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Low Health Literacy Costly for Payers, Health Plan Simplification Needed

A recent Accenture report shows the costs of low patient health literacy, suggesting health plan simplification is needed for a better patient experience.

health literacy

Source: Thinkstock

By Sara Heath

- Low patient health literacy costs US healthcare payers nearly $4.8 billion in administrative costs each year, suggesting a need for health plan simplification, according to a new report from Accenture.

While it is important for healthcare professionals to ensure patients are knowledgeable and engaged enough to interact with the medical and payer industry, it is also incumbent upon payers to simplify their benefits programs. It should not require a patient to be a healthcare expert to navigate the currently convoluted system, the Accenture report contended.

“Instead of forcing people to continue to battle complexity, payers can invest in simplifying the ways consumers interact and engage with healthcare,” wrote report authors Jean-Pierre Stephan, Loren McCaghy, and Michael Brombach.

“Because it’s not Americans who are failing in healthcare system literacy. It’s the complexity of the system that’s failing them,” added Stephan, McCaghy, and Brombach, who are Accenture’s managing director of CRM solutions, director of consumer engagement & product insight, and manager of Accenture strategy, respectively.

Using a patient health literacy index, the researchers determined that half of US patients have low health literacy – 33 percent have no experience with the healthcare system, while 19 percent are considered healthcare industry novices.

READ MORE: How to Test Digital Health Literacy in Older Adult Patients

When a patient has low health literacy, she struggles to make informed decisions about her care; does not have the self-efficacy to manage referrals, medications, and complex provider systems; and may not know the right questions to ask of providers or assert her needs as a patient.

Additionally, patients with limited health literacy may not know how to fill out administrative paperwork, leading to both missing and redundant information. Patients may not understand their medical bills, their benefits packages, and their own financial responsibility.

That lack of patient knowledge comes at a price, the researchers revealed. Patients with lower health literacy contact customer services departments 13 percent more often than patients with relatively high health literacy.

With increased customer service calls come higher administrative costs. Health payers and employers spend an average of $26 more on patients with low health literacy, totaling at $4.8 billion across the industry each year.

Patients with comparatively high health literacy only cost healthcare payers $1.4 billion annually, the report authors noted, a difference of $3.4 billion.

READ MORE: Using NLP to Improve Patient Portal Use, Patient Health Literacy

Limited health literacy also takes a toll on patients, the report added. Twenty-six percent of patients with low health literacy are high-needs patients who manage complex chronic illnesses. Low health literacy is especially costly for a patient with cancer or another life-threatening illness who needs extensive medical care.

As noted above, low health literacy is not a patient failing, the report authors emphasized. Instead, the medical industry must become simpler and provide more supports to patients who need to navigate the healthcare system.

The hospital and payer industries must first refocus administrative burden away from patients. Healthcare institutions should provide navigation support and other service options across the care continuum to ensure patients don’t even need to have high health literacy (although health literacy is beneficial).

When working to better engage patients, payers and providers must adopt a targeted approach. Using data analytics and risk stratification, organizations can identify patients who need more assistance and better education to improve their health literacy. This approach will also keep payers and providers from spending resources on patients who are already engaged.

Creating community health partnerships between payers, providers, and community leaders will allow patients to receive healthcare education outside of the clinic or hospital. Support in a local house of worship, school, or other community group will both reinforce patients with more education and provide patients a secondary option for navigation support that may be more comfortable than the healthcare setting.

READ MORE: How Non-Clinical Staff Enable Patient Engagement, Care Coordination

Finally, payers and providers may wish to consider employing lay navigators. Lay navigators are not clinicians, but rather volunteers or professional social workers who help patients understand the medical industry, translate complex situations, and provide other services that help patients comb through the web of healthcare issues.

Payers may also consider mechanisms that actually make the healthcare system simpler, the report authors stated. Patient-centered billing, more understandable terminology, and better explanations of benefits could alleviate the need for patient education and care navigators.

“The only way to eliminate this systemic issue is advancement,” Stephan said in a statement. “Rather than forcing consumers to battle the complexities of the system, the healthcare system must design user experiences to align seamlessly with the needs, behaviors and preferences of the people it serves.”

Separate research shows that complex payer arrangements cost patients via surprise medical bills. Fifty-seven percent of healthcare consumers have received a medical bill that they were not expecting, according to data from NORC at the University of Chicago.

Fifty-eight percent of patients said their insurer was to blame for the unexpected bill. Benefit design can be complicated, leading patients to be confused about which services, providers, and facilities are covered under the payer plan.

Those plans need to be clearer, patients say, so that patients can make more informed decisions about where and from whom they received their treatment.

“Most Americans have been surprised by medical bills that they expected would be covered by their insurance,” Caroline Pearson, senior fellow at NORC at the University of Chicago, said in a statement. “This suggests that consumers may have difficulty understanding their insurance benefits or knowing which providers are included in their plan’s network.”

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