100% Copay Market Issues
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never meet thier deductible and under traditional High Deductible Health Plans (HDHPs), approximately fifty percent (50%) of plan members never meet their deductible. This further reduces the potential for health care providers being caught; because before deductibles are met, consumers in these plans experience the same vulnerability as they would under cash discount programs. Additionally, those with Pharmacy Cash Discount Cards experience claim reversals 4 to 10 times that of traditional, fully funded copay plans, with comparable experience expected under all other 100% copay situations.
On the medical side of the HDHP/CDH market, healthcare providers have to wait up to 120 days to collect funds from consumers, and a significant percentage of providers never receive payment, resulting in write offs. This has created a market dynamic where providers "overestimate" the amount owed and collect it from consumers at the point of service, leaving consumers to seek reimbursements from their health plans. Health care providers engage in this practice because experience indicates that, once consumers leave the point of service without paying for the service or product received, providers are at-risk of not being able to collect the balances owed. Furthermore, health care providers often write-off unpaid balances because pursuing collections of unpaid balances often cost more than the unpaid balances owed by consumers. The preceding is a widely acknowledged problem; and just like the pharmacy market, when given the opportunity, other health care providers can circumvent the adjudication process in order to collect their preferred margins. Circumventing the system on 100% copay programs (i.e. cash discount cards and HDHP/CDHP claims prior to the deductible) may not be illegal, but this behavior is not consistent with the terms of their respective contracts. Unfortunately, the currently applicable repercussions, if any, in the highly unlikely event a health care provider is caught, have not eliminated the problem. Therefore, providers can be expected to consider the relative “risk” of being detected against the “reward” of being able to charge their desired, higher price. When it is easy to exploit a system for financial gain, with very little chance of being caught and limited to no penalties, it is logical to conclude that a significant percentage of providers will take advantage of the opportunity!
Adjudication circumvention is an industry-wide deficiency for both pharmacy and medical claims. Currently, in 100% copay situations, there are no published statistics on the frequency of claim adjudication circumvention. There is no way to track, measure, or prevent its occurrence at the point of service because consumers, healthcare claims processors and/or health plans do not know if the health care providers have circumvented the claim adjudication process to 1) collect higher reimbursement fees, 2) avoid paying fees to healthcare claims processors that are commonly associated with cash discount programs, or 3) some other reason (drug incompatibilities, prices higher than consumers are willing to pay etc.). Under cash discount programs, the vulnerability is greater because health care providers may not even submit claims when such programs are identified upfront, or they may reverse a submitted claim to avoid paying a fee that is assessed by healthcare claims processors for providing "steerage" to the health care provider. Significantly, under Consumer Driven Health Plans, approximately ninety percent (90%) of plan members