Closing the Budget Gap: Can Student Health Insurance Plans Help?
Traditionally, many college health centers have primarily been funded by a segregated health fee, charged to students on a semester by semester basis. Recent rising health care costs, budget cuts and stagnated health fees have hit many student health services hard, prompting them to move away from traditional segregated models in favor of increased fees-for-service funding plans.
Dana Mills, MPH, chair of the American College Health Association’s (ACHA’s) Student Health Insurance Task Force and director of the student health center at Wisconsin’s Marquette University, agrees that in the short term, many colleges will need to supplement, if not replace, their segregated health fee.
“There are colleges that will continue to use the segregated health fee to support campus health services,” he says. “Budget limitations notwithstanding, it is their culture and conforms with the expectations of their stakeholders. But the vast majority of colleges and universities will be counting on increased fees-for-service revenue in the future."
The biggest choice facing health centers that have made the decision to transition to a fees-for-service model is whether to bill students and put the onus on them to claim on their health insurance, if they have a policy, or offer a student health insurance plan and bill to a single insurance carrier directly, as more U.S. colleges are now doing.
There are some compelling reasons to choose the latter. According to the results of a study completed recently by the United States Government Accountability Office (GAO), about one in five college students between the ages of 18 and 23 were uninsured in 2006. This is problematic from almost every angle. From GAO’s perspective, the cost of uninsured students’ health care may be passed on to government payers. From a school’s perspective, uninsured students cannot be referred to other providers off-campus, putting a strain on under-resourced student health services. From a student’s perspective, being uninsured means risking large medical bills that may burden them with debt and even force them to drop out of school altogether. Added to this, providing a student health insurance plan may be one way of increasing revenue to your health center. Mills affirms this, with some caveats.
“It is dependent on how well the system is designed and implemented,” he says. “Assuming that the college health service has developed an appropriate fees schedule, negotiated acceptable contracts and has good working relationships with third-party payers, is accurate in coding and timely in the billing process, and the student population is well covered by adequate health insurance, most of them will probably increase their cash flow over previous funding arrangements. And this system allows for future increases as costs increase.”
The GAO study indicates that plans vary widely between schools, with annual premiums ranging from $30 to about $2,400, and a spectrum of benefit limits from $2,500 to $1 million per condition per lifetime. These differences are due in part to the priority schools place on affordability of premiums over breadth and depth of coverage; plus, those that receive federal financial assistance have more limitations on the type of plan they are able to offer.
Ohio State University is one of the institutions examined as part of the GAO’s study. It has what many would consider a very strong student health insurance program: most services offered at the student health center are covered in full, the pre-existing condition clause is waived for services on campus, and the insurance covers 90 percent or more of the cost of most services by network providers. Diane Plumly, associate director of resources management at Ohio State, explains their criteria.
“When we shopped for a plan, we considered ACHA’s Standards for Student Health Insurance/Benefits Programs
and federal regulations regarding international student sponsorship,” Plumly elaborates. “We also benchmarked with peer institutions and the faculty and staff plans offered on campus and considered other factors such as cost, ease of administration and simplicity in benefit design, including minimal exclusions.”
OSU’s team re-evaluates its chosen plan annually using a committee composed of students and other representatives from as many as 11 departments; including athletics, optometry, human resources and student health services. The university uses a hard waiver approach, where students are only allowed to waive enrollment if they have comparable coverage, and it gives very specific and rigorous guidelines for what constitutes “comparable”. This can prove vital to the success of the plan, because the higher the percentage of students that opt in, the more affordable the plan is likely to become.
“Enforced health insurance requirements allow for a broader spread of risk, better plan features, and a more economically priced premium,” Mills explains. “Without this type of waiver that’s consistent with ACHA standards, it is nearly impossible to get adequate coverage and an annual premium that students can afford.”
Implementing a student health insurance plan is not without its own set of problems, however. Mills explains that negotiating the health insurance field can be challenging for institutions.
“There are fewer health insurance carriers willing to underwrite coverage in the student health insurance marketplace,” he says. “Colleges and universities are becoming more selective in the design of their plans and it narrows the response from vendors.”
Navigating the ins and outs of different policies can also be tricky for the uninitiated. Parents and students alike tend to assume that if the university is offering it, the policy must be a good one. If you don’t have the expertise on campus to develop criteria and find a solid plan, Plumly advises hiring a consulting firm with experience in the field to assist with creating an RFP, evaluating responses and validating projections. The basic litmus test is this, says Mills: “If your student plan would not be adequate for you, it’s not adequate for the students.”
Some health centers are concerned that billing, even to one payer, will be a drain on human resources. According to Plumly, OSU has not found this to be the case since they automated their health center. “Time and effort in managing claims filing has decreased, not increased,” she maintains. To get a better idea of the processes that would be involved for your health center, Plumly suggests contacting your practice management system vendor. “Request a list of clients that are currently using claims filing software or file transfers to claims processing companies, and then contact those clients for advice,” she says.
When considering what type of fee-for-service policy is right for your college, it is also wise to look ahead to medium and long term changes in revenue sources. Instituting a student health insurance plan is a good way to develop a billing “infrastructure” that gives your campus health service the option later on to transition to bill a variety of commercial payers – a potentially profitable venture, if undertaken correctly, as Western Kentucky University will attest. Libby Greaney, MHA, MBA, WKU’s director of health services, says that billing commercial insurance payers has increased their revenue by about 65 percent. According to Greaney, more and more schools are realizing the benefits of opening their health centers up to commercial plans.
“People are beginning to see the need. They are talking about it and addressing it,” she says. “Those in college health who are resistant to the idea may be viewed as ‘old school’ if they do not embrace the concept."
Mills suggests that if you do make the decision to implement a student insurance plan, it is wise to start with a more robust billing process that can be expanded later on.
“Although you could use simplified processes that minimize the need for staffing when establishing billing to a single payer, it is better to proceed with a process that would suffice for billing to a number of third-party payers, given the future trends,” he advises.
Single payer billing may not be a quick fix for all health centers’ budget deficits. What is clear is that there exists what Mills calls a “small but emerging trend” toward billing to third-party payers. With this in mind, implementing a student health insurance policy can not only set the stage for wider commercial insurance billing, which certainly can help boost a health center’s revenue, but also goes some way to address the high percentage of uninsured students on U.S. college campuses.
Three golden rules when considering a student health insurance policy for your campus:
- Strive to be in compliance with ACHA standards
This includes providing a health insurance requirement as a condition of enrollment and enforcing it. - Request bids where necessary
Building relationships with vendors is important, but don’t be afraid to put your plan out for bid if you need major changes in features or price (i.e., your plan may need to be customized and have a market test). - Provide plan incentives to use the campus health service.
Dana Mills provided these opinions as chair of ACHA's Task Force on Student Health Insurance, as a higher education consultant, and as an administrator in the field at three universities (two public and one private). He wishes to make clear that his comments do not necessarily reflect the views and opinions of the American College Health Association.