cover the increased number of patients who will need care has the potential to weaken New Jersey’s ability to fully care for the newly insured. Still, the hoped-for benefits of the Exchanges propel the movement forward. The ACA gave the option for states to establish and operate their own Exchanges with the fallback that the federal government will be ready and willing to run a national Exchange in any state that refuses to create an Exchange. As of now, the federal government will run Exchanges in 26 states, while 24 states will either run their own or partner with the federal government for specific por4 tions of the entity. In New Jersey, for example, the Christie administration has decided to permit the federal government to establish and operate an Exchange in the state. The objectives of the ACA are intrinsically linked to the success or failure of these Exchanges. The plans offered in the Exchange must strike a balance between offering affordable coverage and providing essential benefits to ensure that consumers are getting value for their purchases. If this balance can be attained, the benefits for all are substantial. Insurance companies will have a new market to increase the number of enrollees in their plans, as well as a guarantee of a subsidy payment from the federal government when the plan is selected by the individual. Hospitals will receive payment for services rendered to these newly insured patients who currently are being absorbed by the hospitals as bad debt. Lastly, the healthcare system will benefit as a whole by equipping these individuals with access to preventative care that was once unavailable to them. Of course, these possible benefits do not eliminate the innumerable hurdles of establishing the logistics of the Exchange. But even putting these hurdles aside, there are still two major issues of paramount concern to hospital executives. The first is the reduced commercial reimburse-
ment rates that insurance companies have already begun negotiating with hospitals for the newly insured individuals. The second is the concern that those who purchase coverage from commercial payers will have adequate access to care for all services across the spectrum. RISK OF REDUCED COMMERCIAL REIMBURSEMENT RATES The rates negotiated between payers and providers are proprietary and vary based on geography, markets and other factors. Payers offer to “steer” a volume of patients to hospitals, physicians and other providers if these providers agree to contract with the payer and accept discounted rates. But what happens when insurance companies and providers begin to negotiate contracts for an Exchange market that does not yet exist? For providers, accepting an even lower rate for these newly insured patients could mean a loss of revenue for each patient that comes through their doors, much like treating a Medicaid patient. It is understandable that the insurance industry would seek to lock in lower rates with providers for the new Exchange market before the open enrollment date of October 1, 2013. Their argument to hospitals and physicians is that these soon-to-be insured patients were previously uninsured, and therefore, a patient with coverage at a discounted rate is better than receiving very little to no payment at all. It has also been reported that some insurance companies are looking to renegotiate their contracts in December 2013 to take advantage of “grandfathered” status, which delays the application of the new rules on 5 those plans until they are renegotiated. What further complicates the issue is the fear that many employers will choose to forgo providing coverage through their business and instead encourage employees to purchase
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