When is a Self-Pay Arrangement a Good Prescription for High Deductible Health Plan Members?

By March 22, 2017 June 11th, 2019 Payor Contracting
High Deductible Health Plan Members

Recently I was asked what ASCs could do to assist patients who can’t afford to pay for a procedure that’s covered under their high deductible health plan (HDHP).  If you haven’t faced this question yet, brace yourself!  The findings of the Kaiser Foundation and Health Research and Education Trust’s 2016 Annual Survey suggest you will soon.

Kaiser’s survey indicates four out of five patients who arrive in your facility are likely covered by a high deductible plan.  It further reveals that deductibles on employer sponsored health insurance policies rose 12% in 2016.  This is four times faster than premiums increased.  The average deductible for single coverage is almost $1,500 with many plans exceeding that amount.  Since 150 million Americans have coverage through their employers, expect to see patients with high deductibles more often.[1]  

I negotiated a contract with a payor on behalf of a client and was pleased the end result was exceptional reimbursement for the ASC.  However, one of the facility’s surgeons was approached by a patient who had insurance with that payor.  To my surprise, the surgeon was not as impressed with the reimbursement as I was.  He was concerned the payor’s contract made the ASC cost-prohibitive for his HDHP patients.  Talk about unintended consequences!  

Since I contributed to creating the problem, I had a stake in finding ways to minimize the adverse effects for the ASC and its patients.  One way was to educate patients on their right to opt-out of insurance and create a self-pay arrangement.  If you are wondering if your ASC and its patients could benefit from a self-pay arrangement, consider the following:

  • What limitations does your ASC need to be aware of prior to pursuing this route?
  • When can your ASC recommend to a patient that it may make sense for them to opt-out and enter into a self-pay arrangement?

What limitations does your ASC need to be aware of?

Review your contracts to determine which ones call for direct billing.  Most, if not all, contracts with insurance companies require providers to directly bill the insurer for covered services provided to their members.  

Federal regulations now allow patients covered by health plans the right to opt-out (typically for privacy reasons).  As Wall Street Journal clarifies: “Cash prices are officially aimed at the uninsured, but people with coverage aren’t legally required to use it.”[2]  If they opt-out, they choose to pay a provider in full on or before the day of surgery and relinquish the privilege of the provider billing the insurance company on their behalf.  

Some precautionary measures your ASC should be aware of include:  

  • Does your contract have a “most favored nation (MFN)” clause?  A MFN clause essentially restricts your ASC from accepting lower payment for a service from anyone other than the payor that mandated the clause.  In other words, your discounted rate for self-pay patients cannot be lower than what the insurer with the MFN status pays your ASC.  Fortunately, MFN clauses are not common these days.  But if they’re overlooked, this condition could present a problem if you deeply discount ASC fees for self-pay patients.      
  • Your patients need to be informed they can’t avoid paying their deductible under their HDHP. If the patient opts to seek care under a self-pay arrangement, an insurance claim will not be filed.  This means the amount they remit under the self-pay arrangements is not credited to (applied against) their deductible.      
  • Once a patient opts out of insurance, they cannot expect the ASC to bill the insurance company at a later date. By that point, it is likely the claim would be outside of timely filing requirements and subject to denial.

The primary message is “do your homework.”  This starts with knowing the terms in each of your insurance contracts and, when necessary, seeking legal opinion about your options.  Further, find out if there are laws in your state that override federal regulation.  Typically, the most restrictive laws will dictate your self-pay pricing.

When can your ASC recommend a self-pay option?

It makes sense for a patient to elect self-pay when:

  • The patient expects to be responsible for paying the ASC the full amount due under their HDHP.
  • The patient’s deductible is high and their health is such they do not anticipate reaching their deductible during their plan year.
  • The amount the patient will pay under your ASC’s self-pay policy will be substantially less than they would owe if you submitted the claim under their HDHP. Remember to take into consideration the contracted rate (allowable), not merely the fee you bill to the payor.  
  • The patient is able to pay for services in full, via cash or cashier’s check, on or before the day of surgery.
  • The patient is willing to sign a form electing to opt-out of insurance and enter into a self-pay arrangement.
  • The patient, for privacy reasons, wishes to withhold releasing their medical records to their insurance carrier.

Ensure patients who opt-out, specifically sign an “election to opt-out of insurance” clause on your self-pay form.  

By acknowledging this clause, the patient is stating they understand:

  • They have chosen to opt-out of their insurance.
  • Your ASC will not be filing a claim with their insurance company.
  • If the patient were to file a claim on their own, there is no guarantee it will apply towards their deductible. This is because the patient chose not to use insurance.

At the time of scheduling, it can be difficult to predict all the procedures that will be performed when the surgery actually takes place.  For that reason, add a disclaimer to the election form alerting the patient to the possibility of an alternate procedure and/or additional procedures being performed. Ensure they accept responsibility for paying the difference between the quoted price and the actual price after the “time of service” discount is applied.

Also, it is important to clarify upfront that receiving the discounted self-pay price is contingent upon payment being made on or before the date of service via cash, money order, or cashier’s check.   If your ASC opts to accept payment from the self-pay patient via credit card, consider adding a 3% credit card processing fee to your cash price.  Doing so will incentivize self-pay patients to pay with cash, money order, or a cashier’s check.

Finally, your ASC should not send any claims to the carrier for the opt-out episode of care, nor provide a claim form to the patient for claim filing purposes. Instead, incorporate all charge and payment information into the opt-out self-pay election form.  This precautionary measure may deter opt-out self-pay patients from sending a claim to their insurance company.   


Dan Connolly – Vice President of Payor Relations and Contracting

[1] The Kaiser Family Foundation and Health Research & Education Trust. “Employer Health Benefits,” 2016      

[2] “How to Cut Your Health-Care Bill – Pay Cash,” The Wall Street Journal, February 2017

 

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