ACA delay on out-of-pocket costs has consequences for hospitals

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Without question, the recently reported one-year grace period granted to some insurers for out-of-pocket expenses will have a serious effect on the financial health of both patients and hospitals.

The policy adjustment by federal officials allows insurers to set higher limits, or no limit, on some costs in 2014. As a result, patients expecting to pay no more than the ACA’s prescribed cap for out-of-pocket expenses ($6,350 for an individual; $12,700 for a family) may find that they owe both the maximum amount for hospital services and an additional maximum amount for prescription drugs.

In fact, some patients may even have to pay significantly more than the ACA-mandated drug plan maximum because insurers who do not currently impose a limit on out-of-pocket costs for their drug plans aren’t required to impose one for 2014.

Many patients will enroll in new healthcare coverage unaware of the delay in the out-of-pocket cap and their dramatically increased financial responsibility. Since most billing still occurs post-service, these patients will only discover what they owe after the fact. What’s more, many patients may be forced to default on their bills, saddling hospitals with more bad debt.

As this challenging new reality rapidly approaches, it is critical that hospitals better manage their financial risk by offering patients transparency at the front end of the revenue cycle. When patients are provided a reliable and detailed picture of their financial responsibility in advance, they’re more likely to be financially responsible about their healthcare choices, and pay what they owe. This was made clear through results of a survey administered this past March to 700 insured household decision-makers who had either personally received medical care, or had a family member on their policy receive care in the past two years.

Nearly 70 percent of respondents said that receiving clear information on expected out-of-pocket costs before receiving treatment would have a positive impact on their decision to use a provider, and 65 percent said that clear, easy-to-understand bills would do the same. More than 6 out of 10 respondents also reported that cost information at the point-of-service would positively impact their decision to seek non-critical care like preventative screenings and annual physicals.

If this survey is truly indicative of what patients want, then the delay on caps for out-of-pocket costs will have a major impact on healthcare providers. Those that focus on educating their patients on their financial responsibilities and preventing unwelcome billing surprises will be wisely building trust with current and prospective healthcare consumers, setting the foundation for lasting patient/provider relationships.