5 Steps Hospitals Should Take to Prepare for Health Insurance Exchanges

Friday, December 14th, 2012
This post was written by Patricia Donovan

Today is the last day for states to commit to running their own health insurance exchanges (HIEs) or collaborating with the federal government. According to this up-to-date interactive map from the Kaiser Family Foundation, only 18 states and Washington, D.C. have signed on to run their own exchanges. The federal government will run 24 exchanges outright, while state-federal collaborations are expected in six states. Utah and Florida are undecided.

Regardless of the agency helming the HIE, hospitals need to be ready for this post-reform eventuality. Steven Valentine, president of The Camden Group, offered five tips for hospitals anticipating the HIE environment for 2013 during a recent webinar on Healthcare Trends & Forecasts for 2013:

As various health plans have confirmed that they will in fact submit bids and participate in the health insurance exchanges, unbelievably, they’re looking at reductions in payment of 20 to 40 percent in order to be price competitive with the Kaiser Health plans and other health plans that have major critical mass. It is very clear to many health systems and medical groups that they will have to strive to continue to reduce their cost.

We tell people you should look at Medicare reimbursement and make that a target — to be at that level within approximately three years. Top priority is reducing cost, and second is to improve quality and satisfaction scores. Remember, many of the new incentive programs being established for accountable care clinical integration organizations take the cost reduction, which is great. Most feel they can do something, but remember, there’s a quality factor that’s added. If you don’t score well on quality, you do not get to realize the incentive of the entire savings that you have been able to put in place.

We also see organizations trying to brand their name, which includes their physicians, access points and hospitals, so that there’s a preference to pick a plan that would have them in these plans. Because at least we’re seeming to hear from the health plans that they intend to come in with more narrow networks in order to get the bigger discounts. We are going to see more winners and losers in terms of providers.

We also are advising clients to expand their delivery network, especially in the area of primary care and access points. We’re suggesting strongly also that hospitals and health systems look across the continuum to try to put in some kind of delivery model — clinical integration, even bundled payment or the patient-centered medical home — but doing something to get their arms around access and use of the delivery system in order to reduce cost.

To summarize quickly: cost reduction, improving quality and satisfaction scores, branding your organization, assembling a delivery network that’s primary care-, urgent care- and clinic-driven, and then working with the doctors based at the hospital to truly begin to drive down resource consumption.

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