The HIE Conundrum: Cost Sharing and Patient Participation (Part 2 of 4)

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HRF-thumb5In our last post, we began examining the impact health insurance exchanges (HIEs) are going to have on a hospital’s revenue cycle, as explored by Rene Letourneau in the June issue of HealthLeaders magazine.

Obviously, the way in which HIEs will operate is still a big question, namely how uninsured patients will qualify for participation in the exchanges, a concern that Marlene Zurack, senior vice president of finance and chief financial officer for New York City Health and Hospitals Corporation, has.

Out of the 1.4 million patients served annually by HHC, a significant percentage—475,000—have no insurance. Zurack fears that these patients won’t be able to satisfy the numerous requirements for participating in the exchanges, Letourneau reports, which will ultimately affect cost sharing. In fact, she fully expects HHC “to lose revenue in the end due to cuts being made to Medicaid’s Disproportionate Share Hospital (DSH) program, which distributes payments to qualifying hospitals that serve a large number of uninsured individuals.”

The problem is, CMS is moving forward under “the assumption that the PPACA will result in more insurance coverage for low-income patients and, therefore, less uncompensated care.” According to Zurack, “the cuts will be extremely damaging to hospitals that serve this population.”

How damaging will these cuts in the DSH program be for HHC? Zurack is estimating in the hundreds of millions of dollars range. She explains, “Those were the cuts that were enacted as part of the Affordable Care Act to pay for the expansion. We are concerned that the new revenue potential for the exchanges will be lower than the disproportionate care cuts.”

In FY 2017, the current $818 million that HHC is reimbursed by DSH will be cut by $150 million; by FY 2019, it will be cut by $300 million.

Zurack said, “It’s the cuts to disproportionate share funding that are really, really hurting us. Because of that, there is no net benefit to us.”

To compensate, HHC has stepped up its efforts to expand its MetroPlus health plan, hoping “to make lemonade out of lemons and trying to get as many people as possible insured through our health plan. Our MetroPlus health plan is applying for every product available on the New York state exchange. We are hoping to have a competitive product that our patients will join.”

Furthermore, HHC is forging strategic contracts with insurance companies “to get favorable rates so we can afford to care for all of the newly insured. … We are actively engaged with all of our payers with lots of conversations. This all mostly takes effect in 2014, which is not that far away, but we are trying to prepare.”

Beyond the cost sharing, another complicating factor is whether currently uninsured patients understand their liability under HIEs. We’ll look at this in our third installment tomorrow.

In the meantime, how many uninsured patients is your healthcare organization currently serving? What percentage of these patients do you think will qualify for participation in the exchanges? How will your organization be affected by cuts to the DSH program?

-by Pete Fernbaugh

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