Managing the Growing Burden of Higher Medical Deductibles

For each new plan year for the past decade, health plans have imposed higher medical deductibles upon Americans to use their health benefits. Except for annual physicals, routine office visits and immunization shots, this means patients have to pay more out-of-pocket for the cost of the medical services received before the health plan will share in the cost of care. Higher deductibles also means the financial well-being of providers are becoming more dependent upon payments from patients than from patients’ health plans. It is critical providers have a robust process to track and collect payments from patients. And it is critical patients make a plan for how to pay for their medical care.

Higher deductibles means providers need to be diligent in invoicing and collecting payments from patients. As annual deductibles are now as high as $10,000, failure to track and collect deductibles owed by patients can create a serious financial burden to a medical practice. In many cases it is very difficult to collect deductibles before care is provided to patients. But proper planning and documentation can make collecting more efficient and less burdensome.

In collecting from patients, it is vital providers understand state and federal laws regarding debt collection. Penalties for violating state and federal debt collection laws can be severe, so it is important to create procedures and to train staff properly on collecting from a patient. More important, providers do not want to anger patients with debt collection activities that seem too severe and risk losing the patient as a client, or worse, getting a bad review on social media.

Patients need to plan for their future care and how to pay for it. Patients should explore opening a health savings account (HSA) as it provides a pre-tax way to save up for paying for medical deductibles. An HSA does not expire, so it can be rolled over for use in future years. In addition, when possible, patients should plan major medical care around plan years. If a patient has exhausted or nearly exhausted the deductible for the plan year, then, before the plan year ends, it might be a good time to undergo the medical care he/she has been delaying. This way, the health plan pays for more of the cost of care on the delayed medical care.

As the cost of medical care continues to be shifted more upon the shoulders of patients, providers and patients need to be proactive in creating a plan for handling this trend. Those who fail to plan ahead risk being saddled with a huge financial burden. And those who plan properly will be rewarded for their diligence and can concentrate on quality of care.

James Pao, Jr. is an attorney with experience in handling ERISA and healthcare matters on behalf of healthcare providers, health plans and patients.

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