High-Deductible Plans Driving Rise in Hospital Bad Debt
Hospital bad debt rose in 2018 after several years of decline, and according to Moody’s, high-deductible health insurance is one of the major drivers of that increase.
According to the bond rating agency, non-profit hospitals are seeing growing amounts of bad debt as they struggle, often unsuccessfully, to collect from patients whose high deductibles leave them on the hook for meaningful amounts of care.
Kaiser Health News reports that 28 percent of covered workers, nearly half of them working for companies with fewer than 200 employees, now have health plan deductibles of at least $2000. That proportion of individuals with such high deductibles has nearly quadrupled in the last decade.
Bad debt can be an especially challenging problem for Pennsylvania safety-net hospitals because they care for so many low-income patients who, even when they have health insurance, often struggle to find the money to pay their share of the costs their plans do not cover.
Learn more about the bad debt challenge facing hospitals in the Healthcare Dive article “Nonprofit bad debt climbs again amid steeper deductibles, Moody’s says.”
A cut in federal Medicaid disproportionate share (Medicaid DSH) allotments to the states is mandated by the Affordable Care Act and has been delayed several times by Congress. If implemented, Medicaid DSH allotments to the states would be slashed $4 billion in FY 2020 and then $8 billion a year through FY 2025.
The Philadelphia Business Journal reports that since Hahnemann’s closing was announced during the summer, ER volume has risen 15 percent, admissions have risen 12 percent, and births have risen more than 50 percent at Thomas Jefferson University Hospital, a SNAP member. Meanwhile, SNAP member Pennsylvania Hospital has seen its ER visits rise nine percent, SNAP member Penn Presbyterian Medical Center has seen its ER volume increase five percent, and SNAP member the Hospital of the University of Pennsylvania has seen its ER volume rise five percent.
This area is served almost exclusively by Pennsylvania safety-net hospitals and recently suffered a major loss when one of those providers, Hahnemann University Hospital, closed its doors.
Instead, patients previously served by Hahnemann University Hospital, a Pennsylvania safety-net hospital that served especially large numbers of Medicaid and uninsured patients, are now being served by other safety-net hospitals in Philadelphia: mostly, Jefferson Health, the University of Pennsylvania Health System, Einstein Healthcare Network, and Temple University Hospital. All report increased volume in their emergency rooms, more ambulance arrivals, and more inpatient admissions, but at least so far, they also report that they are comfortably handling the increased patient volume created when Hahnemann closed its emergency room and discharged its last patients in July.
In 2015, CMS required states to track their Medicaid fee-for-service payments and submit them to the federal government as part of a process to ensure that Medicaid payments were sufficient to ensure access to care for eligible individuals. Now, CMS proposes rescinding this requirement, writing in a news release that
The Medicaid DSH cuts, mandated by the Affordable Care Act, have already been delayed three times by Congress and could be on their way to a fourth delay if the proposal advanced by the Health Subcommittee is endorsed by the Energy and Commerce Committee and works its way to the full House of Representatives, where such a proposal is thought to enjoy wide support.
According to the post, social determinants of health – income, education, decent housing, access to food, and more – significantly influence the health and well-being of individuals – including low-income individuals who have adequate access to quality health care. Medicaid, the post maintains, can play a major role in addressing social determinants of health.
Miller conveyed what a news release described as
The requirement itself is not new; the purpose of the memorandum is to encourage federal agencies to enforce existing laws that state that, according to the memorandum,