Hospitals Worried About Impact of Insurance Exchanges

by Mark Friedman  on Monday, Oct. 7, 2013 12:00 am  

While hospital executives across the state welcomed the opening of the health insurance marketplace last Tuesday, several said they were worried about its financial impact.

“Obviously, there’s some concerns with the [health insurance] exchange with this being new to everyone,” said BJ Roberts, assistant vice president of fiscal services at White County Medical Center in Searcy.

He said that the payments for treating the newly insured patients might not be enough to cover the constraints applied to Medicare reimbursements, which were made to help pay for the Affordable Care Act.

“I think there are grave concerns about that,” said Paul Cunningham, executive vice president of the Arkansas Hospital Association. “It’s going to take a year — maybe longer than that — before you get a real solid idea of the impact of all this.”

To help pay for the Affordable Care Act, the rate of growth in Medicare reimbursements took a hit. For Arkansas hospitals, that means missing out on $2 billion to $2.5 billion in Medicare revenue during the next decade, Cunningham said. And some of that reduction in revenue has already started this year, he said.

“When you talk about the Affordable Care Act … you can’t do it in a vacuum,” Cunningham said. “You have to look at it in terms of what’s coming down the pike in terms of Medicare payments.”

Hospital executives also worry that people might choose high-deductible plans and not be able to afford the deductible or copays. Hospitals also expect slightly lower payments for procedures than they’re used to from private insurance carriers, which have adopted hardball pricing tactics that are forcing hospitals to look for ways to cut expenses.

Still, some hospitals think the exchanges will help their books. From the standpoint of the University of Arkansas for Medical Sciences at Little Rock, almost everything about the health insurance marketplace will be an improvement over the current system.

Roxane Townsend, the CEO of the UAMS Medical Center, said the state-owned hospital is projecting an increase in net income because more of its patients will have some sort of insurance coverage.

“Thirteen percent of our business today is uninsured,” Townsend said. “If we are able to get 75 percent of those people enrolled in the insurance exchange over a six-month period, it could mean an $8 million gain for the medical center at UAMS.”

But there are still a lot of unknowns involving the marketplace.

“Right now, as of Oct. 2, there are so many questions that are unanswered,” said Gary Bebow, the CEO of the White River Health System in Batesville. “On the plus side, we are going to have a whole segment of our population that will have insurance. That’s got to be a positive.”



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