The increased uninsured population and changes in coverage for others requires healthcare finance departments to revise their practices
- A Kaiser Family Foundation analysis finds that [as of May 2] nearly 27 million people could potentially lose employer sponsored insurance (ESI) and become uninsured following job loss.
- In total, 79% of those losing ESI and becoming uninsured are eligible for publicly subsidized coverage in May, according to KFF.
- With more people losing healthcare insurance due to job loss amid the COVID-19 pandemic, it is important for healthcare providers to review and implement HFMA’s Patient Friendly Communications Strategies.
A Kaiser Family Foundation analysis finds that “[as of May 2] nearly 27 million people could potentially lose ESI and become uninsured following job loss. This total includes people who lost their own ESI and those who lost dependent coverage when a family member lost a job and ESI. Among people who become uninsured after job loss, [KFF] estimates that nearly half (12.7 million) are eligible for Medicaid, and an additional 8.4 million are eligible for marketplace subsidies, as of May 2020. In total, 79% of those losing ESI and becoming uninsured are eligible for publicly-subsidized coverage in May. By January 2021, when unemployment benefits cease for most people, [KFF] estimates that eligibility shifts to nearly 17 million being eligible for Medicaid and about 6 million being eligible for marketplace subsidies, assuming those who are recently unemployed have not found work.”
As a result in the anticipated growth in exchange enrollment, we’re seeing more plans enter the various state exchanges for plan year 2021.
There are three takeaways.
1. Financial counseling and community outreach. The need for increased financial counseling and community outreach can’t be overstated. The KFF analysis rightly points out, “It is unclear whether people losing ESI and becoming uninsured will enroll in new coverage. The estimates are not of take-up or enrollment in coverage options but rather look at eligibility for coverage. Even before the coronavirus crisis, there were millions of people eligible for Medicaid or marketplace subsidies who were uninsured. Eligible people may not know about coverage options and may not seek coverage; others may apply for coverage but face challenges in navigating the application and enrollment process.”
2. Patient education and communication. We know exchange enrollees tend to pick plans in lower-cost metal tiers. Depending on your income level, if you enroll in a bronze or silver product, you’re more likely to have a low- or no-cost plan due to the amount of subsidy received.
What makes a plan lower cost? Higher out-of-pocket cost sharing and narrower networks. So as a result, in 2020, 90% of exchange enrollees selected either a bronze (33%) or silver (57%) product due to their relatively low premiums. As a result, 41% of silver plan networks can be characterized as “small” or “extra small.” However, many consumers will not be aware of the size of the network when they purchase the product.
Also, those with incomes below 250% of the federal poverty level (FPL) can qualify for cost- sharing reductions if they enroll in silver plans. The cost sharing reduction doesn’t eliminate out-of-pocket costs completely, it only increases the actuarial value of the plan as an enrollee’s income decreases in a tiered fashion. For example, individuals who purchase a silver plan between 100% – 200% of the FPL will have a plan with an actuarial value of 94% while those between 200% – 250% will have an actuarial value of 73%.
Forty-eight percent of exchange enrollees received some level of cost-sharing reduction. Higher actuarial values equate to lower out-of-pocket maximums and cost sharing at the point of service. That said, average deductibles in 2020 for exchange products ranged from approximately $1,100 in Mississippi to $4,600 in Ohio, which means that even families who are enrolled in plans with cost-sharing reductions are likely to still face significant out-of-pocket costs relative to their income level.
3. No one likes surprises. And now, more than ever, it’s crucial that hospitals provide patients an out-of-pocket estimate of their cost sharing for services in advance for non-emergent procedures and services. Typically, when patients know their responsibility in advance and are proactively educated about their options, account resolution occurs more quickly and results in a better patient financial experience of care. This is why adopting HFMA’s Patient Friendly Communications Strategies is more important than ever.
Finally, because of the prevalence of narrow networks in the exchanges, it is important to give patients the tools they need to ask questions that will help them to avoid receiving an unexpected medical bill. HFMA’s Consumer Guide for Avoiding Surprise Bills does just that. As a side note, legislation related to surprise bills is still under debate in Washington and could be included in the next COVID-19 relief bill.
Will we see more APMs in the exchange?
Increased alternative payment models (APMs) in the exchange? We see greater adoption of APMs in Medicare Advantage plans. Over half of MA payments to providers flow through an APM (24% through two-sided models). Why? From the plans prospective, unlike in employer-sponsored market, the plan holds the risk, so their profitability is tied to the medical loss ratio. From the provider’s perspective, again, unlike the employer-sponsored market, MA plans are more willing to use benefit design and narrow networks to reward high-quality, low-cost providers with more volume. If we’re going to see more lives in exchange products where the plans hold the risk and use narrow networks, will we see greater adoption of APMs?
This is something to watch, but my knee-jerk reaction is probably not. Churn in MA is typically incredibly low, with 78% of beneficiaries remaining in the same plan year-to-year, based on KFF analysis. And of those who switched plans, only 13% did so voluntarily to either another MA plan or Medicare FFS. That’s not the case in the exchanges as enrollment has been notoriously unstable.
In 2020, 25% of exchange enrollees were new consumers. Another 46% of enrollees had an exchange plan the prior year but actively shopped when they re-enrolled. While that’s good for a competitive marketplace, it becomes much harder for plans and providers to collaborate in a risk bearing APM. The investments you make in year one to address an enrollee’s underlying health issues may take several years to pay off. And odds are, by then the enrollee will have another form of coverage.