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Hospitals Share in Financial Risk If AHPs Rise And Fall Again

By Jack O'Brien  
   January 26, 2018

The Commonwealth Fund teleconference focuses on Trump administration’s decision to allow association health plans and its potential impact on states and consumers. 

The Labor Department’s decision to increase access to association health plans (AHPs) is expected to have a major effect on consumers and states, though not on health systems.

AHPs have a complicated history marked by deregulation, leading to rapid consumer participation and market disruption, which could expose providers to some financial risk of not getting paid.

Mila Kofman, JD, executive director of the D.C. Health Benefit Exchange Authority, said that when an AHP goes under there is a lengthy retrieval process for money owed. When trustees are settling outstanding bills, they work to make sure small businesses aren’t left with the bad debt, she said.

“It’s just very difficult to pay both physicians and hospitals, and many times physicians are very small practices, so there is an effort made not to put those physicians out of business,” Kofman told HealthLeaders Media. “I would say hospitals have a lot to lose because they get paid last.”

That being said, Christopher Koller, president of the Milbank Memorial Fund said hospitals won’t be as directly impacted as consumers.

“I think at this moment, the risk around association health plans to me looks like it’s on the individual consumers, less to the providers,” Koller said. “At the margin, the more people in AHPs will result in more confusion, more bad debt for insurers. I don’t think [providers] would be the constituency affected by this nearly as much as the consumers.”

Kofman and Koller spoke during a teleconference hosted by The Commonwealth Fund, a private health foundation, on Thursday along with Kevin Lucia, JD, MHP, a research professor and project director at Georgetown University's Health Policy Institute.

The panel generally agreed AHPs are expected to deal a significant impact to private insurance markets, which could suffer a collapse like Kentucky faced back in the 1990s.

Related: Association Health Plans Would Be Another Hit to Struggling Insurers

Kofman cited the likely proliferation of fraud insurance groups to collect premiums and avoid both state and federal regulators as a risk from allowing AHPs to grow.  

Consistency in enforcement is another challenge. Some states would be ready to enforce the rules, while others severely lack the resources, expertise and tools to actively regulate AHPs, Koller said, calling it a “recipe for disaster.”

President Donald Trump issued an executive order in October to promote choice and reduce costs for consumers by revising regulations on AHPs. The move would allow nearly 11 million small business owners and sole proprietors to sign up for low-cost, regional group health plans, according to the Trump administration.

Proponents of AHPs say the plans address concerns about high premiums by offering lower costs since they do not fulfill some requirements under the Affordable Care Act (ACA), such as covering essential health benefits. Consumer rights advocates have expressed concern that the rule would leave consumers unprotected with cheap plans and disrupt the ACA exchanges by filling them with a higher-risk pool of patients.


Jack O'Brien is the finance editor at HealthLeaders. 

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