Fixing health care costs in Indiana should be top of mind for all Hoosiers. The Wall Street Journal spotlighted this critical issue, citing a Rand Corporation study that ranked Indiana as the fifth highest in hospital costs in the U.S. in contrast with Hoosier physician reimbursement as the fourth lowest. 

Indiana lawmakers are prioritizing several pieces of legislation to solve this problem. Republican senators have dedicated their caucus to health care and fiscal responsibility. Some possibilities in consideration are place-of-service fee additions, hospital charge penalizations, non-compete eliminations, and individual health plan expansions.

While this all sounds promising, it’s time to shift focus and look at the business of health care from another perspective.

Indiana’s Health Care Reality

In 2021, Indiana lawmakers addressed concerns in a letter to hospitals, physicians and insurance carriers, encouraging collaboration to reduce the skyrocketing cost of health care—which didn’t happen. Without a viable plan, the legislature pledged to take effective steps this year to reduce health care costs—but at whose expense?

Patients are in the middle of this highly complex reality. When physicians and health care providers are penalized and cannot collect fully on services rendered, they have to make hard business decisions—just like in any other industry. With these financial constraints, along with facility closures, staffing shortages and clinician burnout impacting health care, there is a limited supply of physicians to care for patients in need.

With a rapidly aging population and many Hoosiers suffering from poor health, the need is imperative for affordable, accessible and equitable health care. If hospitals and physicians can’t viably navigate the business of health care, side effects will be detrimental to patients.

Health Care Industry Insights

UnitedHealth recently reported a fourth consecutive quarter of double-digit growth, totaling $82.79 billion, as reported by The Wall Street Journal. Insurance carriers, across the board, are seeing record profits. Major publications, such as Becker’s Payer Issues, have listed insurance carriers, including Indiana’s Elevance Health, posting in the black for 2022.

Alternatively, physicians are met with deep cuts in Medicare reimbursements, rising inflation and increasing bad debt from unpaid medical bills. Health systems across the country, and here in Indiana, are experiencing huge deficits and additional costs and chaos associated with implementing stringent regulations and changes in the payor-provider relationship.

The rise of high deductible plans has created an environment where patients are the number one payor for many health care organizations, necessitating a shift in collections. An analysis from the Kaiser Family Foundation reports that deductibles increased over 150% in just 10 years. Not only are deductibles rising, but it’s also taking patients longer to meet their deductibles, moving from February in 2006 to May in 2019. This reality means more out-of-pocket patient expenses before they benefit from health plan’s financial protections.

Furthermore, the average patient deductible now exceeds the average spent on health care. According to Crowe, the bulk of bad debt used to be attributed to uninsured patients, but now it’s tied to insured patients with balances, rising from 11.1% in 2018 to 57.6% in 2021. Insurance carriers are responsible for negotiating high-deductible health plans with employers, negatively impacting physician reimbursement while causing a fragmented patient financial experience.

Additionally, the credit bureaus issued a joint statement stating that by July 2023, they would not include medical debt in collections for amounts of $500 or less. This move offers relief for patients unable to pay their co-pay or deductible; however, it puts further risk and cost  on hospitals and physicians forced to collect payment for services directly from patients.

Why is the risk of collecting on these plans sitting squarely on the shoulders of providers? Any state lacking in appropriate physician  compensation will continue to see issues around access to care, marketplace competition and recruitment and retention efforts. Isn’t it time to consider a new approach to level the playing field  and to improve the way health care works for everyone?

A Prescription for Health Care

There is a solution that keeps patients at the forefront of their health care journey while allowing their trusted physicians to keep their practices viable and provide care. This remedy helps patients by removing hospitals and physicians from the collection equation and allowing physicians to focus on providing quality, accessible and equitable health care.

Insurance carriers need to be the initial payer of healthcare, they should reimburse physicians in full for their services day one, then collect the remainder of deductible or co-insurance directly from the patient. This remedy would significantly reduce overhead costs for physicians without increasing costs for patients or the state. This framework lays the foundation for a more level playing field for hospitals, physician practices and patients. 

Ultimately, cost is only one factor to consider when addressing the problem of poor health. Indiana must also recruit and retain quality physicians to care for all Hoosiers. States that do not view physicians as economic development drivers are short sided as employers want quality healthcare to attract talent. Eliminating the risk and cost of collecting patient deductibles is a solution that enables our health care systems to heal and gives insurance carriers a chance to put their record-breaking profits to good use. 

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