Taming the High Deductible Monster While Ensuring a Positive Patient Financial Experience

Taming the High Deductible Monster While Ensuring a Positive Patient Financial Experience HFMA Lone Star Winter Institute January 26 27, 2017 Chris Johnson VP PFS Carolinas HealthCare System

Carolinas HealthCare System 47 Hospitals Representing 7,500+ Licensed Beds 8 Freestanding Emergency Departments 2,500+ Staff Physicians 900+ Care Locations Consisting of Academic Medical Centers Acute Care Hospitals and Rehabilitation Hospitals Free-Standing Emergency Departments Outpatient Surgery Centers Physician Practices Imaging Centers Nursing Homes / Home Health Laboratories / Pharmacies 12M Patient Encounters Per Year $8.7B Net Operating Revenue 60,000+ Team Members

Epic - System Initiative

My How Quickly Things Change

My How Quickly Things Change

My How Quickly Things Change

So. Where Are We? As Steve Burr, our Senior Vice President recently put it The more things change, the more they stay the same. Emphasis on cost reductions, patient satisfaction and transparency are not new. The new payment methods will continue the shift to the patient to help promote consumer consciousness, reducing demand and making the financial side more demanding. No worries, we ve got this!

Declining Reimbursement Is Already A Struggle

And The Shift To Consumers Continues

Closer To Home $1,400 Patient Balance After Insurance $1,200 $1,000 $800 Patient- Centric Billing Online and Mobile Access Security and Compliance $600 $400 $200 $0 2010 2011 2012 2013 2014 2015 2016 Carolinas HealthCare System

Creating A Household Crisis Kaiser Foundation reports the average deductible has increased from $826 in 2009 to $1,217 in 2015 Only 51% of households have enough assets to cover a higher-range annual deductible of $2,500 / $5,000 Only 33% of lower-income families have savings to cover $1,200 individual /$2,400 family In 2015, plans offered through Healthcare.gov, the average combined deductible for single silver was $2,556 http://www.benefitspro.com/2015/04/01/rising-deductibles-hitting-consumers-hard

Observations What we re seeing in the industry PATIENT REALITIES ACCESS & EDUCATION HDHP BEHAVIOR Top 5% of costliest patients represent 50% of national healthcare expense Bottom 50% of costliest patients represent only 3% of total expenses Less than 7% of total health care spending was paid by consumers for shop-able services Costs do vary mammograms range from $270 to $1050 Nationally Consumers can't distinguish well between essential and nonessential treatment Most rely on primary doctor to help them make key health-care decisions Preventative visits are a challenge Large employer study showed HDHP members spent 12% less on healthcare services Unexpectedly, they used less of everything, including preventative services Self diagnosing

Dynamics Are Shifting Market dynamics are shifting financial and decision-making responsibility to the individual patient, driving rapid growth in healthcare consumer payments Payers Public exchange Private exchange Individual market DISBURSEMENTS RECEIPTS Consumers Patients Guarantors Individual Plan Members RECEIPTS DISBURSEMENTS Providers Healthcare systems Specialty practice Lab & diagnostic Pharmacy 12% 50% of U.S. national healthcare expenditures are consumer out-ofpocket healthcare payments. of all overdue consumer debt on credit reports is from medical debt. One out of five credit reports contains overdue medical debt. $515 billion Consumer out-of-pocket spend will grow from $406 billion in 2015 to $515 billion by 2019 -- a rate of 6%.

Consumer Spending Increases Growth in consumer health spend categories is evolving. 49% Total medical consumer payments to a healthcare provider or merchant as required by commercial health plan coverage in 2015. 7% Growth rate in 2015. A dramatic uptick. Medical Prescription Drugs Retail Dental 7% 5% 7% 3% 14% 12% 16% Top Consumer Health Spend Categories 49% % Growth Rate % of total 2015 0% 20% 40% 60%

For CHS A Challenge Within A Challenge Different employers select HDHPs Penetration of Silver and Bronze plans on the exchange Small Business staffing practices (avoiding benefit obligations) Major employers select different approaches, making needs different by community

