ACA Exchanges Debut Oct. 1 Amid Uncertainty

September 24, 2013

In This Article

Low Physician Pay Accompanies Low Premiums

With Americans able to compare price tags for standardized health plans, private insurers participating in the exchanges feel pressure to offer low, competitive rates. Some would call this good for consumers, but is it good for physicians? To keep exchange plan premiums affordable, insurers have had to trim their customary payments to providers.

"The contracts coming out of Colorado are very aggressive on rates," said Todd Welter, a practice-management consultant in Arvada, Colorado, in an interview with Medscape Medical News. "They're on the low side — slightly above Medicare."

Healthcare consultant Susanne Madden, president of the Verden Group in Nyack, New York, said insurers are paying network physicians 10% to 15% less than what they normally pay under an HMO or PPO contract. "Many physicians are saying, 'I might as well be in Medicaid,' " said Madden.

It's not clear whether physicians will make a profit on exchange patients, she said. "It's the experiment we're going to see."

One way that insurers convince physicians and hospitals to accept lean reimbursement rates is to promise them a high volume of patients. Insurers try to make good on this promise by restricting the size of their provider networks — in other words, fewer competitors. Insurers participating in the exchanges are doing just that with so-called narrow networks that are a hallmark of traditional HMOs.

This business rationale ought to heighten physician interest in how many Americans eventually enroll in exchange plans. Participating in a narrow network will look less appealing if the flow of newly insured patients amounts to a trickle, said Todd Welter.

"The physician response should be, 'If you're not sending me the volume, you shouldn't be entitled to aggressive rates,' " Welter said.

For that reason, physicians who agree to be a network provider for an exchange plan need to sign short-term contracts so that they're not stuck with a bad deal, he said. Most managed-care contracts automatically renew from year to year unless the physician decides to renegotiate or simply bail out. In the case of exchange plans, Welter recommends signing a contract with a definite sunset date.

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