What Health Insurance Exchanges Mean for Physicians

Congress enacted the Affordable Care Act (ACA) to provide the means for uninsured Americans to purchase healthcare coverage.  Despite many legal battles and slipped deadlines, the new healthcare insurance exchanges - also known as marketplaces - will begin open enrollment on Oct. 1, 2013. The law provides for three options: one, where states will create and run their own exchanges; two, where they will create a hybrid exchange run by both the state and federal government; and three, where the federal government creates and runs the exchanges for states that have opted out. Coverage through the plans begins on Jan. 1, 2014.

Aside from great reservations expressed by many states, there are a number of unanswered questions where physicians and their practices are concerned. In part because so many states were reticent to fund and undertake the creation of a state-based exchange, progress to date varies widely. As of May 10, 2013, 25 states have been conditionally approved to operate some type of state-based exchange, according to The Center for Consumer Information & Insurance Oversight (CCIO).

And, because each state exchange is unique, the number and type of insurance companies that participate in the exchanges will be singular to each state.

So, what does this mean for physicians and their practices?

Sarah Dash, a faculty member at the Health Policy Institute at Georgetown University, says "fundamentally the exchange plans are just insurance plans. …The market is organized for the purpose of the consumer gaining easier access to those insurance plans. So, to some extent, it is the same thing."

Since many people put off seeing the doctor because they are uninsured and can't afford the cost, experts have suggested that there will be a flood of sicker patients once the exchanges provide health insurance. Dash calls it "pent up demand." However, she is not convinced that this will be the case. She points out that the premise of the reform law's "insurance mandate" was to provide a good mix of healthy younger patients with older, potentially sicker patients.

Owen Dahl, a practice management consultant based in The Woodlands, Texas, also believes that practices won't be deluged with new patients - but for a different reason. He says people who don't have insurance now are generally those who don't understand how it works and can't afford to pay for it.  "If I've been going to the emergency room for 15 years to get my care, [patients will say] 'Oh look, I've got this insurance, well I'm still going to go to the emergency room,'" says Dahl. He thinks that it will take time for people to change their behavior, which means practices will have plenty of time to prepare for newly insured patients.

There is also trepidation among physicians that plans offered on the insurance exchanges will not pay well. As it is nearly impossible to predict reimbursement rates until the exchanges are fully established and patients are enrolled, it is perhaps a wasted effort for practices to dwell on this aspect. Dahl feels that plans offered on the exchanges may behave like managed-care plans. He says that it is likely that exchange plans will be offered by the major payers such as Blue Cross. "As far as the rates are going to be concerned, I think the best-case situation we could expect would be Medicare rates," he says.

While that could mean lower revenues for practices, there are other aspects of the reform law which may be to their advantage. Dash says that "the point of the ACA is not to just give people an insurance card. It's to give people an insurance card that they can use. By that I mean, if the cost sharing is too high [in the forms of copays and deductibles], certainly that could be a deterrent."  She argues that through the law, patients will have access to tax subsidies and cost-sharing subsidies that should make it easier for patients to pay their bills.

Certainly these changes will bring added administrative burdens to practices, but in many cases, they have already begun to implement new processes and quality improvements required by programs like Patient-Centered Medical Homes. Dahl advises practices "Do not panic." He says that while the business of medicine is most certainly changing, it won't happen overnight. "The important thing is for doctors to think about [the law] and to be prepared for that, but not react," he says.