2 Hospitals With Different Experiences Less Than 50 Miles Apart

Patient Pay = Low Collections / Significant Delays

Opportunities Abound Governmental and Private Insurance Plans Continue to Allow Less, And More Of The Cost Is Shifted To Patients As The Patients Balance Increases The Percentage Paid Decreases Replacing Obamacare Deemed Highly Likely Repeal and Replace High Deductible Health Plans Are Not Going Away Most Patients In A HDHP Are Not Prepared For Their Required Out Of Pocket Dollars The Need For Long Term Patient Payment Options Will Continue To Increase As Patients Move To A Consumer Mindset Expectations For Transparency and Consumer Focused Customer Service Will Increase

Meeting The Challenge As consumer financial responsibility and payment volume grows, providers must be ready to manage a range of shifting and evolving mandates Patient-Centric Billing Online and Mobile Access Security and Compliance Billing and payments are a key part of overall patient satisfaction Awareness and accuracy of out-ofpocket responsibility Easy-to-understand billing statements Payment plan options and financial counseling Consumers expect the convenience of online and mobile access, it is no longer a differentiator Online healthcare bill payments via PC is expected to grow at a CAGR of 27% Younger healthcare consumers rely on text and mobile browsers Consolidated view of information from multiple business groups PCI and HIPAA converge to form a daunting challenge Clinical and PAS systems in-scope for PCI, increased volume leads to more involved SAQ process Remittance posting info is often considered PHI, what networks does this touch? Staff must often be specially trained on acceptable use of payment info

Patients First Guiding Principles Patient Engagement Empowers patients Is easy to use Defines value of services Clarifies price of care Requires stakeholder commitment Charges Patient Estimates Single Patient Bill Patient Advocacy Our Mission: To improve health, elevate hope and advance healing

Patient & Family Advisors Patients And Families Have Unique Perspectives And Ideas To Enhance Care And Services Provided Patient And Family Advisors Serve On Councils, Committees, and/or Special Projects Advisors Must Have Direct Experience As A Current Or Former Patient, Family Member, Or Caregiver At A CHS Care Location Advisors serve as the patient voice across Carolinas HealthCare System. Patient and Family Advisors provide direct influence on polices, programs, and practices that affect patient care, safety and services.

All You Need Is.. Patient Friendly Scheduling online self scheduling Complete Price Transparency Insurance Verification & Plan Explanation Accurate Price Estimation Out Of Pocket Visible And Clear Financial Assistance Programs (Think 501r) Multiple Payment Options Including Long Term Payment Plans Highly Skilled Customer Service Teammates Clear And Actionable Patient Statements And obviously excellent clinical care!

Where To Begin? Start With The Obvious FINANCIAL CLEARANCE is a strategy for improving collections in changing times

Every (Pre) Registration Is An Opportunity Scripted, Consistent Message Screen out those who really can t pay Share the right message at the right time with patients who can pay Discover unexpected coverage Get Point of service payments Cash/Credit Card Deferred HSA Payment Short Term internal financing Long Term Loan Program (with or without Financing)

Financial Clearance Transaction Tools Policy for deferrals harmonized with 501r ECA notes PCI-Compliant card processing HSA Card Credit Card Affinity Loan Card (Recurring) Check By Phone Accept Multiple Internal financing limits 3 rd Party payment financing plans Possible incentive for advanced payment (depending on managed care agreements)

Account Assessment Patient complaint injury related? TPL or Work Comp? Investigate and/or change Primary Presumptive eligibility score review Activate Charity Plan? Medicaid eligibility screening Activate Medicaid Eligibility Review Existing account(s) check Trigger account management dialog Propensity To Pay scoring Patient balance estimate review Low, Medium, High

Financial Dialogue (Before Arrival) Prepare for inbound and outbound calls Offer patient-friendly times for conversations Expect clinical questions and be scripted for handoff Information at fingertips of staff (knowledge is key) Prepare to answer insurance questions Work the account as if a Financial Planner and Coach Informational and solution-oriented dialogue Compassionate and collaborative

