100% Copay Market Overview
When consumers have an unknown financial responsibility at the point of service [as experienced under all 100% copay programs and plans that include Cash Discount Programs, and all High Deductible Health Plans (HDHPs), including the alphabet soup of Consumer Driven Health Plans (CDHPs) before they have met their deductible], they are vulnerable to health care providers circumventing the adjudication process and assessing a “what the market will bear” fee that is greater than the discounted, contract rate. HDHPs and CDHPs are, effectively, cash discount programs with consumers paying 100% copay until their deductible is met. The only noteworthy difference between HDHPs/CDHPs and cash discount programs is that HDHPs/CDHPs have a deductible that, once met, automatically converts to a cost-sharing arrangement with the consumer’s health plan that eliminates the problem.
When health care providers receive pricing edit responses from healthcare claims processors during the adjudication process that indicate consumers are responsible for the entire cost (100% copay), health care providers recognize the opportunity to charge and collect more than the pre-negotiated, discount reimbursement rates under the applicable plan or program without detection at the point of service. Healthcare claims processors include any entity that performs the function of receiving and adjudicating electronically submitted claims and returning pricing edits which identify the financial responsibility of consumers, and if applicable, the financial responsibility of their health plans. Pharmacy Benefit Management firms (PBMs) are good examples because 99.999% of claims are submitted electronically for adjudication, but the MBRx services are also applicable to medical claims.
Discounts that providers have felt forced to accept under managed care plans have spiraled down over time and are now well below their preferred margins. This has led health care providers to subsidize those discounts by charging cash paying consumers more than the health care provider’s “managed care” contracted rates when consumers are financially responsible for the entire cost of their services or products (100% copay). Health care providers can be expected to continue this practice as long as there continues to be very little risk of being caught, and applicable penalties, if any, have not eliminated this problem.
Unlike any other segment of the economy, the consumer who walks into a health care provider’s practice and pays cash (i.e. debit/credit card, check, etc.) pays the highest fee for the products and services received. Health care providers, for fear of losing volume, have accepted deep discounts below their preferred margins from managed care entities (insurance companies, HMOs, etc.). As a consequence, cash consumers can expect to be treated as “cash cows” and charged significantly more in order to subsidize managed care reimbursement rates. This practice is the norm, rather than the exception. Currently, every time a consumer pays the full amount at the point of service, that consumer is unknowingly vulnerable to being treated as a “cash cow” since no real-time quality control protection is provided to the consumer. MBRx removes this vulnerability under all 100% copay situations.
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