REFORM:

Hospitals encourage designs reducing negative effects

Hospitals seek exchange designs that lessen unintended consequences

As a growing number of states mold health insurance exchanges under the federal healthcare law, hospitals and other providers are pushing designs that would minimize unintended consequences.

The Patient Protection and Affordable Care Act requires states to create exchanges or have a federal model established for them, and the law outlines many components and minimum standards.

Nationally, public hospitals have focused on ensuring that the exchanges require their plans to include many types of healthcare providers within their networks, including essential community providers.

Exchange plan networks should include “especially high-volume Medicaid providers, or the folks that are already treating the vulnerable population so that there is continuity of care,” said Xiaoyi Huang, assistant vice president for policy at the National Association of Public Hospitals and Health Systems.

In Washington state, hospitals strongly support the creation of an exchange but are concerned that the Legislature may add an optional program for low-income enrollees to a bill that would establish the state’s market- place. The basic health option would use federal insurance premium subsidies to create a publicly funded health insurance plan for enrollees whose incomes range from 133% to 200% of the federal poverty level, or an estimated 60,000 to 100,000 people. Providers are concerned that states may control costs in this new insurance plan by dropping provider reimbursements to less than even state Medicaid plans must provide.

“It does not offer protections for providers at rates that would be above Medicaid,” said Chelene Whiteaker, policy director for the Washington State Hospital Association. “Medicaid levels are unsustainable; they don’t cover the cost of providing care.”

Nonetheless, Washington providers are urging quick creation of an exchange to avoid even temporary use of a federally created version, as are providers in many of the 22 states where legislatures are working to enact exchange exchanges, according to the National Conference of State Legislatures.

Providers in New Jersey have closely tracked legislation to create the state’s exchange and urged specific designs, including a middle-ground approach to determining insurance plan eligibility between the approaches used in Massachusetts and Utah, states that established insurance exchanges before the passage of the Affordable Care Act. The Massachusetts insurance marketplace has used a narrow definition of qualifying plans that has limited the number in its exchange, while Utah’s allows nearly any type of plan.

“We want this thing to be independent of state government so that it is outside of the political and fiscal pressures of the state budget but still publically accountable so that stakeholders will be involved in the decision-making and if there has to be some sort of legislative oversight, that that still exists,” said Neil Eicher, deputy director for legislation and policy at the New Jersey Hospital Association. New Jersey’s Legislature is expected to vote on final passage of the exchange as early as mid-march.

Maryland is one of 10 states that have moved aggressively to pass legislation to establish and refine a state-run exchange. Hospitals have supported creation of the exchange, but at least one unresolved detail is causing worry. The federal grants that fund the administration of the state-run exchange end in 2014, and Maryland has not yet decided how to cover those ongoing operational costs.

“One of the concerns is that in the early dis-

cussions there was some consideration given to doing an assessment on providers as one of the ways to develop ongoing funding for the exchange,” said Michael Robbins, senior vice president of financial policy at the Maryland Hospital Association.

For now, new provider fees appear unlikely because providers have already reached the maximum fees the state is allowed to assess under a unique statewide provider assessment system established in the 1970s, Robbins said.

Providers also have been involved in exchange planning efforts in states that have neither enacted laws creating an exchange nor appear likely to do so because they believe exchanges are inevitable, despite strong political opposition.

For example, North Carolina hospitals have participated in an exchange design task force organized by the North Carolina Institute of Medicine, which is hashing through exchange options. Hospitals there have urged the inclusion of exchange components to ensure the adequacy of provider networks and fair contracting between providers and plans.

That private effort is ongoing, despite strong Republican opposition in the state that stymied legislation in 2011 to establish an exchange as a not-for-profit organization.

“We believe that a state exchange will be more responsive as change is needed and as the system develops here than a federal exchange could be,” said Don Dalton, a spokesman for the North Carolina Hospital Association. “We’re at the table to see that this happens here and to keep in place the good things that we have in place.”

In Texas, where the political hostility is similar, providers have focused their efforts on urging state leaders to overcome their objections to the controversial federal healthcare law enough to establish an exchange, because the alternative is that HHS will establish an exchange in the state.

“We want our state to step up and opt to create that given that we know our market better than Washington,” said John Hawkins, senior vice president of federal relations for the Texas Hospital Association.