MBRx clients consist of healthcare claims processors that adjudicate electronically submitted claims on behalf of 100% copay plans and programs that include Cash Discount Programs, and all High Deductible Health Plans (HDHPs), including the alphabet soup of Consumer Driven Health Plans (CDHPs), before consumers have met their deductible. Healthcare claims processors include any entity that performs the function of receiving and adjudicating electronically submitted claims and returning pricing edits which identify consumers’ financial responsibility, and if applicable, the financial responsibility of their respective health plans.
Cash Discount Programs
Adjudication circumvention enables health care providers to 1) charge “what the market will bear” rather than the pre-negotiated, “managed care” discounted prices as determined by healthcare claims processor edits, or 2) avoid paying a fee that is assessed by healthcare claims processors for providing “steerage” to the health care provider providing a product or service. At the point of service, the health care provider’s actions are undetectable because the healthcare claims processor is not aware that claims have not been submitted, and if claims are reversed, the reason for the providers’ reversals are not known. Therefore, in all 100% copay situations, consumers and the healthcare claims processors are completely vulnerable to health care providers unilaterally circumventing the claim adjudication process without their knowledge or consent and charging “what the market will bear”.
Securing a higher profit margin is not always the sole reason for circumventing the adjudication process. Health care providers may opt to circumvent the adjudication process under cash discount programs to avoid being assessed a fee by the healthcare claims processor, a common practice in that market. For example, in the pharmacy benefits sector alone, it is not uncommon for cash discount programs to experience reversal rates ranging from twenty percent (20%) to fifty percent (50%), with those reversal rates ranging from four (4) to ten (10) times that experienced under traditional, fully funded pharmacy benefit plans when consumers’ (cost-sharing) copays alone are approximately the same amount as the average prescription cost under the cash discount programs. It is reasonable to conclude that comparable experience can be expected in all 100% copay situations. Under traditional prescription drug plans that utilize a cost-sharing copay structure, pharmacists can’t unilaterally circumvent the adjudication process because plans (insurers) are responsible for a share of the cost. Therefore, preventing health care providers from circumventing the adjudication process not only benefits consumers, but also healthcare claims processors because, by programmatically forcing compliance with their health care provider agreements, healthcare claims processors increase their revenue.
As the Affordable Care Act transitions consumers without insurance to adopt High Deductible Health Plans (HDHPs), which include Consumer Driven Health Plans (CDHPs), because of their greater affordability, health care providers’ “cash cow targets” will be transitioning from consumers without insurance to consumers utilizing insurance products that have a deductible attached. The bottom line is that, because of cost differentials in traditional health plans and various types of HDHPs, including all CDHPs, HDHPs/CDHPs can be expected to grow by double digits annually. This growth increases the identified risks and problems to increasingly more consumers. Unfortunately, this major transition places consumers in the vulnerable position of easily being treated as “cash cows” by health care providers who circumvent the adjudication process to secure their preferred margins without detection at the point of service. Consequently, consumers are vulnerable to being charged more than contracted rates without their knowledge or consent.
Account-based health plans, commonly referred to as Consumer Driven Health Plans (CDHPs), are the fastest growing segment of healthcare coverage, and this trend is expected to continue in the foreseeable future. The cost to provide traditional health insurance to an aging population coupled with governmental regulation/health reform is expected to cause traditional health insurance premiums to continue to increase at an alarming rate. Add a struggling economy, and an ideal scenario is created for the explosive growth of CDHPs. In order to secure lower premiums, almost half of the market has already shifted to HDHPs with a deductible that is just a little under that required to qualify for a Health Savings Account (HSA). The premiums for CDHPs tend to be considerably less than traditional health insurance. The healthier population, that historically has subsidized the sicker population under traditional insurance programs, will gravitate to a CDHP in order to lower their total cost of health care as traditional health insurance premiums continue to climb. This will generate a subsidy loss and traditional health insurance premiums will increase even more. This adverse selection cycle is expected to continue over time with the net effect of a higher CDHP population than traditional insurance. This trend is expected to continue, if not accelerate, in the foreseeable future.
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