By Ann Lambrix and Mick Raich
The new Insurance Exchange is up and running and many practices are wondering how this will affect their bottom line. There are several issues to review when thinking about these Exchanges.
In the past, many practices have remained out-of-network with carriers that have lower reimbursement rates due to the ability to obtain higher out-of-network payments. Unfortunately, this will not be the case with the Exchange Plans. Many, if not all, plans within the Insurance Exchange will not offer out-of-network coverage, aside from emergency services. Providers that choose to remain out- of- network may see a decrease in referrals if the contract/patients within these product lines require in-network providers only. The choice may not be entirely up to the provider as well – some carrier’s contracts may have language indicating that your participation is inclusive of all product lines (including the Exchanges).
Some carriers will also have a “narrow network” that limits participating providers. This will also impact physician referrals if the provider is not within this narrow network of approved physicians.
So you simply will have no choice but to be involved with these plans as there is no “out of network” coverage any patient that is out of network will be self-pay.
Rates for the Exchange Products aren’t anything to get excited about either. In an article from Medscape, How insurance Exchanges Will Affect Doctor’s Income (Page, 2013), indicates rates will be 30-40% below what providers are currently receiving from existing non-Exchange plans. Plans will act similarly to Medicaid plans, where the goal is to emphasize efficiencies and cut reimbursement.
The big issue here is the fact that once you accept these Exchange plans and their lower rates how long will it be until this becomes the new industry standard? This means if you accept 40% of Medicare for the Exchange plans why, can’t you accept that from the standard HMO or PPO plan?
In an interview with Michael Ferrie, the founder of Physician Data Management (PDM), national path/lab physician billing firm, he noted that another area of interest is the “most favored nation status” in the contract. He states “This is often a missed or misunderstood section of the contract and the implications are considerable. This allows for payers to grab lower reimbursement that are better for the payer where a practice signs a contract with a subsidiary.”
Jane Pine Wood of McDonald Hopkins also noted that in addition to being wary of the impact of participation in an exchange upon most favored nation clauses in private payer contracts, pathology providers should be mindful that some state Medicaid programs have similar most favored nation clauses, and if the exchange’s rates are less than the state Medicaid program, the pathology provider may need to lower its charges to Medicaid to the exchange’s fee schedule rates.
Providers will also need to be prepared for an increase in patient out of pocket expenses, as well as potential increases in collection activity for patients within the Exchange Networks.
Participating plans will offer a tier-based program to members. Patient out-of-pocket expense will be based on the level (Bronze – lowest premium/highest out-of-pocket – Platinum-highest premium/lowest out-of-pocket). Many patients will choose the lower premium cost/higher out-of-pocket plans which may mean more unpaid patient deductibles outstanding, an increase in patient A/R, and higher volume of collection activity.
With Obama Care, the grace period for non-payment of premiums has increased from a standard 30 days to 90 days. The first 30 days the carrier will continue to pay claims, and the additional 60 days will suspend payment until the premium is paid. After 90 days the patient will be dis-enrolled from the plan for non-payment of premium and plans will deny claims billed after the initial 30 days within the grace period. How does your practice combat this and prepare for individuals that “play the system”, jumping from one plan to the next to basically receive free healthcare?
Your billing system should be effective in separating out these patients/plans to identify if there are potential issues. Due to so many unknowns, it is difficult to estimate or recommend exactly how providers will be proactive in these situations. Increase patient screening on the front end and collection activity on the back end? Ultimately, the impact of your bottom line will be the costs of additional resources needed to collect on payment that is due to you.
Finally, true self-pay patients may be a thing of the past. Since Obama Care requires everyone to have health insurance or face a fine, this population will shift to the lower reimbursement, in-network only Exchange Plans.
Health Exchange products will be reimbursed less than current contracts and will not have out-of-network benefits. Carriers may include current contracted providers in the insurance Exchange plans, making it difficult to terminate the contract for risk of losing higher commercial/Medicare plan reimbursement. Providers also risk losing referral sources if they are out-of-network as referring physicians will be required to refer to in-network providers.
The rates paid for these Health Exchange Plan patients will be very low and will in effect lower the overall acceptable rates for services provided.
These plans may well be tied to other plans and lower rates via a most favored nation clause.
Practices will need to be prepared for higher patient out-of-pocket expenses, with more accounts rolling into collections. Personnel costs may increase as more resources will be needed to identify potential risk and collect on outstanding debts.
True self-pay patient population will decrease significantly, with the shift going to the Health Insurance Exchange Plans.