1. Chief Healthcare Strategy Officer
What’s Happening Today in Healthcare: Self Pay is Not Going Away Increase in Patient Responsibility JEOPARDY
Lyman Sornberger
Chief Healthcare Strategy Officer
Capio Partners LLC
September 22, 2016
AAHAM

2. Lyman G. Sornberger Presented by:
Chief Healthcare Strategy Officer - Capio Partners
President & CEO - LGS Healthcare Consulting
For over 31 years Mr. Sornberger led revenue cycle activities for the Cleveland Clinic and UPMC and has consulted with the largest health systems in the country. Those healthcare organizations have revenues that exceed $12 billion. He has authored over 2,200 articles for HFMA, AAHAM, and other leading healthcare publications and has been a featured speaker at over 125 healthcare revenue cycle industry events.

3. Agenda
Overview of exchanges, ICD.10, Consumerism, and Patient’s Responsibility
Potential Impact to Patient, Provider, and Industry and why self pay is growing
Test Your Knowledge - Play Jeopardy

4. Obamacare Exchanges Overview Reality Check!
Improve Quality 1
Increase Access 2
Improve Price 3

5. Fact 2014 Final Numbers 11 million adults
+2.6 million under the age of 26
-.0.8 million non-payment (assumes 90% will pay)
+1.5 million children
+0.95 million early expansion
TOTAL: MILLION GAINED INSURANCE DUE TO OBAMACARE AS OF DECEMBER 2015
assumes a 6 % drop on a population of 240M adults in the USA*

6. Fact 2015 Numbers- What does it Look like Now?
30 Million insured and uninsured has dropped by 12.3%
Uninsured adults went from 40 Million to 30 Million
Congressional budget for Obamacare subsides will cost: $209 Billion less then projected
103K in the first month of 2013 Obamacare

7. Fact 2015 Numbers- What does it Look like Now?
9.5 Million through Medicaid expansion
11.7 Million on exchanges
8.2 Million signed up outside of exchanges
30 Million
Fact or Fiction?

8. ACA EXCHANGE Qualified Health Policy (QHP) Enrollments:
Many moving parts Unemployment down Retirement is up Many enroll for tax season and drop the coverage Started a 46.6M or 15.7% and now is 9.2% Consider that 1%=3.2M people Fact is that those over 400% of poverty showed little change 87% are getting some form of subsidy and roughly 7M didn’t pay their premium

9. 78% of Americans approve of most of Obamacare
Fact
78% of Americans approve of most of Obamacare
60% agree with the requirement to have a large number of employees to insure workers
Only 35% approve of the mandate to require individuals to buy insurance

10. United and Aetna backed out
Fact
28% of Democrats say Obamacare has helped them while 43% of Republicans say that it has hurt them
31% of states will have only one marketplace exchange option and 31% will have only two options
United and Aetna backed out

11. Penalty 2014 Penalty $95 per adult $47.50 per child
up to $285 for a family OR 1% of their income, whichever is greater-9 months uninsured
The fine increased to $695 per adult and $ per child and caps at $975 or 2% of their income, whichever is greater-9months uninsured
Tax credits- individual $11,500 and $46K or a family of four $23K and $94K

12. Obamacare Impact to Self Pay
Estimated $7 Million as of 2015 that did not pay their premium
Payers and provider denial processes are inconsistent and engage the patient
Penalty for “no coverage” is weak
Providers closing the door on Marketplace
“Back to the Out of Network denial world and the ED as a Dr’s office”

13. Obamacare Impact to Self Pay
75% of healthcare exchanges are in high deductible plans
Silver plan has 30% out of pocket, bronze 40%
“Gone are the days of the peak in collections with tax returns”

14. ICD-10 Overview
ICD th revision of the International Statistical Classification of Diseases and Related Health
Migrates – ICD-9 five digit numeric codes to seven digits alpha numeric moves IP procedure codes from 4K to 72K
Overall the change for ICD.9 to ICD.10 moves from 18K to 140K codes
Objectives:
Improve quality outcomes, patient safety, public health-disease reporting, accurate reimbursement
Impact to: Providers, Payers, and Vendors- what about the patient?

15. ICD.10 Fact
Two components: Procedure Coding System (PCS) and General Equivalence Mapping (GEM)
Reimbursement impacted & three specialties have high indicators:
Cardiology
Neurosurgery
Orthopedics
Denials are inconsistent and reflecting increases from 3% to as high as 30% and most related to smaller hospitals unprepared

16. AHIMA STUDY Survey rendered in May 2016 and published June 2016
One hundred and fifty six coder professionals responded to thirteen questions
Objective: Did ICD.10 impact productivity and accuracy?

