How much will hospitals get paid in the exchanges? About the same

Providers join the exchanges with their own insurance plans

Topics: Accountable Care, Market Trends, Strategy, Health Policy, Reimbursement, Finance

October 3, 2013

Hospitals will be paid nearly the same rates for care by the health insurance plans sold through the state exchanges as they will by insurance plans sold to employers outside of the exchanges, Melanie Evans reports for Modern Healthcare.

According to Megan Neuburger, an analyst for Fitch Ratings, the "early information has been fairly favorable for hospitals" and their reimbursements through the exchange plans are most similar to reimbursement rates from commercial insurers.

Fitch analyst Jim LeBuhn added that "providers have been pretty satisfied with the rates they've been able negotiate."

Providers that are restricted to one health system by their health plan may have agreed to lower rates since such "narrow networks are expected to offset the lower rate with more patient volume," Evans writes. Patient volume depends on how many U.S. residents will sign up for coverage through the exchanges—and that likely won't be clear until December.

How hospitals are playing the exchange game

In some cases, Evans writes, hospitals have acquiesced to lower rates in hopes of capturing new volumes coming through the exchanges.

For example, Catholic Health Initiatives (CHI) agreed to reduce rates by 5% to 10% in order to be included through narrow-network health plans on the exchanges, according to Juan Serrano, CHI's senior vice president of strategy and operations. He added that insurance companies initially sought major discounts without establishing narrow networks—Serrano called them "doesn't hurt to ask" proposals—prompting CHI to push back and negotiate higher rates.

"We're watching, hoping that the exchanges will in fact see meaningful enrollment," said Serrano, adding that "of course, we're curious like everyone about what this first wave of enrollment will look like."

In contrast, North Shore-LIJ Health System entered the New York insurance exchange with its own health plan after acquiring an insurance license. Their health plans offer a narrow network of the system's own providers, according to Howard Gold, executive vice president of managed care and business development for the system. The health system also entered into separate narrow-network contracts with commercial insurers.

Some insurers sought discounts of 10% to 50% from what employer-sponsored plans pay and North Shore-LIJ agreed to discounts based on the possible benefits contracts could offer, according to Evans.

"We have looked at every plan and evaluated it," Gold said (Evans, Modern Healthcare, 10/2 [subscription required]).

Which exchanges are working? See our rolling tracker

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