Page 1

Health Insurance Exchange Impact on Providers November 2013 BLOG POST

Impact of Health Insurance Exchanges (HIX) on the Providers1 The HIX aims to increase the covered population decreasing the uninsured population over the next few years. While the HIX opens a door for the targeted population to purchase affordable health insurance for accessing quality healthcare, on the other hand how the cost burden is going to be mitigated still remains a question. How the providers will be impacted due to HIX is not very clear, but there are some key areas listed below would be of provider concerns.

Some of the Key areas for Providers’ concerns include: •

Reimbursements According to Affordable Care Act, qualified providers are allowed to receive the higher payment in accordance with the approved Medicaid state plan amendment. But there are some laws around reporting of quality improvement initiatives to the Exchanges, which in turn will force providers to make considerable investments to fulfill reporting requirements in order to record performance parameters. So this higher payment might get neutralized by the additional overhead expenses that need to be borne by providers. Now small employers and lower wage workers now buying insurance through exchanges, the payers might be pushed to keep the plan costs low which, in turn might affect the reimbursement of the providers servicing this population.

Impact of Medicaid Expansion With lot of the uninsured population now becoming eligible for Medicaid, this increase in coverage would reduce the burden of uncompensated care on hospitals. This expansion in coverage along with the coverage provided through the exchanges will considerably reduce ‘bad-debt’ patients for many providers. Although the impact on providers may differ from state to state based on the state’s decision to expand the coverage, the general expectation is that the providers in states opting for the expansion will experience lesser bad-debt with the expectation that the number of uninsured will be greatly reduced as against those states that have decided not to expand the coverage.

Impact on Resources Such as Emergency Rooms Federal law requires that there should be some level of care provided to anyone who needs it through emergency rooms irrespective of the medical condition qualifying for an emergency. And therefore the uninsured have always treated the emergency rooms as their primary care provider. With this population now covered through exchanges, they will have access to lower cost of clinical care that will bring down the burden on emergency rooms.


Corporate Wellness Magazine

Health Insurance Exchange Impact on Providers

Page 2

Undocumented Immigrants Affordable Care Act does not have any provision for health coverage for undocumented/illegal migrants. This population receives care either through Federally Qualified Health Centers (FQHCs), aka the ‘safety net’ providers, or through emergency services. According to estimates, millions of undocumented immigrants reside in different parts of the U.S. and the policy makers in the interest of the country cannot propose any such provisions that will encourage this further. With this population ending up being the largest uninsured group, it might prove a bad debt for providers in the future.

Rise in Increased Uncompensated-Care Costs High-deductible plans are among a growing number of financial concerns that hospital administrators say could tip the scales between planned federal reimbursement cuts and an increase in the number of insured customers. Now hospitals are increasingly worried that large numbers of low-income exchange enrollees could opt for the highest cost-sharing plans, because they will have the lowest monthly premiums, as federal subsidies will cover most or all of the premiums but subsidies will cover much less of the deductibles or copays. The attractiveness of high-deductible plans to low-income exchange enrollees could increase further in states that do not expand their Medicaid program. . Exchanges in states not expanding Medicaid will offer subsidized coverage to many low-income residents who would otherwise be required to enroll in Medicaid. Widespread selection of high-deductible plans could exacerbate the increased uncompensated-care costs.

HIX Uncertainty Patients who have insurance through the exchanges may not fully understand their level of liability for services, which could result in bad debt for the health system. This will be especially true for consumers who are being moved off of other government-subsidized insurance programs to the exchanges.

Some of the Remediation Strategies which could be used by Providers may include: •

Administration Costs Since it would be difficult to find opportunities to reduce the cost of medical care, providers must find opportunities to reduce their administration costs. Electronic transactions have been a proven tool for reducing administrative complexities. Standardized methods of conducting healthcare administrative transactions across different provider set-ups would help in reducing some of the administrative costs. Another way of bringing the billing administrative cost down is to let the price structure is determined by a committee consisting of various stakeholders; instead of the different plans having separate contracts with the providers.

Health Insurance Exchange Impact on Providers

Page 3

Reimbursement Methods An ideal payment reform will be a mix where the best features of all the reimbursement methods are utilized. Fee-for-Service alone should not be the preferred method because of the strong financial incentive attached to utilizing more healthcare resources than is medically necessary. This method can be modified to include performance based contracting – providers showcasing a significant edge over others in terms of quality of care provided can be entitled to a higher fee schedule or receive additional funds for investing in various methods of care coordination.

New Methods of Healthcare Delivery The exchanges will add significant Medicaid population along with the individuals purchasing QHPs. With this increase in the number of insured people along with adequately streamlined premiums, the payers will be required to come-up with newer methods of healthcare delivery and the providers will be expected to offer quality healthcare services. Providers need to continuously look for new methods for care delivery. The focus will now be shifted towards care coordination.

Conclusion Health Insurance Exchanges will certainly be an effective mechanism to provide affordable health insurance coverage to the uninsured and reduce the financial burden of healthcare costs. There is a need for stakeholder collaboration and innovative methods for mutual success. At this point in time, it’s hard to predict the impact of HIX on providers with certainty. Access to healthcare service delivery, variety in reimbursement options, and lack of technological infrastructure are perceived to be the major barriers for the providers in the HIX implementation. The HIX will present opportunities as well as challenges at the same time. While there will be an influx of new patients which, in turn means more revenue, providers are not sure if they are equipped with the infrastructure to support this influx. There will also be increased emphasis on better coordination between the payers and providers.

Health Insurance Exchange Impact on Providers

Page 4

Health insurance exchange impact on providers november'13