Adding up the costs of high-deductible health care plans
Quality care, billing and collection challenges face many pediatricians as more families switch to the most common of consumer-driven health insurance
- Copyright © 2007 by the American Academy of Pediatrics
When a family transferred to the New York practice of Anne B. Francis, M.D., FAAP, the mother informed staff that she was not interested in routine check-ups for her child as she could not afford the cost.
The family was insured though a high-deductible health plan (HDHP) that did not cover well-child visits and other preventive care. An HDHP, according to the new AAP policy statement, High-Deductible Health Plans and the New Risks of Consumer-Driven Health Insurance Products (available at www.aap.org/moc and scheduled to be published in Pediatrics), “is essentially a catastrophic health insurance plan, often linked with tax-advantaged spending accounts, with very high deductibles, fewer benefits, and higher cost-sharing than conventional health maintenance organization or preferred provider organization plans.”
The most common of the consumer-driven health plans (CDHPs), HDHPs are gaining popularity among cost-conscious employers. And while many plans do cover at least some preventive care, HDHPs may present significant financial risks for low- and moderate-income families, especially those with children who have chronic conditions or other special health care needs. For pediatricians, the growth of HDHPs presents myriad new quality care, billing and collection challenges.
The new policy statement outlines the types of HDHPs available, and offers recommendations for insurance providers and pediatricians to ensure optimal child health care, and timely, appropriate reimbursement.
Consumer-driven health care “is the most noteworthy development in health insurance since the widespread adoption of health maintenance organizations and preferred provider organizations (PPOs) in the 1980s,” according to the policy statement.
In 2005, 20% of employers offered HDHPs, up from just 5% in 2003.
How the plans operate
HDHPs were established by the Medicare Prescription Drug Improvement and Modernization Act of 2003. Currently, qualified HDHPs are health insurance plans with at least a $2,000 deductible for family coverage, and a total annual out-of-pocket maximum (including deductible, co-pays and other cost-sharing) not exceeding $10,000 per family. The spending account — either a health reimbursement account (HRA) or a health savings account (HSA)— is used to pay for a portion of health care expenses until the plan's high deductible is met, when the HDHP then functions like a PPO plan.
An HRA account is owned and funded by the parent's employer, who has discretion regarding the amount of funds that can be carried over from year to year. An HSA, which only can be used with an HDHP policy with an annual deductible up to $5,150 per family, is owned by the employee, although an employer can contribute. An HSA is portable, and money can be carried over from year to year.
These HDHPs, said Anthony D. Johnson, M.D., FAAP, member of the AAP Committee on Child Health Financing (COCHF), and co-lead author of the policy statement, “are seen by the current ad ministration as a way to change the health care system and lower costs. They shift some of the first-dollar cost of care back to patients. And while these policies may be advantageous to high income and healthy individuals trying to save or reallocate funds, for families “without a lot of disposable income,” the upfront costs may prohibit important care.
Families face difficult choices
“HDHPs have the potential to adversely decrease access to medical homes and result in more episodic, high-priced care,” according to the policy statement. “Faced with difficult choices, families may seek to `load up' on a scheduled visit to save money or delay care until after the deductible is met.”
“People have grown accustomed to a $10 or $25 co-pay for office visits and are now experiencing sticker shock when faced with the full cost of a visit,” said Dr. Francis, past chair of the AAP Section on Administration and Practice Man agement. “To see these $100 bills is going to make it difficult for parents to navigate when and when not to bring their child in.”
HDHPs with HSAs are permitted but not required to offer preventive care without meeting the deductible; only 70% of these plans cover preventive care, according to the 2005 Employer Health Benefits Annual Survey.
“If the family has a $5,000 deductible, they're going to have to pay the pediatrician out-of-pocket from the HSA for most of the expenses for the year and not use the insurance at all,” said Steven E. Wegner, M.D., FAAP, COCHF chair, and co-lead author of the new policy statement.
While many HDHPs do provide some well-child coverage, the cost ceiling may not be enough to cover the real cost of full, preventive care.
“For adults, the typical `well' coverage is $500 a year,” said Dr. Johnson. “But when you look at a 1-year-old child, and add up their shots and well-child visits, they need closer to $1,500 a year. So if plans treat kids the same as adults, there may not be enough money there.”
Another concern is that critical nonpreventive care — from management of chronic conditions such as asthma to mental health services and drug abuse counseling — often is not reimbursed.
“If they have to pay all the charges upfront to go in and have their child's significant disease progress followed, they may go in less frequently or not at all,” said Dr. Johnson. “A 3-year-old needs a check-up once a year. But if that 3-year-old has asthma, they should be coming in every three months.”
How to improve care, administration
According to the policy statement, optimal HDHP coverage should include and allow for:
preventive services (covered before the deductible is met), including but not limited to well-child care, immunization and appropriate screenings;
age-adjusted reimbursement for preventive services recommended by the Academy;
payment for non-preventive, non-covered services at the time of care;
charges reflecting the full cost of care and increased billing and administrative costs incurred by the physician; and
charges for telephone and e-mail care, which may become more prevalent for families with HDHPs.
The statement also recommended real-time debit cards for health savings accounts to expedite payment. Vendors should implement integrated, real-time claims adjudication processes to help clinicians obtain payment more quickly.
Pediatricians should explain to patients the importance and cost of“ preventive, acute, follow-up, and chronic medical care,” according to the policy statement, and develop billing and collection policies for such care, including telephone and e-mail consultation.
“It is important for pediatricians to recognize that this is something that their administrative staff is going to have to understand and prepare for,” said Dr. Johnson.
With these plans, said Dr. Wegner, “pediatricians are going to have to make a lot of collection decisions at the same time: `How much can I charge you? What is your co-pay? How much money is in your health savings account? How much will your insurance company pay?' It's going to take a great amount of administrative and collective costs.”
If pediatricians do not collect as much payment upfront as possible,“ it will change the whole money flow,” said Dr. Johnson. “If we have to wait 30 days for a claim to be denied and then another 30 days for patient payment, it's going to really strain the office.”
Improve education, research
The statement also recommends greater education for patients, employers, pediatricians and the public on the importance and cost of preventive care. New educational strategies should be considered for helping families in making insurance decisions. Insurance companies providing HDHPs should provide reliable, quality data information to consumers.
More research is needed to assess the effects of HDHPs on preventive care and services, the policy statement concluded.
“These aren't all bad plans,” said Dr. Johnson. “For a healthy individual, families in the 40% tax bracket, and/or couples trying to put money away, there are some really potential and wonderful benefits. But a significant portion of the population is not going to benefit that way.”