What insurers leaving Obamacare exchange means for physicians

August 3, 2016

Recent analysis by the consulting firm McKinsey & Co. reveals that many insurers are losing money in ACA individual markets, with aggregate year over year losses more than doubling, and with post-tax margins between –9% and –12%. Losses like these resulted in UnitedHealth Group leaving the California ACA market after only one year.

Recent analysis by the consulting firm McKinsey & Co. reveals that many insurers are losing money in ACA individual markets, with aggregate year over year losses more than doubling, and with post-tax margins between –9% and –12%. Losses like these resulted in UnitedHealth Group leaving the California ACA market after only one year.

 

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That decision, as well as other insurers leaving some markets has sounded some alarm bells, particularly among opponents of the ACA.

Health policy expert Joel White, president of the Council for Affordable Health Coverage, notes this is a phenomenon happening all over the country because not enough people are signing up and insurers are losing money.

According to the Congressional Budget Office only about 10 million of the expected 21 million people have enrolled.

 

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“The risk pools are older and less healthy. And automatic stabilization programs are ending in 2017,” he says. “The combination means rates must go higher, which discourages more enrollment, which makes the market worse.”

What does this mean for physicians?

Adam C. Powell, Ph.D., president of Payer+Provider Syndicate, a management advisory and operational consulting firm focused on the managed care and healthcare delivery industries, notes that physicians who had contracts with insurers that departed the exchanges but not with other insurers may lose patients. Conversely, physicians with contracts with the remaining health plans may gain from the exodus.

Next: Any more problems physicians should know about?

 

According to the Kaiser Family Foundation, residents of 650 counties will be limited to just one health insurance company in the healthcare marketplaces next year.  This significantly and negatively impacts consumers because lack of choice means no competition and thus no incentive to hold down prices.

 

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Therefore, in order to control costs, carriers that remain on the exchanges will have to limit their network access and try to reduce payments to providers-both of which will clearly put a strain on physicians and prompt more to drop out of these networks.

White says that Congress needs to stabilize the market by reforming the Affordable Care Act and having the first generation of exchanges create a simple and easy enrollment process. There’s also a need for more flexibility in what plans offer and expanded  employer coverage via new options like health reimbursement accounts and expanded HSAs.  

 

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Rick Bates, CEO & co-founder of SingleCare, an online retail marketplace for healthcare services, notes physicians can continue to focus on providing optimal care to their patients, but might find they are spending more time dealing with administrative issues.

Any more problems physicians should know about?

In general, many lower-tier ACA plans have high deductibles, meaning patients pay more out of pocket and it creates additional paperwork and administrative headaches for physicians, taking their attention away from providing quality care.

Next: How will this affect reimbursement rates?

 

One big concern is how this will affect a provider’s ability to get the best reimbursement rates for his or her practice. Bates explains that when providers can work with multiple insurer networks, they have more bargaining power and can negotiate more favorable rates. But with fewer insurers in the market, remaining insurers have more leverage (through less competition) and can try to force a doctor to lower their prices - requiring doctors to replace that revenue by taking on more patients to compensate for the lower rates of reimbursement.

 

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Physicians want to focus on providing care, but as long as they’re dealing with looming legislative complexities, that focus may remain hazy.

 Susan Nedza, MD, senior vice president of clinical outcomes at MPA Healthcare Solutions in Chicago, notes physicians and their patients are affected by all of this in three significant ways. 

“It affects patients who will find themselves switching insurance once again. The administrative burden associated with switching is challenging for patients or their doctors,” she says. “There is a high probability that insurers will continue to offer plans with high deductibles and a narrow networks of providers. Patients may forgo needed treatment due to co-insurance costs.”

Doctors need to prepare for increasing pressure to sign in-network contracts that impact their fees this year and in 2017, Nedza adds.

“Health insurers drive profitability through aggressive provider contracts and utilization management,” she says. “Thus they may find additional pre-authorization burdens for specialty pharmacy, imaging and oncology services put in place.”