The Baptist Health System is one of the newest and largest San Antonio health care providers to sign on to a new concept in how services are paid. Averde Healthsm is a Connecticut-based company offering a revolutionary network-based product specifically tailored for patients who have high-deductible health insurance policies.

As insurance premiums have escalated, more people, especially small businesses and the self-employed, have found high deductibles of up to $10,000 are the easiest way to remain protected at an affordable rate. A 2009 study by the Kaiser Family Foundation found that the number of employers offering deductibles of $1,000 or more was 22 percent, more than double the rate of just three years earlier. Nationwide, Texas is the state with the second-highest number of high-deductible policies.

The down side comes when people realize they must pay thousands of dollars out-of -pocket. The same financial pressures that make lower premiums so attractive make it hard to come up with the money to pay health care providers. A 2003 Federal Reserve Board report showed that unpaid medical bills are a major problem both for consumers and providers.

The majority of collections accounts (about 52 percent) are associated with medical bills. The high incidence of collections related to medical bills is not surprising, given both the large number of individual consumers and families that have partial or no health insurance coverage, and the high cost of medical services.

For physicians and other health care providers, this represents a three-pronged problem. Depending upon specialty, the impact on a practice’s cash flow can be significant; and the cost of hiring employees or agencies to handle collections cuts down on the actual amount of revenue. Providers, who have already agreed to discounts as part of managed-care contracts, often find they are paid much less than that. It’s something Averde CEO Tom Policelli calls the “hidden discount.”

Averde Health’s solution to the problem is elegantly simple. Called “Complete Care Financing,” it promises to pay providers everything they are owed, including deductibles and coinsurance, within 30 days of receiving a properly-submitted claim. Averde then collects from its own members.

The Averde model is radical in that for the first time the incentive is for the company to pay quickly, rather than delay as long as possible. Traditionally, payors have slowed payments in order to earn more interest. But since Averde can not collect from its members until providers have been paid, there is every reason to pay claims immediately.

An added benefit for patients is that the paperwork is greatly simplified, and they should never have to get collection calls or bills from in-network physicians. Further, the assurance that they will be paid has allowed some providers actually to offer their best pricing to Averde, helping to slow the trend of cost increases.

The Baptist Health System, which has 1,600 licensed beds in its five San Antonio hospitals, also operates a large Physicians Hospital Association (PHO). Baptist Health System VP of Managed Care Tom Shock said “the 1,600 physicians in the Baptist PHO are always looking for ways to improve their efficiency. One of the biggest costs in running a practice these days is collections. Any program that promises to help resolve that issue and save the cost of collections is more than welcome.”

While San Antonio physicians and hospitals will be among the first in the nation to begin seeing Averde members early in 2010, the idea is gaining momentum nationwide. Averde recently passed the 100,000 member milestone. By the end of 2010, Averde will have networks in Colorado, Texas, Florida and Virginia.