Pre-existing Condition Insurance Plans opportunities for providers [Healthcare Financial Management]

The road to healthcare reform offers opportunities that providers should investigate. The federal Pre-existing Condition Insurance Plan (PCIP) allows patients to obtain credible insurance that had previously been unavailable. The program is operated by either the individual states or the federal government for the state. Approximately 54 percent of the states operate their own plan, but in either case, they must abide by the intent of the federal legislation.

The PCIP program is designed for patients with chronic conditions who have been unable to obtain credible health insurance. To qualify for coverage, patients must meet the following minimum requirements:

* Be a U.S. legal resident

* Be a resident of the state in which they are applying

* Have had no credible insurance for at least six months

Chronic conditions are defined differently by states but in general are diagnosisdriven. In some states, a physician must document the chronic condition.

The federal government initially estimated that 200,000 to 375,000 legal residents would be eligible for this insurance and allocated $5 billion to operate the program nationwide. Although the program has been available since the beginning of 2011, enrollment has been quite low. In fact, as of April 30,2011, only 21,454 individuals had enrolled, resulting in claims payments of approximately $110 million, as shown in the exhibit on page 39.

One reason for the low enrollment is that the states and payers have done little to promote the program. Another reason is that the PCIP premiums are unaffordable for many prospective enrollees. (View data showing spending for PCIPs at the federal and state levels at www.hfma.org/hfm.)

It is important to note that the PCIP is not Medicare or Medicaid; rather, it is a commercial plan that varies depending on the payer's product in each state. The premiums range in general from $200 to $900 per month. Some states subsidize the premiums to make the expense more manageable for the enrollees.

An Opportunity (or Hospitals

The PCIP program presents an opportunity for providers to help uninsured patients pay their healthcare expenses while optimizing revenues. Because the revenue associated with patients who qualify for the PCIP can exceed the costs of the premium, many hospitals and hospital foundations are assessing their ability to purchase the insurance for the patient. Interested providers should analyze their data in detail to determine whether they should consider assisting patients with their premiums, and if so, at what level. A recent letter from the U.S. Department of Health and Human Services (HHS) regarding third-party payment of insurance premiums has indicated that although the government will be carefully monitoring the program, it has placed no current restrictions on assisting patients with paying their premiums.

This opportunity comes with risks. Patients who have PCIP coverage can go to any provider in their state, so even if they receive assistance in paying the PCIP premium from a provider, they are not required to go to that provider for all of their future health care. The government will be watching for providers that enroll members and subsequently terminate coverage based on the utilization of services. The HHS letter clearly states that if "HHS finds that these payments represent conflicts of interest or contribute to greater than projected spending, HHSanticipates that it will issue further guidance that restricts or even prohibits third-party payments of premiums."

Providers should research their data and state-specific plans to determine the benefits that exist for the prospective members and the provider.

To determine the PCIP's impact on the organization, providers should take the following four steps:

* Analyze data from the past 12 to 24 months to identify patients who had no credible insurance.

* Project revenue based on estimated payment for the services for each patient.

* Determine whether the patients can pay for premiums or need financial assistance.

* Prepare a policy and procedures to help the patients pay the premium, and determine the impact of the expected revenue on the organization.

Analyze the Data

Providers should use their IT system to run a query that isolates all patients and all of their visits (inpatient and outpatient) with:

* No current insurance (Charity care is not considered insurance.)

* A chronic disease as specified in the patient's state

Depending on how robust the organization's information system is, the following additional data based on the above criteria would assist in determining the eligibility and financial implications for each potential PCIP patient:

* Patient's Social Security number

* Any patient payments

* Diagnosis/procedure and diagnosis-related group information

* Admission source

* Discharge disposition

* Financial screening information

* Medical record number

* Age of patient

Project Revenue Based on Historical Data

Assuming typical managed care rates, providers should calculate expected payment for all services rendered to patients identified as potential PCIP candidates. Although payment is prospective, ongoing chronic diseases may result in similar utilization.

This payment covers services just like any other managed care plan and includes, but is not limited to, hospital, outpatient services, physicians, hospice, home care, and pharmaceutical costs.

Determine Source of Premium Payment

After identifying the types of patients who would qualify for this plan, providers should determine whether the patients can pay for premiums on their own. They can research the data to determine if these patients have or currently are paying based on services rendered.

This assessment, in conjunction with determining the revenue stream for each potential enrollee, will allow the provider to determine what level, if any, to subsidize the plan fees and projected out-of-pocket costs.

Develop Policies and Procedures Related to PCIP Enrollees

To clarify and develop necessary policies and procedures, focus should placed on:

* Identifying diagnosis-related characteristics of patients

* Identifying which patients are likely to return to the facility for future services

* Identifying typical utilization levels for different types of patients

If funds are available to help subsidize premium payments, providers should develop policies to establish:

* Which specific patients will be eligible

* How subsidies will be determined

* What the necessary requirements will be for patient participation

* How payments will be handled for out-of-pocket patient responsibilities (co-pays and deductibles)

* An outreach process to be conducted with patients who have an unpaid balance and other selected patients who meet screening requirements, such as foundation outreach, financial counselors, mail, phone, email, or outreach from physician offices

These policies may best be served as an extension of providers' existing compassionate care/patientfriendly billing guidelines. In addition, providers should involve physicians as stakeholders in this process.

Risks and Rewards

As this plan is implemented and patients begin to enroll, providers need to establish monitoring tools to track fund utilization and resulting payments to all related entities associated with the organization. Again, although there are no restrictions to a third party paying for these premiums, caution should be used in implementing these policies.

Under no circumstances can a provider force any patient to come to its facility through payment of this premium. Hospitals take a risk to obtain the potential revenue associated with the needs of the patient. It is a fairly logical assumption that the federal government will frown upon providers that terminate policies because of low utilization. It is also reasonable to assume that most patients who typically come to a provider's facilities for chronic care will continue to do so if they are being subsidized by that facility through an insurance plan that covers so many of their specific needs.

AT A GLANCE

Hospitals can take four steps to determine how the federal Pre-existing Condition Insurance Plan can affect them:

* Analyze data to identify patients who lack health insurance.

* Project revenue based on estimated payment for the services for each patient.

* Determinewhetherthe patients can pay for premiums or need financial assistance.

* Prepareapolicyand procedures for helping the patients pay the premium and determine the impact of the expected revenue for the organization.

View data showing spending for PCIPs at the federal and state levels at www.hfma.org/hfm.

Patients who have PGIP coverage can go to any provider in their state, so even if they receive assistance in paying the PGIP premium from a provider, they are not required to go to that provider for all of their future health care.

Richard Parker is executive director, CBIZ KA Consulting Services, LLC, East Windsor, N.J., and a member of HFMA's New Jersey Chapter ([email protected]).