Moody's: HIX Uncertainties Will Hurt NP Hospitals' Credit
Not-for-profit hospitals could see a migration of commercially insured patients to exchanges, where reimbursement rates may be lower, says a report from Moody's Investors Service. Commercial rates have traditionally subsidized Medicare losses and driven profitability for most hospitals.
Unanswered questions about health insurance exchanges such as who will enroll and what exchange-based plans will pay providers will create a "modest credit negative" for not-for-profit hospitals in 2014, Moody's Investors Service says.
The Congressional Budget Office has estimated that about seven million people will sign up for health insurance coverage under the exchanges. However, Moody's Associate Managing Director Lisa Goldstein says in a new report that NFP hospitals could see a migration of commercially insured patients to exchanges, where reimbursement rates may be lower.
"The exchange-related risks center on two primary issues that will largely negate the benefits of a declining uninsured population in 2014," Goldstein said in remarks accompanying the report. "These issues are the level and composition of enrollment, and how insurance exchanges exacerbate revenue pressures on hospitals."
"Providers are reporting that negotiations with exchange plans range from Medicaid rates, usually the lowest rate-per-service a hospital receives and does not cover costs, to a discount off of commercial rates, typically the highest rate a hospital receives," Goldstein said. "Commercial rates subsidize losses incurred with Medicaid and Medicare and drive profitability for most hospitals."