April 2015

To date, the Affordable Care Act (ACA) has resulted in an estimated 32 million newly-insured Americans since 2010; nearly one-third of which purchased coverage through exchanges. On the surface, it appears that this would be nothing but positive news for health care providers, as their ability to collect for billed services should be enhanced with more insured consumers seeking care. However, taking a closer look at the plans the newly insured are choosing reveals a growing issue in collections for providers: the increasing popularity of high deductible health plans (HDHPs). Users of the insurance exchanges and corporate consumers of health insurance are starting to shift their health plan choices toward higher deductible options. The tiered structure of offerings on the exchanges allows consumers to choose their plans based on cost. This is leading to an increase in popularity for HDHPs which typically include lower upfront premiums but higher total costs for many services. The number of HDHP enrollees rose to nearly 17.4 million in January of 2014, up from 15.5 million in 2013, 13.5 million in 2012 and 11.4 million in 2011; an average annual growth rate of approximately 15% since 2011. As consumer preferences shift further towards these HDHP offerings, the need for hospitals to adapt their billing and collection strategy increases; otherwise bad debt and charity care could evaporate profits. Coinciding with the increasing interest of HDHP among consumers, more employers are offering HDHPs, and in some cases offering only HDHPs, to help control costs. This trend is…

  by Venson Wallin and Bill Bithoney, MD, The BDO Center for Healthcare Excellence and Innovation What is the 340B program? The 340B program is a means through which providers, known as “covered entities,” can offer pharmaceuticals to a greater amount of eligible patients than they could at traditional manufacturer pricing. This is because the program requires that manufacturers sell the drugs to the eligible providers at a discount, thereby enabling a larger number of those in need to get the assistance they need with purchasing their prescriptions. The 340B program is very popular for this very reason; covered entities are able to purchase drug supplies at the 340B discounted price, and then bill the patient’s insurance company the traditional rate. This “margin” generates much needed profit for some of the more income-challenged providers, while having minimal impact on the Medicare and Medicaid program costs. The patient wins, the provider wins, and the government programs win. Providers understand the upside, and annual 340B drug spending by covered entities exceeds six billion dollars and approximately one-third of U.S. hospitals participate in the program. The spending and number of participating providers is forecast to increase significantly during the coming years. In 1992, Congress created the 340B program via Public Law 102-585, the Veterans Health Care Act of 1992, which is otherwise known as Section 340B of the Public Health Service Act. The law requires drug manufacturers that participate in the Medicaid program to agree to provide discounts on covered outpatient drugs purchased…