HSAs: A new paradigm in payment and collections

June 1, 2006

People who pay more of their own costs up front... make choices based on cost as well as quality.

What is an HSA? It consists of a contribution made by an employer to an employee's tax-free savings account. The HSA combines an insurance policy with high deductibles of $1,000 to $5,000 (compared with the current $300 to $400 per year deductible paid by the employer) to help people pay pre-deductible expenses. As a result, the responsibility for the payment of health care services shifts from the employer to the employee or the patient. Any money not spent by the patient will be allowed to accumulate tax free, and employees can take the account with them if they decide to change jobs, making the health care plan very portable.

Payment at the time of service

This new paradigm is based on the theory that patients can make good choices regarding the selection of their health care and will look for services that are most reasonably priced and that offer the most quality. The presumption is that this method of paying for health care by cost-conscious consumers will control spiraling health care costs. If the proponents are correct, the result will be lower costs paid by both employers and employees.

Under the HSA model, physicians will find it imperative to collect fees for their services from their patients. Historically, patients have had low or relatively low co-payments that were easy to collect or that didn't make a huge difference if one or two slipped through the collection cracks. The remainder of the bill was of no consequence to the patient because it was paid by the insurance company. Our payment from the insurance company was based on a negotiation between our practice and what the insurer was willing to compensate us for our service on a "take-it-or-leave-it" basis.

With the new paradigm, doctors will have to collect for their services at the time of the service or they are not likely to receive their deserved compensation. We all know how hard it is to collect from patients, so the new mantra will be, "Get paid now or don't get paid at all!" According to Crillo, you will go broke if you bill patients weeks after you deliver the service. The acronym to know is PATHOS, or payment at the time of service.

Fortunately, getting paid by patients using an HSA may be easier because they will have a debit card by which fees can be deducted from an account created for them by their employer.