How Has COVID Impacted Patient Responsibility for Anesthesia Charges?

Summary: The coronavirus pandemic has not only negatively impacted surgical case volumes as a whole, it has eroded the collection percentage for the individual case. Today's article discusses the reasons for this phenomenon and how groups may overcome these obstacles in the days ahead.

A Significant Change

How do our clients get paid for the services they perform? The Medicare payment model has historically been typical of the industry as a whole. The intermediary evaluates the details of the claim to determine an allowable based on the current contract rate. Unless the patient has a deductible, the payment is 80 percent of the allowable. The patient is responsible for the 20 percent balance unless they have a secondary plan. The only plans that do not have a patient responsibility are Medicaid and workers' compensation, the specific rules for which are determined by the state in which the service is being paid.

Curiously, some cheaper plans now include a higher patient responsibility; and so, the Medicare model is no longer the exclusive standard. Conventional wisdom holds that it is easier to collect money from the insurance plan than the patient. In fact, most practices find that the toughest dollars to collect are those pertaining to patient balances and for patients who have no insurance at all. The question, then, is: how have the various components of this process been impacted by the current pandemic? The answer is that the impact has been significant.

Charting the Change

The table below represents a sample of clients from across the country. The analysis is intended to identify the impact of patient responsibility by comparing the first two quarters of 2019 and 2020. For purposes of comparability, the actual payments shown for 2019 represent the same cut off of July 15 (2019) as those for 2020 which were posted up until July 15, 2020. A number of points should be noted here. 

• The allowable is the amount indicated by the insurance on the Explanation of Benefits (EOB) form.
• The total allowable for 2020 is 75 percent of the total for 2019. For the most part, this reflects the drop in surgical volume that began on March 15, although there may have also been a slight drop as a result of coding and reimbursement changes pertaining to endoscopy claims.
• Patient responsibility reflects both deductible and co-payment responsibility, which is always higher in the first quarter than the second quarter because of the impact of deductibles.

Data for this study was compiled from 10 clients and the patterns were quite consistent from client to client. The intent is to show the combined impact of a drop in volume and a drop in actual payments from patients and their secondary insurance, which are separate and distinct factors in the evaluation of revenue potential.

Explaining the Change

Based on this table, which reflects average values for the clients in the sample, there was a slight increase in patient responsibility from 2019 to 2020, which we attribute to an increase in deductibles as compared to a decrease in the percentage of the allowable paid by the insurance. Data for Q2 appears to be flat at 19.3 percent, but a review of the actual practice data reveals that many did see an increase in patient responsibility for both quarters. This increase is significant in a period of increasing unemployment and financial stress for patients who will simply not be able to pay their portion of the bill.

Only 55.3 percent of the 2019 allowable was collected from patients and their secondary insurance by July 2019, which is consistent with past experience collecting from patients. The 7 percent drop in patient collections (55.3 percent to 47.51 percent) from 2019 to 2020 must be attributed to the impact of the virus on patient ability and willingness to pay their medical bills in the current environment. Some may argue this is a time-based issue, that it is simply taking longer now for patients to pay, and there may be some truth to that. The fundamental reality of accounts receivable management is that the longer an account goes unpaid, the less likely it is to get paid.

In Spite of the Change

When the economy picks up and people can go back to work, we should see some relief. Until that happens, though, we can expect patients to struggle with their portion of the anesthesia bill. We are continually thinking about creative ways to minimize patient bad debt. We have experimented with a variety of strategies including deductible avoidance, which has been successful, as well as various pre-payment policies, especially for cosmetics cases.

One of the fundamental challenges has always been the fact that anesthesia providers only see the patient at time of service, as compared to office-based practices which can ask for a pre-payment prior to the services. Successful strategies will inevitably involve a partnership between the practice and the facility. Please feel free to contact your account executive or email us at info@anesthesiallc.com to explore these and other options.