John Jacobi over at HealthLawProfBlog is going over some interesting future implementation challenges with PPACA. One of the reforms that he sees as a critical piece of the puzzle is the expansion of Basic health plans:
First, and most obviously, states and advocates should be examining the Basic Plan Program, which will finally be ready for roll-out in 2015. The Program, authorized by § 1331 of the ACA, is a public health insurance program intended to bridge the gap between Medicaid and subsidized private insurance for people with income between 138% and 200% of FPL. It could serve two purposes: It could reduce “churn” between Medicaid and private insurance as insureds’ income fluctuates in the low range, therefore minimizing disruption in ongoing access to providers. It could also improve the affordability of coverage by allowing states to piggy-back on their Medicaid provider networks and premium structure, allowing Program participants rich coverage with little or no out-of-pocket cost. There are downsides: the Program would reduce the exchange’s pool, perhaps increasing per-enrollee costs and threatening actuarial destabilization of the individual plan market; and Medicaid provider networks are already fragile in many states. But faced with the risk of cost-based attrition and/or low service utilization by low-income exchange enrollees, states will want to consider this option.
From a mechanical point of view, Basic plans have significantly more flexibilty than Medicaid in benefit design and implementation choices, and providers may be more willing than the professor thinks to join the Basic networks.
The big thing that we talked about last week was how providers see their accounts receivable situation:
The ideal patient from an account recievables perspective pays a very high percentage of the billed charge with a high degree of certainty and a short turn around time and minimal haggling. Excluding celebrity rehab centers and $40,000/year per person coverage, there are few payers who meet this provider ideal. Everything else is a trade-off…
An individual hit with a cancer diagnosis with a 20% co-insurance and a $5,000 annual out of pocket limit will easily run up $25,000 in contracted rate charges in the first round of treatment. They might have 5G lying around, they might not. They’ll be in a similar situation as people with high deductibles who are described below.
People with commercial insurance but very high deductibles will see their contracted rates be fairly high. A provider has a low probability of seeing the entire deductible in a single lump sum within 30 days of service. The more likely scenario is that an HSA or FSA is emptied out to pay a significant chunk of the contracted rate lump sum, and then either a credit card payment is made (good for the provider, bad public policy) or $45/month for the next 5 years is used to pay the lump sum….
Platinum, Gold and cost-sharing Silvers are closer in behavior to good commercial insurance in the first scenario. Since most people on the Exchange qualify for some subsidies, the probability of people having a full deductible in cash lying around is fairly low. This can explain some of the narrowness of networks as providers may not be willing to take either the lower than commercial but higher than Medicare contracted rates OR they are worried about their ability to get quickly paid in full so they opt out of some networks that are designed to be low premium cost but high out of pocket plans. Small group employer sponsored insurance with high deductibles will also fall into this bucket.
After this, Medicaid will pay quickly but at a low rate….
A Basic plan will pay out quickly and it will pay out in full. Basic plans tend to have higher reimbursement rates for providers than Medicaid, so Basic should be preferable from an AR perspective than Medicaid expansion. The relevant question is how does Basic compare to a a very good or merely good cost-sharing assistance Silver plan as those are the plans that are most likely being bought by people who would qualify for Basic coverage. My state’s Basic program has a nominal deductible and two dollar co-pays for most non-preventative services. The best Silver cost-sharing assistance plans for a single adult will see $500 deductibles and another $1,000 in out of pocket expenses. From an AR perspective, providers will see all of their lower reimbursement rate from BASIC but have to chase people down in cost sharing Silver. I don’t think docs will avoid Basic plans for AR reasons.