Harvest Time for the Bill Collectors? The ACA’s Narrow Hospital Networks May Spur Demand for Revenue Cycle Management (RCM) Services


We compared hospital networks for plans sold on the health insurance exchanges (HIEs) to networks for plans sold (by the same issuer) off of the HIEs

For the non-profit issuers and HUM the ‘on-HIE’ and ‘off-HIE’ networks appear the same; for AET, CI, and WLP, the ‘on-HIE’ hospital networks are significantly narrower

Hospitals in the narrow ‘on-HIE’ networks have less revenue per patient day, lower receivables turnover, and lower net margins than hospitals offered outside of (but not on) the HIEs. These differences cannot be attributed to payor mix (‘on’ and ‘off-HIE’ hospitals are the same on this measure) or to average acuity of patients (‘on’ and ‘off-HIE’ hospitals also are the same on this measure). The most likely explanation is that ‘on-HIE’ hospitals are less adept than ‘off-HIE’ hospitals at revenue cycle management (RCM)

As we’ve shown elsewhere, the Affordable Care Act (ACA) has shifted the market for individually purchased health insurance to significantly higher deductibles, co-payments, and rates of co-insurance. Many 2014 HIE enrollees will have been 2013 individually-purchased beneficiaries; thus beginning in 2014 ‘on-HIE’ hospitals are going to have to collect a far larger percentage of these patients’ invoices directly from the patient, rather than from these patients’ insurers. Rates of collection inevitably will fall

‘On-HIE’ hospitals appear behind the game in RCM; and, to have little choice but to bring their RCM capabilities up to par. Rising demand for hospital-oriented RCM services is a likely outcome

Hospital-oriented RCM providers are a broad and diverse group, within which AH and STRM appear to offer the most direct exposure, followed by CPSI and QSII

Separately, the narrow nature of some issuers’ ‘on-HIE’ hospital networks is further evidence that potential HIE beneficiaries will not view the exchanges’ health coverage offerings as good value for money, with low enrollment and adverse selection the likely result

For our full research notes, please visit our published research site

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