Upon Arrival (Scheduled Patients) Create a by-pass for patients who are already cleared Resolve minor open items at reception Resolve complex open items at registration Cross-functional training Registrar Verification/Authorization/Estimation Financial Counseling Transactional Tools

Scheduled Patient Arrival Tool

Now The Reality Patient Friendly Scheduling online self scheduling Complete Price Transparency Insurance Verification & Plan Explanation Accurate Price Estimation Out Of Pocket Visible And Clear Financial Assistance Programs (Think 501r) Clear An Actionable Patient Statements Multiple Payment Options Including Long Term Payment Plans Highly Skilled Customer Service Teammates And obviously excellent clinical care!

CHS - Pre-Service Pre-registration Accounts Feed From Scheduling Demographic And Insurance Information Updated Insurance Eligibility Verified Authorization Obtained (If required) Patient Estimate Developed Cash Call Initiated

The Process Begins - Demographics

Patient Procedures

Patient Benefits

Insurance Authorization If Required

Estimate Calculation

Millions Ultimate Goal Cash Call Made And Cash Collected Prior To Arrival $5.0 $4.5 $4.0 Additional Staff Added For Cash Calls $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2009 2010 2011 2012 2013 2014 2015

Clear and Actionable Statement Look Familiar?

Current Legacy Statement Hospital

Current Legacy Statement Physician

Current Legacy Statement Physician

Combined Patient Statement

Combined Patient Statement

Percentage of Statements with Multiple Accounts 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Thousands Thousands Monthly Statement Costs Trended $500 $500 $450 $450 $400 $400 $350 $350 $300 $300 $250 $250 $200 $200 $150 $150 $100 $100 $50 $50 $- $- PB HB UB Total

Self Pay Strategies Segmentation

Millions Additional Benefit Of Segmentation $8 $7 $6 Total Agency Payments Avg Agency Pmts pre/post Patient Payments Pt Pmts pre/post Partner Management Tool Implementation (7% bump in Cash) $5 $4 $3 $2 $1 Account Segmentation final phase (14% drop in Agency Payments) $-

Payment Options CHS Uses A Combination Of Internal And External Payment Plans For Our Patients Internal Basic 6 Month Interest Free Option Established Through Out Customer Service Call Center External Interest Free Option Up To 100 Months Based On Account Balance Interest Bearing Option Hardship Option

CHS Long Term Payment Options Carolinas HealthCare System Partners With A Third Party Vendor To Provide A medical credit card As A Long Term Payment Option For Our Patients With A Self-pay Obligation. Maintain Positive Benefits of Credit Cards Program is easily conveyed to patient Includes all hospital revenue centers and owned physician groups Revolving charge account available to all family members Patient families receive single consolidated monthly bill Eliminate Negative Features of Credit Cards No annual fee No prepayment penalty No default or retroactive interest No credit reporting No balance limit EVERYONE QUALIFIES

Patient Balance - $10K or less Patient Options Assists self-pay patients with or without Health Insurance who do not qualify for financial assistance Self-Pay Accounts $10K Interest Free Options:

< or = $10K Patient Monthly Responsibility

Patient Balance > $10K Patient Options Assists self-pay patients with or without Health Insurance who do not qualify for financial assistance Self-Pay Accounts > $10K Interest Free Options:

> $10K Patient Monthly Responsibility

Additional Options For Our Patients Patient Options Assists patients who may qualify for partial Financial Assistance Also assists those patients with fixed or low incomes Self-pay accounts of any size All monthly payments are Interest Free:

Hardship Monthly Patient Responsibility

Think About This You Want To Ensure You Consider The Following When Considering A Long Term Payment Plan Solution: Voluntary, non-discriminator, and everyone qualifies Does not engage in credit reporting Forgives unpaid fees and interest on defaulted accounts No credit rating or financial harm to patient cardholders Credit Card Payments are not listed as an Extraordinary Collection Actions (ECAs) Does not bill accounts with FAAs in process Return accounts when Financial Assistance Applications (FAAs) are approved for Medicaid or total charity write-off Compliant with HIPAA Compliant with the 2009 Credit Card Act Compliant with the Affordable Care Act and the IRS s 501(r) regulations

Customer Service Call Center

Customer Service Every Second Counts Previous: Annual Call Volume Approximately 1.2 Million Calls Are Recorded Each Employee Was Allocated 30 Minutes desk time At The Beginning Of Their Shift Reprieve Time Between Calls Set At 45 Seconds Current: Desk time is allocated throughout the day as needed. Reprieve Time Between Calls Set At 15 Seconds The Department Can Now Handle 325 Additional Calls Per Day!

