Medicaid churn is not a new challenge for healthcare finance leaders. However, shifts in patient eligibility for Medicaid and other subsidized coverage is expected to increase substantially after three core elements of the Affordable Care Act-insurance exchanges, expanded Medicaid coverage, and insurance subsidies-go into effect in 2014.
Medicaid will expand to cover any nonelderly person whose family income does not exceed 133 percent of the federal poverty level. In addition, many more low-income people who do not qualify for Medicaid-and have incomes up to 400 percent of the federal poverty level-will be able to obtain subsidies to help them pay for insurance through the state exchanges.
Millions of people who are near the income cutoffs risk losing or gaining Medicaid eligibility if their income levels change. According to a recent study, up to 28 million could churn between Medicaid and the exchanges within a year. The authors estimate that more than 50 percent of all adults with family incomes below 200 percent of the federal poverty level will experience a shift in eligibility from Medicaid to an insurance exchange within a year (Sommers, B.D., and Rosenbaum, S., "Issues in Health Reform: How Changes in Eligibility May Move Millions Back and Forth Between Medicaid and Insurance Exchanges," Health Affairs, February 2011, pp. 228-236).
For hospitals and other providers, this dramatic increase in churning could create many revenue cycle logjams. What can healthcare finance leaders do to minimize the impact?
Assess Your State's Churn Potential
The level of churn is going to be different from state to state, says Jon Kingsdale, PhD, who helped set up the health insurance exchange for the state of Massachusetts when he served as the executive director of the Commonwealth Health Insurance Connector Authority. States that do not have much of their Medicaid population in Medicaid managed care organizations (MCOs) may experience higher levels of churn than states with highly populated Medicaid MCOs.
"Patients in regular Medicaid programs who move up the income eligibility ladder from Medicaid will have to switch to qualified health plans on the exchange," says Kingsdale, managing director, Wakely Consulting Group, Boston. "For example, a patient might have to switch from coverage under the state's Medicaid system to a qualified commercial plan on the exchange, such as Aetna. However, commercial health plans that run Medicaid MCOs may be able to simply convert Medicaid patients who lose eligibility to the commercial version of the same plan."
To help with continuity of coverage, Kingsdale predicts that some state exchanges may favor health plans that are also Medicaid MCOs. "One way for states to deal with churn is to have as much overlap as possible between Medicaid MCOs and commercial insurance companies."
Establish the Right Payer Relationships
Kingsdale recommends considering the following question: "Is the exchange in my state going to favor commercial plans with Medicaid MCOs to make it as easy as possible for people to stay in their health plans when they move from Medicaid to commercial insurance?"
If signs point to "yes," finance leaders need to do some digging to determine which health plans currently (or plan to) service both Medicaid and the exchange. "You may want to partner with these plans so your hospital can be in these health plan networks when the exchanges launch," Kingsdale says.
For more information, see "Jon Kingsdale: Benefits and Challenges of Health Insurance Exchanges," hfm, April 2012
Publication Date: Monday, April 02, 2012