State Insurance Exchanges: Hospital IT's Next Challenge
As state insurance exchanges take hold, hospital IT departments must figure out how to keep up with patients' insurance eligibility, health status and benefits in fluid environment.
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The launch of the state insurance exchanges on Oct. 1 is not top of mind for hospital CIOs, who are dealing with everything from Meaningful Use and ICD-10 to ACOs and value-based reimbursement. Nevertheless, the exchanges and the accompanying Medicaid expansion in some states will affect the IT departments of hospitals and health systems in a number of ways, say consultants and an official of the American Hospital Association (AHA).
First, the prospective coverage of millions of uninsured Americans will require changes to the revenue cycle management (RCM) systems that hospitals use for billing and collections. Hospitals already check eligibility electronically, but the advent of the exchanges will substantially increase the number of plans for which they must do this, noted Doug Hires, executive vice president of Santa Rosa Consulting.
A large portion of the newly insured will be comprised of the working poor, who earn too much to qualify for Medicaid but don't have employer-provided insurance. In states that plan to expand Medicaid to individuals earning up to 133% of the federal poverty level, that will be the dividing line between those who are eligible for Medicaid and those who can get government subsidies to buy insurance on the exchanges. In other states, there will be a gap between the two programs in which most people will remain uninsured. In either case, some people will flow back and forth between the two insurance pools as their incomes fluctuate.
Whether a patient is covered by Medicaid or by an exchange plan can be crucial to hospitals. Medicaid pays most healthcare costs, but many people in the exchanges -- particularly those who choose low-cost plans -- will have high deductibles and copayments, said Zac Stillerman, executive director, revenue cycle solutions, at the Advisory Board Co. "If they're in an exchange plan, there's a good chance they'll have a hefty deductible, so the hospital may have to seek payment from them for the first $5000 - $6000 worth of care," he pointed out.
One tactic that many hospitals are seriously considering, Stillerman added, is asking everyone within a certain income range to fill out a Medicaid application. That way, if they are or become eligible for Medicaid, the hospital can reduce its exposure.
However, the central problem is finding out who has what coverage. "Many hospitals are wondering, 'Do I have the right eligibility system to seek that information out? Are the systems I have now strong and sophisticated enough, given how things are changing?'" Stillerman believes many hospitals will upgrade their systems.
Thad Glavin, senior director of the Advisory Board's RCM division, added that the insurance companies aren't necessarily providing the timely information that hospitals will need. "Right now the eligibility information from health plans is 30 - 90 days out of date. So if patients miss two premium payments and are no longer covered -- but the data says they are covered, and the hospital proceeds accordingly -- the bill never gets paid. That's where we see the pressure being placed. It's unlike traditional employer-sponsored insurance, where the likelihood of someone losing their insurance during the year is fairly minimal."
Ellen Pryga, director of policy for AHA, countered that the administrative simplification provisions of the Affordable Care Act should correct this situation in the long run. Since Jan. 1, 2013, she noted, health plans have been required to provide timely responses to electronic queries about eligibility and claims status. However, she acknowledged that it may still take some time for plans to update their enrollment lists. And state Medicaid agencies, which are subject to the same legal requirement, are "all over the map" in upgrading their systems, she added.
Meanwhile, the Centers for Medicare and Medicaid Services (CMS) has begun requiring the Medicaid agencies to accept standardized applications. This should make it easier to determine eligibility and streamline the movement of former exchange plan enrollees to Medicaid, and vice versa. It should also make things easier for providers, according to Pryga.
Healthcare organizations will also have to deal with the makeup of the individual exchange plans, the consultants noted. That's important because they don't want to have to care for too many high-cost patients at low reimbursement rates or with high deductibles. While they're going into this "blind" right now, Stillerman pointed out, they'll eventually have enough data on these patients to apply analytics to that information. "Going forward, they'll be able to use risk stratification tools to categorize patients so they can figure out whether they're losing their shirt with a given plan," he said.
These kinds of analytics are also important in risk contracting. But at least initially, the exchange plans will pay conventional fee for service, the observers said. A greater concern to hospitals is the fact that some of them will have narrow or tiered networks -- an increasing trend among health plans, Pryga said. To ensure that their hospitals are included in these networks or in their preferred tiers, IT departments will need to be able to supply data to prove their value.
Finally, many hospitals are participating in the Obama Administration's outreach campaign to encourage the uninsured -- and especially young, healthy people -- to enroll in the exchange plans. According to Pryga, these hospitals are reaching out to everyone, regardless of age or health condition, but those with chronic illnesses are likely to be first in line to enroll.
Are hospitals using their patient portals to enlist people in the exchange plans? "They're using every tool they have," Pryga replied.
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