Consumer Directed Health Plan Growth Could be Boost for Smaller, Local ARM Professionals

The latest Mercer survey shows that employer-sponsored enrollment in high deductible consumer directed health plans (CDHP) continues to rise, with the most significant growth coming from small business operators.

According to Mercer’s National Survey of Employer Sponsored Health Plans, CDHP offerings among businesses with 10-499 employees increased from 9 to 15 percent in 2009, pushing the percentage of all U.S. covered employees enrolled in CHDPs from 7 to 9 percent.

The trend, coupled with stagnant enrollment in Preferred Provider Organization (PPO), falling enrollment in Health Maintenance Organization (HMO) plans and higher deductibles on PPO plans means health care providers will be looking to patients more often to pay a greater share of their medical bills. The trend could drive business for smaller accounts receivable management professionals working in smaller markets, said Kaulkin Ginsberg Analyst Michael Klozotsky.  

“For independent physicians or small practices, those physicians may come to rely more on the ARM industry than they had before because they don’t want the headache of tracking down patients when they don’t pay,” Klozotsky said.

Although enrollments in PPOs were flat at 69 percent, Mercer said employers increased the average deductible by $100 for individuals for an average annual deductible of $1,096.  Families enrolled in employer-sponsored PPOs saw their average deductible increase by $300 to $2,515. Meanwhile, Mercer found that 55 percent of small businesses that offered a CDHP said it was the only health care coverage option made available to their employees.

“Over the past decade employers have been moving away from HMOs to PPOs, in part because PPOs give them greater flexibility to control cost sharing with members,” said Beth Umland, Mercer’s director of health and benefits research. “Now we’re seeing growth in consumer-directed health plans, in which cost-sharing is sweetened by an account that allows employees to accumulate any health care dollars they save by spending less or spending more wisely.”

Umland said about 52 percent of small employers who offer CDHPs made a median health savings account (HSA) contribution of $1,000 towards the median $2,000 deductible for employee only plans. And they made a median HSA contribution of $1,200 towards the median $4000 deductible for family plans.  But that still leaves nearly half of employees enrolled in a company CDHP responsible for the full tab, she said.

Although small business offerings of CDHPs jumped the most this year, the plans still are more commonly offered by large employers, with 20 percent of employers with 500 or more employees offering the plan, and 43 percent of employers with 20,000 or more workers offering them, Umland said.  

Sixty five percent of large employers made a median HSA contribution of $550 towards a $1,500 deductible for employee-only plans, and a $1,100 contribution towards a $3,000 deductible for family coverage.   To help ease the burden of the deductibles for HSA plan holders, 61 percent of small employers and 75 percent of large employers covered preventative care at 100 percent of cost for a defined set of services, Mercer found.

“The HSA plans tend to be more generous about covering preventative care, compared to a PPO. They (employers) don’t want employees to skip their annual exam because they are worried about spending down their HSA account,” Umland said.   

During interviews with 500 small business owners who don’t offer coverage, Mercer found that 44 percent said they would be willing to offer their employees health care coverage if individuals were required to it. Fifty-seven percent would be more willing to provide coverage if they received an annual tax credit to reduce the cost of coverage.

Klozotsky said that’s also a positive for ARM professionals even though the gross number of pure self-pay accounts will decrease. He said tracking patients with account balances will be easier because they have insurance, and likely a single or predominant health care provider where information about them is easier to obtain and verify, than through an emergency room visit.  

“There’s paperwork associated with insurance, such as a home address and social security number,” Klozotsky said. “It makes a medical debt collector’s job easier than it would be to chase down pure self-pay patients.”