Deductibles Reset: How to Prepare for Q1 Billing Nightmare

The beginning of the year brings challenges for many healthcare patients and, in turn, nearly all healthcare providers. The issues are all related to the resetting of insurance deductibles. For many patients, medical services that were completely covered by insurance only a few weeks ago must now be paid for out of pocket until they meet their deductible, once again. 

While the financial challenges that burden the insured are mostly unavoidable, there are some ways physicians and medical billing teams can prepare for the onslaught of canceled appointments and difficult collections. Many providers take this as a time to focus on collections services and implement new processes that make it easier for patients to pay. For example, many healthcare providers found that simply talking to their patients about treatment and payment options results in a more positive patient experience and an easier collection process. 

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How to Plan for High Deductibles Reset

When a patient’s plan renews, the office administration team must outline a plan on how to deliver updates to the patient and reverify old or new benefits. They should also implement new office policies for collections. The administration may do one or all the following:

  1. Enforce upfront collections.
  2. Offer payment plans.
  3. Notify patients of what they need to pay prior to the date of service (DOS).
  4. Ask patients if they have an HSA they can use to pay for services.
  5. Offer the option to move forward with higher-cost care in Q4 and explain the financial benefits.
  6. Eliminate costly no-shows at year-end with appointment reminders.

What Else Can Your Medical Billing Team Do in Q1?

  1. Review patients who are past due on preventive services or follow-ups. Preventative services are typically covered 100% by most plans even before the deductible is met.  
  2. Review your electronic health records (EHR) and practice management (PM) software for new tools and issues. Schedule meetings with your vendors to be sure you’re getting the most from your EMR and PM systems. Ask if they have any Q1 advice. 
  3. Attend insurance provider webinars or complete continuing education (CE) courses. 
  4. Use the extra time to improve current workflows and identify previously missed opportunities. This may include exploring a tech-enabled medical billing service.

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More About Insurance Deductibles

What Is a Deductible?

A health insurance deductible is the amount the insured must pay for covered healthcare services before the insurance plan starts to pay. However, some exclusions apply to certain services, depending on the policy.  Premiums and copays generally do not count towards the deductible; therefore, patients should always review the details of their plan.

What’s the difference between an individual deductible and a family deductible?

  • An individual deductible is a separate per-person deductible; a fixed amount of money each family member must pay before insurance will start paying for his or her services. 
  • A family deductible bucket is a fixed amount the entire family must pay before insurance starts paying expenses for the family. The family deductible is an accumulation of all family members.

Typically, individually-purchased insurance plans offer a lower monthly premium, which often results in higher deductibles, copays, and coinsurance percentages. Nevertheless, most insurance policies have an out-of-pocket maximum, in which there is a limit on the amount a patient will pay for services before all services are covered at 100%.

Health Insurance Deductible Example:

  • A patient has a $500 individual deductible on a 4-person family plan.
    • X 4 family members = $2,000 family deductible.
  • A $1,250 individual out-of-pocket maximum on a 4-person family plan.
    • X 4 family members = $5,000 out-of-pocket maximum.

The insurance policy states for mental health outpatient office visits the patient pays a 20% coinsurance after the individual or family deductible is met. If the patient has a $150 visit before the deductible is met, the patient will pay $150 upfront. If the patient has met the deductible, the patient will then pay $150 X 20% (Coinsurance) = $30. If the out-of-pocket maximum is met, the service will be covered 100% and the patient pays $0 until the deductible resets.

Deductible Summary

  • Each family member on a plan has an individual deductible.
  • The plan also has a family deductible.
  • Payments applied to the individual deductible funnel to the family deductible.
  • Family deductibles can be met without a member of a family plan meeting their individual deductible.

What Is a High Deductible Plan?

The Internal Revenue Service (IRS) sets the minimum family deductible for a health insurance plan to qualify as a high deductible health plan (HDHP). In 2021 and 2022, the IRS defines a HDHP as a plan with a deductible of at least $1,400 (per individual) and $2,800 (per family). To qualify for a health savings account (HSA) a patient must have a HDHP.

high deductible graphic

Do Copays Count Towards Deductibles?

What is a copay? 

A copay is a fixed amount of money paid for a certain service. Your health insurance plan pays the rest of the cost. Deductibles are sometimes confused with copays, but the two are completely different. With a copay, a patient must pay the specified amount for each appointment, while the deductible is only paid once per enrollment period. Usually, a copay does not count towards the annual deductible but counts toward the annual out-of-pocket maximum amount.

What is Coinsurance? 

Coinsurance is the portion of healthcare services a patient is required to pay for each covered health care service or prescription. Coinsurance is based on percentages and is applied to the out-of-pocket maximum.

Why Do Deductibles Keep Going Up?

The Kaiser Family Foundation (KFF) survey provides statistics and details why the costs of patient deductibles continue to rise. The KFF survey noted deductibles have risen from $826 in 2009 to $1,655 in 2019. There are very few plans with deductibles between $250 – $500 and the number of people with employer-sponsored insurance with deductibles has increased from 63% to 82% in the past 10 years. The increase in deductibles in recent years is due to higher-deductible plan offerings. Patients often enroll in these policies because the monthly premiums are often lower and employers offer HDHP to offset costs associated with lower deductible plans. The tiered structure of insurance plan offerings on the healthcare exchanges and marketplace allows consumers to choose their plans based on costs.

Source: Employer Health Benefits 2019 Annual Survey

Implement a More Reliable Revenue Cycle

Whether you’re navigating your first Q1 or your 30th, Gentem can help. Get in touch for revenue cycle staffing, reporting at your fingertips, and a best-in-class team. We have the specialty-specific knowledge and strategic mindset to help you get a strong start to your strongest year ever.

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