A Phoenix health system instituted the first self-pay price transparency program in Arizona, outpacing the state legislature and recouping lost finances associated with an uninsured, self-pay population.
Providing a self-pay pricing tool to uninsured, low-income patients is a strategy that has been considered by public health experts and state legislatures across the country over the past decade, with one health system leading the way in Arizona.
Maricopa Integrated Health System (MIHS), a 578-bed safety-net provider commissioned a nine-month internal task force in 2012 culminating in the creation of “Copa Care,” a program that publishes self-pay prices on its website for the 10 most frequently requested inpatient and outpatient procedures. MIHS’ financial policy was finalized and fully implemented in March 2013, making MIHS the first system in Arizona to post their self-pay prices online.
By 2014, Arizona adopted similar legislation in the form of HB 2045, which required providers, including MIHS, to post direct pay prices for at least the 25 most common services on their websites or deliver price estimates on request.
Reasons: Configuring the scale
MIHS faced significant financial challenges through the early 2000s and voted to become a special healthcare district in 2004, receiving the designation of a federally qualified health center (FQHC) look-alike for outpatient services.
According to a 2006 report from St. Luke’s Health Services, a public foundation, operating as an FQHC look-alike allows safety-net clinics to “receive cost-based payment for Medicaid services” and address the inability to “shift costs to cover deficits.”
As a safety-net provider, MIHS officials say the system has to account for Maricopa County’s high Medicaid population as well as its undocumented immigrant population, totaling 187,000 people as of 2015. Between late 2005 and early 2006, 80% of the self-pay patients at MIHS were undocumented immigrants.
Copa Care functions as a sliding scale for low-income patients at zero to over 200% of the federal poverty line (FPL). Rather than charge full amounts for procedures or doctor visits, which can run into thousands of dollars, MIHS charges smaller payments all the way down to a $5 copay.
Nancy Kaminski, vice president of revenue cycle at MIHS, told HealthLeaders Media the current scale consists of four categories for both medical and dental plans while hospital services are separated into five categories. Those between zero and 138% of the FPL are charged at 25% of Medicare rates for outpatient ancillary procedures while those from 139% to 200% are charged at 50%. For all patients, however, 50% of costs are due prior to service.
Kaminski said the categories were not only meant to align with FQHC requirements, but also the professional fees for providers. She described this as a complicated arrangement given that MIHS takes in a diverse patient population, including those who are not residents in the county, undocumented immigrants, and those living above 200% FPL.
MIHS also implemented bundled payment options with discounts for patients who prepay in order to recoup lost payments without denying service to those in need. The system eventually renamed the program so the patient population would not confuse Copa Care for a health plan. Officials stress that the program’s mission is not “charity care” and follows with the system’s mission to serve low-income patients with affordable care options in a competitive healthcare marketplace.
Outcomes: Self-pay population decline
The ultimate goal of the sliding scale was to reduce the large self-pay population that MIHS has serviced for years, which coupled with the Medicaid population, has constituted over 60% patients. According to census data, approximately 36% of Maricopa County residents live under 200% of the FPL, a number which remained constant over the past decade.
In this sense the sliding scale has been effective, decreasing self-pay visits to MIHS from 41% in FY 2014 to 22% in FY 2018. The sliding scale has not only affected a decline in self-pay visits, it has benefitted MIHS’ bottom line as well.
From fiscal year 2011 to fiscal year 2016, MIHS saw its operating revenue increase by 28.5%, totaling $722,132,906. Net patient revenue also increased by 14.7%, while bad debt expenses declined by 24.9%.
A January 2015 Maricopa Health Centers Governing Council meeting projected a 15.6% increase in net patient revenue as a result of increased visits and improvements in the sliding scale population. A governing council needs assessment from the same year found 31.4% of patients were still utilizing the sliding scale as their primary means for health coverage.
Implementation: Publishing discounts and providing price estimates
MIHS employee education is a key component to effectively publishing discounts and providing price estimates to patients, according to Kaminski.
Capable registrars and financial counselors are necessary for a successful roll out of a sliding scale, according to Kaminski, since they must understand various aspects of the payment model and easily explain it to patients at the onset. This arose from concerns raised by physicians that patients would abandon treatment due to requests for payment at the time of registration.
“We have a pretty robust financial counseling program up front where we work with the patient, and the sliding scale is actually the last resort,” Kaminski said. “So if we can’t get them enrolled in Medicaid or they don’t qualify for programs like disability, then we’ll work with them to get them in an appropriate category on the sliding scale.”
Example of a MIHS estimate provided for breast cancer biopsy
Kaminski said estimates are often the trickiest part of the sliding scale since they require specific procedure codes in advance to price outpatient liability.
If a patient doesn’t have insurance but has medical orders from a physician, the test or procedure can be estimated. However, Kaminski said patients must provide relevant insurance documentation so the system can accurately determine what the cost will be.
MIHS prefers to receive a deposit prior to procedures, even requiring it for elective procedures, though they do offer exceptions if the situation is cleared by both Kaminski and MIHS’ chief medical officer. Kaminski said the sliding scale allows the hospital some flexibility about when and how much they charge patients.
Those who are in urgent condition can pay in full after the procedure, but must pay a deposit up front, according to Kaminski, who also said systems should institute payment policies in the event that patients can’t provide a deposit prior to a procedure.
Suzanne Delbanco, PhD, executive director of Catalyst for Payment Reform, wrote in Health Affairs in 2014 that price transparency tools represent “one of the core building blocks of payment reform and a higher-value health care system.”
Delbanco wrote that transparency helps contain costs, informs consumer decisions of financial responsibility, and reduces price variation, referencing how the California Public Employees Retirement System saved $2.8 million by “establishing a reference price of $30,000 for hip and knee replacements.”
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.