Health Savings Accounts: What Physicians and Staff Need to Know

1

• Health Savings Accounts What Physicians and
  Staff Need to Know

• Donna B Kinney, CPA
• Director, Research and Data Analysis
• Texas Medical Association

You must call in by telephone to hear the audio
portion of this webinar. The dial in number is
1-800-588-4973 and passcode is 23426524
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Continuing Medical Education

• Faculty Disclosure
• Planners and faculty have no relevant conflicts
  of interest with any commercial interest.
• The Illinois State Medical Society designates
  this educational activity for a maximum of 1 AMA
  PRA Category 1 CreditsTM. Physicians should only
  claim credit commensurate with the extent of
  their participation in the activity.

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Continuing Medical Education

• In order to receive the CME for this course, you
  must complete the on-line quiz at the end of this
  program.
• You will automatically be directed to the quiz
  when you close out of the webinar.

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Learning objectives for the ISMS webinar series

• Discuss current trends in EHRs and important
  features and processes to consider prior to
  implementing an EHR system in a medical practice.
• Identify current issues in consumer directed
  healthcare and Health Savings Accounts, and how
  they affect the physicians revenue cycle.
• Summarize recent changes and updates to Medicaid
  billing and compliance issues.
• Explain recent Stark Law changes and how they
  directly affect the physicians practice.
• Discuss the importance of disaster readiness in
  the physician practice.

Go to www.isms.org to see the list of upcoming
webinars
5

• Health Savings Accounts What Physicians and
  Staff Need to Know

• Donna B Kinney, CPA
• Director, Research and Data Analysis
• Texas Medical Association

6
A quick look at history

• How did we get where we are today?

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The Third-Party Payer Problem
Source AMA Socioeconomic Monitoring System
Surveys
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Cost Increases
1982 2000
Average Physician Office Operating Cost 78,400 246,600 215
Average Fee for Established Patient 21.60 62.00 187
Note General inflation (CPI-U) increase
from 1982 to 2000 72
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Cost Increases

• Non-physician employees per physician
• 1980 2
• 2006 - 5

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Operating Cost as a Percent of Revenue
Source MGMA Cost Survey, 2008
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Cost Increases

• Physician Cost increased due to
• Claim processing, follow-up, appeals
• Cost and utilization controls
• Pre-certification, pre-authorization, referrals
• Formularies
• Network enrollment building, contracts,
  credentialing
• More
• Insurers the other side of all those processes

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Change Possibilities?

• Reducing administrative cost is a win-win-win
• Physician - Reduced operating cost, improve
  profitability, reduce prices
• Insurer - Reduced operating cost, reduced
  physician contract costs, reduce premiums
• Patient Reduced prices, reduced premiums
• Moving more payments to cash reduces
  administrative cost

13
Physician Cost/Revenue Comparison
Sources MGMA Cost Survey (medians), Centers for
Medicare Medicaid Services, Medicaid Fee
Schedule
Note Cost and revenue are reported here per
Relative Value Unit a Medicare measure of the
units of service produced. One RVU is
approximately the value of the simplest office
visit for a new patient.
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Enter Consumer- Directed Care

• Allows some untaxed health care benefit dollars
  to flow from the employer to the employee WITHOUT
  going through an insurer.
• Usually high-deductible plan paired with spending
  account
• Purpose
• Allows employees to benefit from prudent spending
  decisions
• Avoids the added overhead of insurer payment for
  small expenses

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Consumer-Directed Plans

• Health Savings Accounts (HSAs)
• Requires a High-Deductible Health Plan
• HSA account can be funded by employer and/or
  employee
• EMPLOYEE owns the account and accesses it with
  debit card or checkbook.
• HSA funds available to pay for almost any health
  care expense.
• Health Reimbursement Accounts (HRAs)
• No insurance required, although usually used
• EMPLOYER funds and owns the account.
• Generally requires claim filing.
• Payment terms and limitations imposed by plan or
  employer

