A recent Peterson-Kaiser Health System Tracker study revealed an interesting finding: average copayments are declining. Their study, which analyzed claims data from Truven MarketScan, found that average copay amounts paid by patients decreased by 26% from 2004 to 2014.
Seems like a positive trend for patients and practices … except that it’s not. It’s part of a shift that’s actually making out-of-pocket costs harder for patients to prepare for and understand. That makes them harder for practices to collect.
The Peterson-Kaiser analysis found that while copays declined by 26%, coinsurance increased by much more, 107%.*
Payers may be emphasizing coinsurance because it is assumed, like deductibles, to be a more powerful tool to discourage unnecessary utilization of services. But for patients who need care, coinsurance can be another cause of ‘surprise’ obligations, since it’s not always easy to calculate the amounts due.
Patients may also easily confuse copays — which are standard amounts for services like office visits, prescriptions, or the ER — with coinsurance, which can only be calculated after determining what services are needed. This difference can lead to reluctance to pay, or fear of being incorrectly charged, especially when the amounts are significant.
Here’s a chart from the Peterson-Kaiser report:
Coincidentally, but not surprisingly, the report also found that total cost-sharing continued to rise steadily and steeply. The analysis found that total out-of-pocket costs rose 77% from 2004-2014 — much faster than wages. Besides the 107% coinsurance increase, deductibles increased 256%(!).
For practices, this means that effective patient collections continues to be crucial to profitability.
Not only are patients accounting for an ever more significant proportion of earned revenue, their payment responsibility will almost certainly continue to be confusing. It’s crucial to help patients understand and prepare for the amounts they will be expected to pay. Be sure you also offer options like credit-card-on-file, mobile payments, payment portal, and payment plans to encourage their compliance.
*I also wonder how much of the decline in copayments is due to patients using more preventive services, which carry no copay by law under the ACA. This could bring the average down. Another KFF report mentions that preventive service usage is up, but does not delve into this possible explanation for all or part of the decline in copayments charged. Of course, this is immaterial to more important issue for practices: the coinsurance and deductible increases.