The Changing Face of the Self-Pay Patient

Jim Strafford

Jim Strafford , CEDC, MCS-P


Published March 19, 2015

There is no doubt that the Affordable Care Act (ACA) has increased the number of Americans covered by health insurance plans. And if the Supreme Court upholds the program in its forthcoming decision, those numbers will continue to grow.

At this point, there are approximately 10 million newly insured in our country. It would logically follow that hospitals would see a proportionate decrease in "self-pay" patients coming through their emergency departments (EDs).

Unfortunately, this hasn’t actually happened. While the payer mix may have shifted toward private insurance on paper, more patients are self-paying than ever before due to the growth of high-deductible health plans.

In this post, we'll discuss the impact of this trend on hospitals. We will also take a look at the history of self-pay to get perspective on current challenges. Lastly, we will make some recommendations on how to encourage payment compliance while treating patients fairly and with dignity.

A Short History of Self-Pay

In the 1980s, when I started in the field, the majority of ED self-pay patients were actually no-pay patients. These were the indigent, unemployed and undocumented who weren't caught by the Medicaid safety net. Hospitals generally didn't expect to collect much from them, and some even attempted to enroll these patients in Medicaid (with mixed success).

Sometimes insured patients were also forced to pay out of pocket. At that time, many plans would deny claims for non-emergent ED visits (or would pay a smaller percentage, sticking the patient with the balance). This policy changed with the enactment of the “prudent layperson” standard. This meant that if a reasonable person thought they were experiencing a medical emergency, their ED visit had to be covered as an emergency — even if the chest pain turned out to be indigestion from one too many slices of pepperoni pizza.

After the turn of the millennium, the number of self-pay patients began to rise again. The worst recession since the Great Depression turned many formerly employed and insured patients into self-pay patients, as they couldn’t afford an insurance plan on their own. At the same time, and partially due to the downturn, high-deductible health plans began to proliferate. These plans were somewhat affordable to the unemployed. But they basically ensured that a patient would be responsible for the entire cost of an ED visit — particularly early in the year before the deductible was met.

And of course, there were still the 40 million uninsured. Access to coverage was a major plank in President Obama's 2008 campaign platform. So along came the ACA, warts and all.

So how has all of this affected the patients coming through your ED? Well, thanks to health insurance exchanges and Medicaid expansion, more people are insured than ever — at least on paper. But if you take a look at many of the new exchange plans, patients must pay for their own ED visits unless a hefty deductible is met.

Case in point: My last two plans (through one of the "big three" insurers) are ACA silver-level plans, which are intended to balance affordable premiums with higher out-of-pocket costs. Both plans covered ED visits only after I met a deductible of several thousand dollars.

The end result is that more “insured” patients are paying out of pocket than ever before. Plans that cover emergency care on a co-pay basis are still out there but are being crowded out of the exchanges by high-deductible plans.

Maximizing Hospital Reimbursement

These days, when an ED director or hospital CFO looks at payer mix, those percentages can be misleading. Sure, more patients are covered, but who is actually paying the bill? And what can hospital leaders do to maximize revenue in this new age of self-pay?

The post-ACA reimbursement environment requires a focus on the needs of patients with high-deductible plans. In many cases, these beneficiaries will be responsible for their entire ED bill — a fact that may come as an unwelcome surprise.

1. True Insurance Verification.

Hospitals and private physician offices typically contact a patient's insurance before a visit or elective procedure to verify exactly what the plan covers and what will be paid out of pocket. Of course, these entities have the luxury of time that EDs don’t. Nor are they subject to the EMTALA mandate to provide emergency care regardless of the patient's ability to pay.

However, EDs ultimately benefit when staff make an effort to verify patients' benefits. At the very least, this knowledge can help to manage patients' expectations. If time or medical constraints prevent proper verification during the visit, it can still be useful to contact the patient afterward for the missing insurance information.

2. Distinguish ACA Plans

As I found out firsthand, exchange plans through major insurers like the Blues, United and Aetna sometimes look quite different from employer-sponsored plans through the same company. Exchange plans are more likely to carry high deductibles, and the network of covered providers is often smaller.

It is therefore worthwhile for hospitals to verify whether or not a plan is exchange-based so that they can inform the patient and take steps upfront to manage expectations. Often, there's no information on the insurance card stating this is an exchange plan, so staff should contact the payer for verification.

3. Financial Counseling

The concept of placing a financial counselor in the ED has been around for a long time. I worked with a consultant 25 years ago who advocated this practice. However, the idea never gained traction due to space constraints and concerns around patient privacy.

But now with the explosion of "insured self-payers", the concept is worth revisiting. As part of discharge planning, the counselor can educate patients and families about their coverage, connect them with resources and help them develop a reasonable plan to meet out-of-pocket expenses.

4. Work With Patients

The rise of high-deductible plans has both positive and negative implications for ED revenue. On the negative side, these plans contain hidden costs that are often poorly understood by patients. The positive side is that these beneficiaries tend to have some disposable income (at least when compared to the Medicaid population) and typically don't view the ED as a source of free care. They're likely to work with hospitals that assist them in understanding their coverage and developing a reasonable payment plan.

5. Set Expectations Up Front

Another old concept worth revisiting is that the ED revenue cycle begins when the patient walks in the door. While it won't always be feasible, taking the opportunity to verify coverage, explain the payment process and collect some money up front can greatly increase reimbursements from self-payers.
In summary, healthcare reform and the rise of high-deductible plans is changing the face of the self-pay patient. Hospitals must take fresh approaches to maximize reimbursements while treating patients fairly and humanely.

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