Health care costs are a hot topic this year, but a report indicates health care spending is decreasing. According to USA Today, a recent analysis in the New English Journal of Medicine by researchers at The Commonwealth Fund found cost growth is dropping. While there are numerous reasons why health care costs are decreasing, the report noted the rise of high-deductible plans is contributing to the drop.
As more patients enroll in health care coverage with larger personal responsibilities, many are putting off unnecessary treatment to keep their patient payment obligations low. In fact, a working paper by numerous economists agrees that the increasing prevalence of high-deductible plans in the market is causing a slowdown in health care costs. As more patients have larger out-of-pocket costs, patient friendly billing will become crucial to ensure patients understand their responsibility and hospitals receive the patient collections they need to meet revenue goals.
The impact of high-deductible plans on prices
According to the analysis in the NEJM, health care cost growth is slowing. In 2012, the amount patients spent on health care only rose by 0.8 percent per person. How are high-deductible plans causing health care costs to ebb?
According to the analysis, high-deductible plans act as a type of cost control. When patients understand they will be responsible for a higher portion of their medical bill, they are more selective about their level of care. While the analysis noted many experts suggest the recent slowdown is due to the economic downturn, the researchers found the drop in health care costs started well before the Great Recession. However, the recession forced patients to become more aware of their spending, and no doubt had an impact on the cost growth slowdown. Yet USA Today noted the researchers said it is difficult to determine how much of an effect the recession had on patient spending.
“I think it’s fair to say that if this is a trend and if this is an enduring trend, it began a little before the recession, continued through the recession, and seems to have accelerated after the recession,” said David Blumenthal, president of The Commonwealth Fund, according to USA Today.
Blumenthal also said the Affordable Care Act might be speeding up the process, and Rainu Kaushal, chairwoman of the Department of Healthcare Policy and Research at Weill Cornell Medical College, agreed.
“I think the Affordable Care Act certainly accelerated and facilitated those conversations [about care quality and spending],” Kaushal said.
Hospital administrators should still be on guard with respect to low patient payments due to the ACA. The Wall Street Journal reported new research found the average individual deductible on the federal online insurance marketplace is $5,081 a year, which is 42 percent higher than the average deductible in 2013 before the law was implemented. Sick or injured Americans with these high-deductible plans may end up forgoing treatment to avoid the bills or just not pay hospitals for care. It’s less risky in regards to facilitating patient payments for hospitals to encourage preventive care, as emergency care costs tend to be higher. For hospitals, receiving accurate payments for emergency care is harder than receiving accurate payments for planned care.
Benefits of adopting patient friendly billing
Hospitals will need to ensure their revenue collection rates are high to balance the drop in overall health care spending. According to Becker’s Hospital Review, many hospitals won’t be able to benefit from slower health care cost growth in the long term if they don’t abandon fee-for-service, which facilitates providers to send for unneeded tests and provide superfluous care to increase revenue. The switch to pay-for-performance means health systems will need to ensure patient engagement and satisfaction remains high.
The billing process is a vital part of the patient experience and hospitals will need to ensure the payment process remains strong if they wish to keep costs low and revenue high. Patient friendly billing, with cost estimations and clear bills, helps to improve the patient experience and assist in collecting patient payments. Consumers, whether they have high-deductible plans or not, need to understand what they owe to their providers. Clear patient billing can help encourage consumers to pay off their bills faster, which in turn reduces collection cycles and costs associated with bad debt.