Narrow networks

5 Key Predictions for 2014

Each year at The Godbey Group we make predictions for the coming year to help our clients and friends anticipate future opportunities and challenges. For 2014 our crystal ball says that both challenges and opportunities for providers will come from the rolling implementation of the Affordable Care Act. We predict: 1. Patient eligibility will become a major challenge. Providers face a two-pronged challenge of determining patient eligibility in 2014. In states where the expansion of Medicaid was embraced, providers will still be challenged to determine the accurate eligibility of newly enrolled Medicaid recipients. All providers will be challenged to determine the accurate enrollment of patients in the new insurance marketplace products. The accuracy of enrollments rolls provided by the insurance marketplaces to insurance companies has been a disaster so far. This risk then passes to providers, especially physicians, who will be challenged to provide services mandated by the law without adequate proof of coverage. 2. Narrow physician networks will become a major challenge. Insurance plans chose to limit their financial risk by implementing narrow networks for the new online insurance marketplace products. The consequences and challenges will become apparent in 2014. Narrow physician panels will become an apparent dissatisfier to newly enrolled patients, especially those looking for their current physician. As patient enrollment in the new plans grow it’s predictable that patients will find it difficult to gain access to their selected physician. Ultimately hospitals participating in these narrow networks will find their hopes for increased volume choked off by narrow physician networks. Access to care under the Affordable Care Act will become a growing issue for the media and the public in 2014 and beyond. 3. The 2015 launch date for Accountable Care Organizations will be a challenge and an opportunity. Hospital administrators say it’s a coin toss as to whether they will participate in ACO’s in 2015. Without a track record or clear path, hospitals are indecisive about the move towards the ACA. On one hand the Center for Medicare & Medicaid Services has already announced reductions in payments to hospitals for 2014 and beyond. And on the other hand the Affordable Care Act holds out the promise of shared savings for successful management of Medicare quality and costs under ACO agreements. So it’s a coin toss, with 48% of CEOs saying they will not participate and 52% saying they will participate in ACO’s. 4. Reimbursement will fall below Medicare levels. Health care utilization in the first 3–4 quarters of 2014 will see an unprecedented spike as new cardholders are projected to utilize healthcare resources at a rate of 120% of current insured. Utilization/volume will drive cost up, necessitating a overall price reduction in an attempt to balance the equation. 5. 30% of the fully insured will lose their insurance by the fourth quarter of 2014. With the increase in costly benefits and the elimination of underwriting ability, insurance companies are hedging their bets and escalating insurance premiums to small employers skyhigh and unaffordable. As a result expect 30-50 million people to lose their insurance coverage. We hope these observations help you think about your prospects in the coming year. To all our colleagues and friends we wish a prosperous and healthy new year. Tweet Share Neil Godbey is President of The Godbey Group, Irving, Texas. Since 1999 The Godbey Group has been helping leading hospitals and healthcare systems negotiate favorable managed care and value-based...

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3 unexpected stories in 2013

For more than a dozen years The Godbey Group has been proud to help hospitals and healthcare systems contract for the revenue they need to care for patients and improve the health of the communities they serve. During 2013 we observed three unexpected stories in the field of healthcare. Fewer inpatient admissions The trend towards fewer hospital inpatient admissions that began with Medicare patients seems to have jumped over into commercially insured populations as well during 2013. Combined with marginally lower Medicare rates, the emphasis on the elimination of unnecessary readmissions has reduced hospital revenue. As a result hospital efforts to cut operating costs are chasing a steadily diminishing line of revenue from Medicare and commercial sources. Given that CMS plans eight more years of Medicare rate reductions this trend may not end anytime soon. Return of narrow networks Health plans reintroduced narrow networks to cope with the tidal wave of utilization that might be unleashed by the new health insurance marketplaces. But politicians and providers alike did not expect narrow networks and were caught off guard by the implications. In some markets health plans walked past leading hospitals and even physicians to contract networks. Physicians in particular were startled to be left out of networks. Commercial plans in some states have taken the opportunity to reintroduce narrow networks to their commercially insured clientele, as well. Troubled rollout of insurance marketplaces on-line With all the time and money available to CMS it’s startling how the federal government frittered away its opportunity to introduce the new health insurance marketplaces online this year. All the more so because such diverse states as Kentucky and California among others have been so successful in launching their own state-controlled insurance marketplaces. Even the tardy and costly repair work to the sloppy federal sites raises legitimate concerns about the viability of the on-line approach to matching consumers with health plans. These and other fundamental concerns about the purpose and tactics of healthcare reform began to bubble to the top of media and public awareness in the closing days of 2013. In our next post we will focus on The Godbey Group predictions for 2014. Happy Holidays to all. Tweet Share Neil Godbey is President of The Godbey Group, Irving, Texas. Since 1999 The Godbey Group has been helping leading hospitals and healthcare systems negotiate favorable managed care and value-based...

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Narrow networks, good and bad

Over the past six months or so it has become increasingly obvious that private health plans are using the advent of Obamacare to limit their offerings to narrow networks. These networks are cheaper for the health plan and can be sold at competitive rates to employers, making them quite profitable to the plans. Increasingly this narrow network strategy is the preferred method of launching a product on the new Obamacare health insurance marketplaces. Tellingly, narrow networks systematically eliminate the high profile, high brand aware institutions that have historically demanded the highest rates from health plans. We’ve seen examples over and over again where health plans have offered to sign such institutions but for deep discounts. The leading institutions reject anything other than a token discount. This is a predictable theatrical exchange on both parties parts. Neither one really wants to enter into a relationship of this type. As a result the employer can offer insured employees a cheaper alternative based on the limited network of options of both physicians and hospitals to choose from. As health-care costs continue to grow, or at least are perceived to, employees welcome lower-cost alternatives even if it means less choice. The challenge of using a narrow network is obvious. Consumers have fewer physicians spread over unfamiliar geography and second-tier hospitals when they really need them. Narrow networks being sold in the new online marketplaces face even greater capacity pressure as actuaries project utilization rates among the newly insured will be 116% of those previously insured. Finding a doctor close to home or close to work in such narrow networks will become a major challenge in 2014. Would the narrow network strategy by health plans have happened anyway without the advent of Obamacare? Perhaps, but health care reform has given health plans a real jolt. They faced extinction and then severe limitations that were ultimately written into The Patient Protection and Affordable Care Act. It seems the narrow network is really a reaction to some of those limitations on their ability to pursue the traditional business model of health plans. But these are big, smart, resourceful organizations who have found a new way to survive in the new world of healthcare reform. Narrow networks are simply one of those tools to their survival. Tweet Author Neil Godbey is President of The Godbey Group, Irving, Texas. Since 1999 The Godbey Group had been helping leading hospitals and healthcare systems negotiate favorable managed care and value-based contracts that help sustain those organizations’ mission of improving the healthcare of the communities they...

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