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Some Exchange Provider Rates Up in Air

California and other states this week opened up enrollment in their health benefit exchanges for the first time. Demand was high — to the point where the main criticism about this week’s kick-off centered on information-capacity issues, as many people had to wait on phone lines for help.

In California, which was first in the nation to create an exchange under the Affordable Care Act, the process has been slightly more advanced than most other states, including Web enrollment capability and the setting of health plan rates within the exchange. In California, some provider rates have been established for the exchange, for the individual market, according to Nicole Evans, vice president for communications at the California Association of Health Plans.  

With three short months until actual coverage benefits begin, however, not all provider rates have been set.

In California, the small business exchange (or SHOP, the Small-Business Health Options Program) has established plans and premium rates, while the provider rates should be worked out by the end of November, according to Evans. 

A briefing held yesterday discussed results of a survey on provider rates, “the only one of its kind in the industry,” according to Brandon Edwards, CEO of ReviveHealth, a health care public relations firm that did the hospital and health system survey.

Most of the health plans participating in exchanges across the country currently still are negotiating rates with providers and health care systems, and those talks can be tense, Edwards said.

“The outcome of these payer negotiations is not something people have a warm and fuzzy feeling about. There has been an escalation in the payer/provider conflict,” Edwards said. “And the narrowing of networks is becoming a pervasive issue.”

Health plans across the country generally have been considering using smaller networks of providers and hospitals in exchange plans, compared with employer-based coverage. That could lower costs to health plans by lowering the rates paid to that smaller number of providers, Edwards said.

Providers and hospitals might be willing to dip below current employer-based rates to serve more patients, he said.  

“But if providers discount too much,” he said, “we could be looking at the largest reverse cost shift in 20 years.”

All of that currently is unknown, though, because plans are still negotiating rates with providers and hospitals across the country and will be, he said, right up to the Jan. 1, 2014, starting date for ACA coverage.

“These are interesting times,” Edwards said. “This is a complicated environment. I do know there is a lot of fear the market, though, because hospitals and providers just don’t have a lot of margin to play with.”

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