Report: Exchanges could hurt nonprofit hospitals

Health insurance exchanges could negatively affect nonprofit hospitals next year, Moody's Investors Services said in a new report.

Commercially insured patients will likely start obtaining health coverage through exchange plans, which could have lower provider reimbursement rates. Other risks facing nonprofit hospitals include uncertain contracts between exchange plans and hospitals and a growth in bad debt, Moody's said Friday in a statement.

"The exchange-related risks center on two primary issues that will largely negate the benefits of a declining uninsured population in 2014. These issues are the level and composition of enrollment, and how insurance exchanges exacerbate revenue pressures on hospitals," Lisa Goldstein, Moody's associate managing director, wrote in the report.

If exchange plans reimburse hospitals at reduced rates compared to commercial plans, it could lower hospitals' revenue growth in 2014.

"Providers are reporting that negotiations with exchange plans range from Medicaid rates, usually the lowest rate-per-service a hospital receives and does not cover costs, to a discount off of commercial rates, typically the highest rate a hospital receives," Goldstein said. "Commercial rates subsidize losses incurred with Medicaid and Medicare and drive profitability for most hospitals."

Moody's also predicts bad debt could rise if consumers purchase exchange plans with high co-pays and deductibles that they can't actually pay. What's more, many insurers selling plans on exchanges are smaller and less experienced, potentially leading to delays in reimbursements and processed claims to hospitals.

To learn more:
- here's the Moody's statement and report (login required)

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