17. AHIMA STUDY RESULTS
14.5 percent decrease in productivity and 0.65 percent decrease in accuracy
67.5 percent of the respondents noted the decrease in productivity, 5.8 percent had an increase, and 26.3 percent had no change
Accuracy reflected a 26.9 percent decline, 11.5 percent increase, and 61.5 percent had no change

18. ICD-10 and Self Pay
Engaging the patient due to:
Improper/inconsistent denial mapping
Volume increases
Provider, payer, and vendor readiness
Delayed reimbursement and aged transfers to collections
Appeals
It’s Y2K all over again
Third Party public relation and operational challenges
Poor Patient Relations
AUDITS
Is it premature to know the final outcome?
Lack of industry partners to support coding, follow-up, denial management & contracting

19. Health Care Consumerism and the Patient’s Role is Changing

20. Consumerism Myths
Consumers know what they want from healthcare companies
Most consumers research their healthcare choices then make fact based choices based on research
Healthcare is different from other industries. Consumers don’t have the same expectations that they do with retail
Now that consumers are paying more for their healthcare, premium price is the only truly important factor in purchase decisions

21. Consumerism Myths
Almost all consumers have a primary care provider and are highly reluctant to change doctors
Retail clinics will remain a niche health solution
Only young people are using technology to manage their healthcare needs
Most people are willing to trust insurers to store their health records

22. Healthcare Consumerism and the Impact to Healthcare
Patients have multiple sources to measure healthcare quality and is it too confusing
Patients have to pay more for their healthcare-increased cost of care and higher out of pocket
Therefore:
Patients will utilize the existing quality and procedure information to optimize their outcomes
Patients will become more prudent users of healthcare-when?

23. Healthcare Consumerism and the Impact Legally, Financially, and Provider Brand
Payment Plans, Loans, 501R, Collection Agencies, Debt Buyers all have Legal, Financial, and Patient Relations Risk
CFPB Director Richard Cordray stated “ The Consumer Financial Protection Bureau is taking action to improve credit reporting. Getting medical care should not make your credit report sick.”

24. Healthcare Consumerism Options for Providers and Patients
Payment Plans-Traditional but Higher Out of Pocket
Loans- New Concept-Financial Risk
Prompt Pay Discounts-Legal Challenges
Interest- Patient Relations Concerns
Patient Advocacy-Education
Debt Buying-New Millennium Concept

25. Self Pay Not Going Away! Three definitions: True self pay
Under-insured- Balance after insurance
Under-insured & True self pay combined are: Patient Responsibility
Patient responsibility outcomes: Paid, Charity, and/or Bad Debt

26. Self Pay Not Going Away!
American Hospital Association reported in 2011 that uncompensated care was at $41.1 Billion on average it has continued to increase by 8% and expected to double by 2016:
$41 BILLION TO $72 BILLION IN 2016 OR A 16% INCREASE!
90% of providers note the growth of high-deductible plans among their patients and 75% of them are in healthcare exchanges.

27. Problem Statement
Hospitals and providers historically were reimbursed 90% from insurers but is now settling in at around 70%
Hospitals are required to be more transparent in billing and pricing
Patients are selecting higher deductible plans but are not setting aside funds to pay their out of pocket expenses
Employers are promoting high deductible plans to restructure coverage and to manage cost and more people are shopping on the federally-run exchanges

28. Problem Statement
Two-thirds of Americans have less than $1000 in savings according to gobankingrates.com
Nearly a quarter of Americans have 2,000 deductible or higher
About 10 percent of American choose a longtime payment option, 30 percent opt to pay in full and the rest choose not to pay
Hospitals have historically failed to collect 65 cents of every patient dollar billed
The cost to pursue the patient is 3 times the expense to pursue the insurance

29. SELLING UNCOLLECTED ACCOUNTS
Statement
The old system was designed to send past due accounts to collections and then ultimately write them off
Patients have to adapt to the new reality and those that can afford to pay should pay
As patients are billed for more of the cost of care, a new process has emerged to encourage them to pay and assist providers with offsetting the financial exposure
SELLING UNCOLLECTED ACCOUNTS

30. Self Pay Not Going Away! Regulators in the industry are:
Federal Trade Commission (FTC)
Fair Debt Collections Act
Consumer Financial Protection Bureau (CFPB)
Self Pay Management Best Practices:
Loan Programs- recourse
Early Out Programs- 501R
Letter Series-extended business offices
Collection Agency “shared risk model”
Debt/Asset Buyers-”unfound cash”

31. Self Pay Not Going Away! FACT
81% of “true” self pay responsibilities are never recovered
55% of the patients financial responsibilities are never recovered
It costs 3X to pursue the patient vs. the payer
Historically hospitals have written off about 3-5% to bad debt and today that number is 7-9% with the majority of it related to the “underinsured”

32. Revenue Cycle Management The most difficult job
in billing and collections
of any industry!
 Multiple payers
Thousands of services to bill for
140,000 + billing codes
Managing myriad of outsourced service providers
Expensive patient accounting systems
Every-changing regulations

33. # Three Payer Behind Medicare and Medicaid!
Self Pay Not Going Away!
Patient Responsibility or Self Pay
# Three Payer Behind Medicare and Medicaid!

34. Lyman Sornberger
Chief Healthcare Strategy Officer
Capio Partners LLC
Southern Illinois Chapter HFMA
August 20, 2015

35. Questions? Feedback!

36. Chief Healthcare Strategy Officer
Contact
Lyman Sornberger
Chief Healthcare Strategy Officer
c: o