Customer Service Every Second Counts Previous Question Every Process Each CSR Was Responsible For Faxing, Printing, And Mail Preparation For Information Requested By Patients Current Department Runner Handles These Functions For The Entire Team Saving Each CSR Approximately 10 Minutes Per Day May Sound Like A Small Win But That Equals An Additional 84 Calls Handled Per Day By The Team

What Do Your Patients Hear? Less Is More! Previous: Welcome to Carolinas HealthCare System! Thank you for calling the Hospital Business Office. Representatives are available 8:30 am to 5:30pm Monday through Thursday, and 9:00 am to 4:30pm on Friday. You can also visit us on the web at carolinashealthcare.org. For quality assurance purposes this call may be monitored and/or recorded. Current: Welcome to Carolinas HealthCare System! Thank you for calling the Business Office. Please listen carefully to our new menu options. You can also visit us on the web at carolinashealthcare.org

Look For Efficiencies Welcome to Carolinas HealthCare System! Thank you for calling the Business Office. Previous: Please listen carefully to our menu as the options have changed. Please locate your account number which can be found in the top right corner of your hospital statement and press one. If you do not have your statement, or if you need assistance press 2. Current: If you would like to use our express system to make a payment, request an itemized bill or to check your balance, press 1. If you re calling about something else, please press 2.

Self Pay Strategies Financial Assistance Coverage Assistance & Financial Assistance (CAFA) Uninsured and resident of North and South Carolina Inpatient, observation and outpatient balance $10,000 or greater 100% adjustment for patients under 200% of FPL Financial Assistance Scoring (FAS) Uninsured outpatient with a balance less than $10,000 Scoring from a third party vendor Automatically reviewed prior to final bill (no action by patient/guarantor) Letter mailed if not eligible and may apply for full review 100% adjustment and will not receive a bill Emergency Room patients responsible for a $75.00 copay

Self Pay Strategies Hardship Settlement Discount Insured Patients With A Catastrophic Medical Event Balance(s) Of $2500 Or More And 10% Of Household Income Patient Must Apply Discount Up To 75%

And The Not So Obvious

Thousands Self-Pay to Medicaid Conversions Net Recoveries by Month 180 160 140 120 100 80 60 40 20 0 January February March April May June July August September October November Net Recoveries

Millions Self-Pay Dollars Converted to Third Party Cash 6 5 4 3 2 1 0 2014 2015 2016 Medicaid Medicare Commercial

Millions Medicaid Dollars Converted to Third Party Cash 1.2 1 0.8 0.6 0.4 0.2 0 2015 2016 Medicare Commercial

Thousands Zero Payment Review 600 500 400 300 200 100 0 Net Recoveries

Thousands Estate Collections: Internal v/s External $250 $200 $150 $100 $50 $- Apr May Jun Jul Aug Sep Oct Nov Dec Internal External

We re Not There Yet..But: Online Ability To Establish Payment Plan Within Payment Portal Ability To Establish a Payment Plan for Scheduled Services (i.e. Maternity) Electronic Patient Statements Enhanced Insurance Discovery Tools Mobile Device Patient Financial App

Conclusion Regardless Of What Happens In Washington High Deductible Health Plans Are Likely Here To Stay In General Patients Are Not Prepared To Fund Their Higher Out Of Pocket Expenses Declining Reimbursement Pressures Will Continue BUT As An Industry We Continue To Meet Any Financial Challenge Presented While Continuing To Care For The Patients Who Place Their Trust In Us. We Will Meet These Challenges And Succeed!

Questions Chris.johson@carolinashealthare.org