What is a Consumer Directed Health Plan (CDHP)?
A CDHP is a health plan option for which the family usually has a high deductible of $1500, $2500, $3000 or higher. The individual that has this high deductible is ‘trading’ the high deductible for lower Health Insurance Premiums. Additionally, a family might save money in a health care savings account for use when in the deductible phase. The family can roll over money from year to year in the Healthcare Savings Account.
Do all CDHP plans have a high deductible for well visits at a primary care Pediatric Office? No. Many CDHP plans cover well visits which usually includes vaccines. In most cases, the deductible/co-pay is $0.
How common are CDHP plans?
CDHP plans, due to the ability to save the employer and employee cost on the premium are growing in popularity. It is estimated that approximately 50% of small employers offer this option and between 20-30% of Medium to large employers. Many employees prefer to work with the ‘known’ and therefore select the traditional HMO and PPO plan. In Pediatrics, parents usually try to offer a plan that has more coverage due to the need to treat their sick kids. We evaluated some of our Pediatric groups and noticed that CDHPs are significantly below 10% currently.
How might CDHP Plans impact my Pediatric Practice?
Studies show that patients whom are insured using CDHP plans have between a 10% and 20% utilization rate of outpatient care. These studies do not look at the impact of Pediatrics versus specialists and other forms of outpatient care. Parents with this type of insurance are much more knowable of what their policy covers versus parents whom have traditional HMO/PPO coverage. Many will check to see what the plan covers as well as request generic medications versus branded medications.
How might CDHP Plans impact my collections and AR Rate? If a pediatric practice did not have strong patient responsibility follow-up as well as a high penetration of CDHP plans, the practice might see the collection rate reduced as well as an increase in AR days. The Medical Group Management Association as well as other organizations provides benchmarks for collection rates and AR days. The average collection rate is around 95% of the contract amount with 97% used by many groups as a benchmark. Achieving well above 99% consistently should be the minimum benchmark for each Pediatric Practice. Related to AR days, a pediatric group should have AR days less than 30 (less than 30 days of Accounts receivable) with the goal of being at 25.
Although CDHP plans are just starting to penetrate the market place they will continue to be an offering as the country struggles with rising healthcare costs. Monitoring and Management of CDHP plans is one component that will help improve the success of a Pediatric Practice.