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High Deductibles and CD Market Growth

• High deductibles
• More than 20 of the commercially insured had a
  high-deductible health plan in 2008. (CDC
  National Health Interview Survey)
• Average deductible in PPOs increased to 1000
  (from 500 in 2007). (Mercers 2008 Survey)
• Consumer-Directed Health Plans (CDHPs)
• Over half of companies offering account-based
  health plans in 2009. New offerings are mostly
  HSAs, not HRAs. (Towers Perrin survey)
• CDHP premiums per employee are lower. (Mercer,
  2008)
• CDHP 6,200
• PPO 7,800

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Health Savings Account Growth

• More than 3.2 million HSA-compatible plans in
  market by Jan 2006, 4.5 million by Jan 2007, 6.1
  million by Jan 2008 (AHIP)
• U.S. Treasury Dept. predicts 14 million policies
  by 2010.
• AHIP reports average balance in HSAs is 1,382
  and growing.
• Average employer HSA contributions (Kaiser-HRET)
• Individual 1,139
• Family 2,067
• AIS Health Reports 2.9 million open HSA accounts
  containing
• over 3.9 billion dollars

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Comparison of Spending Accounts
HRA HSA FSA
Ownership Employer Employee or Individual Employer
High-Deductible Health Plan Not required Required Not Required
Claim Filing Probably but debit card permitted Not necessary. Debit card or check book By employee or medical debit card
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Comparison of Spending Accounts
HRA HSA FSA
Carryover Maybe, but Yes No Use it or lose it
Contribution Employer only Employer and/or Employee Employer and/or Employee
Portable No, but Yes No
Cash out No Tax plus 10 No
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High Deductible Health Plans Required with HSA
Accounts
Deductible Individual Family
Minimum 1,150 2,300
Maximum 5,800 11,600
For 2009. Annually adjusted.
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Spending and Deductibles

• Study at University of Michigans School of
  Public Health
• Of health plan claimants,
• 45 have claims from 1-999
• 35 have claims from 1,000-4,999
• 19 have claims from 5,000-19,000
• 1 in excess of 20,000

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Consumer-Directed Plans Issues for Physicians

• Health Reimbursement Accounts
• EMPLOYER (and/or their TPA) owns and controls the
  account, not the patient.
• Often (usually?) requires claim filing.
• Payment terms and limitations imposed by plan or
  employer
• Information on account balances, deductibles,
  etc. is often not available to the physician
  practice.
• Health Savings Accounts (HSAs)
• HSA account is controlled by patient, but HDHP is
  usually a PPO.
• When HDHP is an indemnity plan, it can be
  difficult to distinguish from PPO.
• Information on account balances, deductibles,
  etc. is often not available to the physician
  practice

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PPO Contracts and CD PlansServices BELOW the
Deductible

• Patient has HSA, physician is NOT contracted
• Patient pays at time of visit using checkbook or
  debit card.
• No billing/collection expense
• Physician can reduce office overhead cost and
  offer prompt pay discount.

• Patient has HSA, physician is contracted
• Physician submits claim, gets back EOB showing
  allowable amount, but must collect from the
  PATIENT.
• Physician tries to collect from patient.
• Physician overhead cost increases, collections
  decrease

Note Analysis applies only to services provided
below the deductible.
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Effects of CD Plan Dissemination

• Threats -
• Decreased collections
• Increased administrative cost
• Patient price sensitivity
• Opportunities - maybe
• Eliminate the middleman
• Decreased administrative cost
• Improved physician-patient relationship
• The threats will come to you. To take advantage
  of the opportunities, you will probably have to
  change some things.

