Healthcare CFOs from very different organizations express concern that HIX, both state- and federally operated, will have negative financial repercussions.
There are different pieces to the uncertainty around health insurance exchanges. One is timeliness: The U.S. Government Accountability Office recently released two reports that cast doubt on whether the HIX established under the Patient Protection and Affordable Care Act will be up and running in time for the Oct. 1, 2013, enrollment period.
But perhaps the bigger uncertainty surrounding the exchanges—both state- and federally operated—is whether they will benefit hospitals and health systems financially. With more people having coverage through the insurance they can purchase from the exchanges, it would appear on the surface that the new marketplace will be good for providers. Yet I've spoken recently with two CFOs from very different healthcare providers who are unconvinced that the exchanges will be a net positive for their organizations, regardless of the exact date of implementation.
Mark Bogen, senior vice president and CFO at South Nassau Communities Hospital, a 435-bed not-for-profit teaching hospital in Oceanside, NY, expects the New York state–run exchange to be online by Oct. 1, with lots of participation from payers and providers because of the political support the program is receiving from the governor's office.
"Gov. Andrew Cuomo is putting pressure on payers to participate in one way or another, whether in individual exchanges or through the small employer component," Bogen says. "He is also looking for broad-based participation from providers and will use the weight of his office if the provider network isn't sufficient."
Although Bogen believes the exchanges will launch on schedule, he is skeptical about what they will mean financially to his hospital on Long Island.
"As opposed to New York City, where they tend to believe most people who sign up for exchanges will be those that are currently showing up in their EDs and entering the system as uninsured, here on Long Island the concern is we may see more of a conversion from employer-sponsored plans, and we'll have to chase after a much larger proportion of the amount [we are owed]," he says.
Bogen fears that small business owners will stop offering health plans, opting instead to accept the fines levied by the government and send employees to the exchanges, where the plans may not be as generous with co-pays and deductibles.
"Our biggest concern on Long Island is that the penalties under the ACA in terms of providing coverage are not really sufficient. … [Employers] may take the penalties and give the dollars to their employees to go out and shop on their own accord through the exchanges. … We're concerned that instead of it being better for providers on Long Island, we'll be hurt by patients who have traditionally been covered through employer-sponsored plans and now have coverage through the exchanges."
Another significant concern for Bogen is that the exchanges are unlikely to reduce the amount of uncompensated care his organization provides to the local population of undocumented workers.
"When I look at Long Island, there may be a small uptick in enrollment, but that isn't going to be enough to be really meaningful as it relates to the uninsured. We do have some farms on Long Island, as well as hotels, resorts, and restaurants where a significant number of the illegal alien population tends to work, so there is still a significant amount of [that] population that will not be covered in all likelihood under the Affordable Care Act."
Two time zones and 2,000 miles away in Albuquerque, NM, at Lovelace Health System, a 606-bed system owned by for-profit Ardent Health Services, CFO Stephen Forney views the small penalties for consumers who decide not to purchase health insurance as a problem.
"The penalties that are sitting out there for not getting your insurance really aren't penalties in the truest sense of the word. They are penalties on paper. The IRS, which is where the penalties would be levied, has no authority to enforce [them]," he says. "Also, the fines are very low to begin with … so the question will be how rapidly people will adopt the exchange products."
Forney expects that 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. He believes this will be especially true for consumers who are being moved off of other government-subsidized insurance programs to the exchanges.
"These [government] initiatives are going to be subsumed by the exchanges, and the new products are going to have significant patient liability and premiums. That is going to be a bit of a sticker shock for those individuals who have not been used to that in the past," Forney says.
"What continues to be a big challenge for us and the industry in general is uncompensated care and patient liability and how best to deal with that in terms of the revenue cycle," he adds. "There are a number of items that have tended to exacerbate rather than help, such as high-deductible health plans shifting cost back to the consumer. The consumer, in many respects, may not have the ability or the willingness to pay."
Despite the uncertainty that surrounds exchanges and their potential financial consequences for providers, Forney believes the positive side of the PPACA is how it is forcing the industry to reevaluate the way it delivers care.
"When you look at healthcare reform in a broader sense … it's really much more about how we as an industry—hospitals, doctors, payers—are going to manage the cost of care in an appropriate fashion," he says. "People still have to have high quality care, the best care they can get, but as a system, we work with finite resources. If anything, the ACA has been a good catalyst to make people think in broader terms."