The federal healthcare act and third-party collectors

I was recently asked to comment on the Supreme Court’s ruling on the federal healthcare act for an upcoming article in a national publication.  I am not sure my comments will make the grade, and I have been asked several times recently for my thoughts on the impact on our industry.  So here are those questions and my comments:

  • How will the Affordable Care Act impact volume and/or collect-ability of healthcare collections? More people will be forced into Medicare/Medicaid, meaning the self-pay amounts will have to balance the amounts the government requires the providers to write off – larger balances for fewer people is likely.  They will only be more collectible than currently if the employment outlook improves – people have to have jobs to pay their bills.  I doubt hiring will increase on a large scale based on the fact the not-so-supreme court has ruled this tax increase constitutional, so more uncertainty and little hiring will remain in the workforce.
  • How will the reform impact the types of accounts placed for collection (e.g. Medicare, charity care, self-pay, etc…)? I see fewer accounts overall as more people will be forced onto government plans or capitated plans.  Charity care will likely increase as well.  Those with commercial plans will continue to see their deductibles increase as the employers try to keep costs under control, meaning larger balances for the working class, but less bad debt overall.
  • Will you need to adjust scoring models or collection strategies? PIF will be less likely as average balances increase – more emphasis on payment plans.
  • What kind of effect will the expansion of Medicaid have on business? What will be the impact from States that choose not to expand Medicaid?  The federal government does very few things efficiently or effectively compared to the private sector, so more government insured mean more regulation, more people expecting things to be done for them.  Less personal responsibility on behalf of the consumer means more complaints to regulators, more resources taken up by businesses telling people the things they should already be doing or know, and simply responding to “complaints” to try to maintain customer relations for people who demand more and more entitlements, and will never not-complain about getting things for free.  States that choose not to expand (Oregon has already passed the laws to create the exchanges) should look over their shoulder for some form of punishment from the feds.  This will be all-in or nothing.
  • With requirements that employers must provide insurance for their employees or face a penalty, how will the reform affect employers and their health care plans?  As it is designed to do, the outcome will force more and more employers to choose to drop their insurance plans (except for the couple hundred entities that have bargained for exemptions like unions and some administration-friendly businesses that have “contributed” significantly to election campaigns).  Currently, my annual plan for this small business is about $132,000, which we pay half.  We have a good plan the employees really like.  If we are forced into a double or tripling of the premium to maintain the same benefit levels, we will choose the penalty and move all of our employees to government plans and exchanges.  Our current re-rate raise is 18%, which is about what we look at every year. 
  • What kinds of challenges and/or opportunities do you foresee for accounts receivable professionals as a result of the reform? We have already positioned ourselves to do more first-party billing and outsource work.  Part of the Act’s requirements is for providers to cut administration costs, and most of us are much more efficient at getting payments and working with patients than many of the average healthcare administrative offices, so the early-out market place should see more opportunity under the Act for the next several years.
  • I had the chance a few months ago to hear a doctor and high-level administrator discussing the impact on one of our local hospitals.  He put it this way; “The government is asking us to fill our five pound bag of sugar with ten pounds, and then telling us they are going to pay us half what we were getting paid for five pounds.”  The current direction seems to force providers to do twice as much work with half the compensation, and it will somehow result in higher quality care for less money. 

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