Health Care's Financial Toll on College Parents

What may not be so fortunate for the student will be the level of care offered, as consistency and quality vary greatly from campus to campus. And what may not be so fortunate for you will be the cost/value relationship of such care for your student.

University health centers have not escaped the wrath of health cost increases grossly outpacing the Consumer Price Index. And student health center users find themselves mired in an industry replete with rising demands, yet without commensurate institutional funding to pay for desired care.

What are some the financial challenges impacting student health centers and the direct financial toll to students and parents?

A student health center differs from a typical primary practice setting. Indeed, your son or daughter can receive, in addition to clinical care, access to excellent wellness and education programs.

But these wellness programs require funding. The ideal funding source is the institution itself, but with fewer and fewer dollars making their way from state governments to public universities, the revenue to fund university health centers remains a challenge.

The financial impact of wellness programs, however, does not even begin to approach the clinical costs of operating a student health center. These costs are often funded through a combination of student health fees included with tuition, pharmacy revenues and fees for service for many ancillary services like x-rays and labs.

However, many student health centers are structured to not accept your student’s private insurance, despite a significant number of students carrying insurance through a parent. Surprisingly, even many universities that mandate its students carry health insurance do not bill insurance.

Penn State conducted a survey in 2004 indicating that 59.9% of students had health insurance through a parent. Another 8.5% had government sponsored health insurance such as Tricare or individually purchased commercial insurance. Another 5.3% carried insurance through an employer sponsored plan provided by a spouse or employer, 10.9% carried graduate assistance/fellow insurance, 5.1% bought the student health insurance plan, while a staggering 10.3% were uncertain about their provider.

Yet despite the prevalence of insurance coverage, Penn State and many other universities will not accept insurance. Many will not charge an office visit fee, and if they do, it usually amounts to a nominal fee, akin to a co-payment charge. However, they do not bill insurance for the office visit. This practice, or financial malpractice, sacrifices a significant revenue stream that may be compensated by higher than necessary student health fees.

In addition, because these student health centers do not accept your insurance, then your child – or in most cases, you – pay out of pocket for various x-rays and labs. Indeed, at The University of Florida (UF) students and parents paid over $4,000,000 in ancillary services in 2004-05, a number that would presumably have been much smaller had UF accepted health insurance.

And while the health centers give students paperwork to file with their insurance companies, reimbursement is difficult. Since most health center providers are considered “out-of-network,” reimbursement is that much tougher. The History and Practice of College Health notes that reimbursement only occurs about 25% of the time in an “out-of-network” scenario. According to Georgia Southern health center director Paul Ferguson, insurance companies even have begun denying pharmacy reimbursement (usually the simplest to bill) if an office visit charge does not accompany the bill for prescription drugs.

So why don’t student-health centers, like the one at The University of Florida, accept insurance? According to the 2004-05 Annual Report for the Student Health Care Center, UF students “sought a way to have their family insurance programs adequately pay for lab fees and other billed services ‘up front,’ thereby eliminating some of the reasons for holds on their records.”

The answer may simply be that insurance billing is a tough business, especially when the process involves the exhaustive process of credentialing the providers to become “in-network” with the various insurance companies like Blue Cross, Aetna, United, Humana, Cigna and the like. Not to mention the strict regulatory, marketing and technological requirements, or the significant capital required to launch an insurance billing practice.

Fortunately, one company developed the niche market of conducting third party billing in student health centers. Highland Campus Health Group is working with 11 campuses across the country, including Arizona State University (ASU) and its 50,000 plus students, with many other universities seeking to partner with Highland before the 2007 academic year begins.

Initial results look promising. According to an August 2006 article in the ASU student newspaper, “with the estimated increase in revenue from office visit fees, the center is expanding mental health services and transitioning to a state-of-the-art electronic records system.”