fix them later on. Vacirca advises keeping on top of accounts receivable. He also said his group purchasing organization, ION Solutions, has provided invaluable help in reducing avoidable costs.

“There are a lot of resources out there for practices, but they gotta pick the phone up,” he said. “That’s the biggest mistake—a lot of oncologists just continue to suffer, and they see an erosion of their finances and don’t reach out, until they end up selling to the hospital for pennies on the dollar.”

Oncologists also advocate policy changes that would ease their financial strain, including a Medicare payment fix, an end to sequester cuts, price regulation of oral oncolytics, standardization of payer electronic records systems, and especially recognition of the cost-effectiveness of non-hospital providers.

“That’ll be the theme of 2015,” Vacirca said. “The payers recognizing better-quality care and our ability to take more of a driver role in patient care.”

References

1. America’s Health Insurance Plans Center for Policy and Research. January 2014 Census shows 17.4 million enrollees in health savings account— eligible high deductible health plans (HSA/HDHPs). https://www.ahip.org/2014/HSA-Census-Report/. Accessed March 23, 2015.
2. Kaiser Family Foundation. Consumer assets and patient cost sharing. http://kff.org/private-insurance/issue-brief/consumer-assets-and-patient-cost-sharing/. Accessed March 23, 2015.
3. Consumer Financial Protection Bureau. CFPB spotlights concerns with Medical debt collection and reporting. http://www.consumerfinance.gov/newsroom/cfpb-spotlights-concerns-with-medical-debt-collection-and-reporting/. Accessed March 3, 2015.