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Transition Problems,Possible Solutions

• Problem Physician unaware of patient deductible
  and/or spending account card
• PLAN transparency contract or insurance
  regulation
• Incentives for patient disclosure like prompt-pay
  discounts
• Problem Unfunded or exhausted spending accounts
  
• Improved employer/employee funding (tax
  incentives)
• Medical lenders (meddirect, CareCredit, others)
• Problem Patient share unknown until EOB received
• Advance deposits (with administrative cost)
• Adjustments in claim filing

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Keeping Collections Up In a High-Deductible
Environment WITH Network Contracts

• Determine patient liability at or before time of
  visit
• Eligibility verification
• Is deductible met?
• What price? Does a contract apply?
• Communicate payment terms clearly to the patient
• Offer payment alternatives
• When at all possible, collect at the time of the
  visit (or in advance). Or take deposits.
• Note Step 1 is not a problem if physician is
  not contracted!

27
Electronic Tools to Help Determine Patient
Liability

• Tools include Eligibility verification
  functions in clearinghouses, enhanced modules in
  some practice management systems, health plan web
  portals, smart cards, revenue cycle management
  products.
• Vendors Athenahealth, Availity, Emdeon,
  Instamed, Metavante, nTelagent, Preferred Health
  Technology A-Claim, RealMed, others

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Electronic Tools to Help Determine Patient
Liability

• What they have in common - eligibility
  verification, using web portal or standardized
  (HIPAA) transactions.
• How they differ
• Functions beyond eligibility verification
• Ease of use effect on staff workload
• Degree to which they interface with various
  practice management systems or clearinghouses.
• Fee structure
• Does it increase of decrease administrative cost?
  

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Fee Schedule Issues

• Upward pressure
• Contracts
• Percent of charges
• Lesser of contract allowable or actual charge
• Need to offset losses on government payer
  discounts
• Downward Pressure
• Patient price sensitivity
• Uninsured
• Out-of-network consumer-directed
• Diminishing returns?

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Prompt Payment Discounts

• Align patient and physician incentives cut
  patient costs AND physician collection costs
• Create an incentive for patient to disclose
  spending account and/or use debit card
• Reduce or eliminate the impact on the patient of
  seeing out-of-network physicians.

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Prompt-pay Discounts

• Physician cannot discriminate against an
  insurer!! Discount is not based on who the payer
  is, but on other terms.
• Prompt-pay discounts are based on full standard
  fee and not available if physician is bound to a
  reduced price by contract or government action.
• May be available if physician is out of network
  or patient is uninsured.
• Should be detailed in physicians standard
  payment policy and patients should be informed.
• Note Practices might not want to give a discount
  if their standard fees are already low and
  collections high.

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Texas Physicians Offering Prompt Payment Discounts
Source TMA 2008 Physician Survey
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Implementation and Transition Problems for
Physicians

• EVERY party needs to change the way they do
  things in order to adapt to change.
• Change does not happen overnight plan carefully
  and change in small steps.

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Planning for the Future

• Re-evaluate standard fee schedule, pricing
  options
• Discount policy publish
• Cash Collections
• Cut administrative cost and overhead
• PPO Contracts
• Change in value of steerage?
• Contract prohibition on cash collections or real
  time claim adjudication negotiate?

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Consumer- Directed Care Information Sources

• www.hsainsider.com
• Summarized regulatory information, news, links
• www.hsabank.com
• HSA accounts, HDHP agent list, general info
• www.ehealthinsurance.com
• Online quotes for HDHPs
• www.irs.gov
• FAQ and other guidance. Tri-fold brochure at
  http//www.treas.gov/offices/public-affairs/hsa/pd
  f/HSA-Tri-fold-english-07.pdf

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Questions?

• Donna B. Kinney, CPA
• donna.kinney_at_texmed.org
• [phone] Ext.1422
• [phone]

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Thank you for your participation

• In order to receive CME for this activity, you
  must complete a required post-activity evaluation
  on your computer screen.
• You will be prompted to complete this evaluation
  once you leave the webinar.
• You will receive your CME certificate in the mail
  within 4 weeks.

Questions? Contact ISMS Division of Health Policy
Research and Advocacy at hpresearch_at_isms.org