Hospital systems across New Jersey are signing contracts with insurers participating in the new health insurance marketplace or exchange that launches today. While they’re doing it because they want to attract new patients, their initiative is also expected to benefit uninsured residents by improving access to coverage and care.
An example of this trend is Meridian Health, which operates six hospitals in Monmouth and Ocean counties.
Terry Manna, vice president for managed care for Meridian, said the health system will be a “prominent player” in providing care to patients who buy insurance through the marketplace. Meridian has contracts with Horizon Blue Cross Blue Shield of New Jersey and AmeriHealth, two of the three companies that will offer insurance through the marketplace.
“We did it with a lot of thought,” Manna said in testimony before an Assembly Health and Senior Services Committee yesterday. “We have a mission to provide access to the patients we serve in our service area.”
Manna said AmeriHealth expects its local enrollment through the marketplace in Monmouth and Ocean counties to grow from 2,280 in 2014 to 5,640 in 2016.
In addition, Horizon expects to enroll 4,500 residents in Monmouth County and 3,800 residents in Ocean County in 2014, he said.
Kerry McKean Kelly, spokeswoman for the New Jersey Hospital Association, said hospitals believe they can benefit from adding patients who are newly insured by the marketplace.
“They want to be a part of it,” she said.
The insurance agreements could prove to be favorable for all three parties: the hospitals, the insurers and the newly insured patients.
For example, Meridian’s agreements with both insurers mean that the health system will be a “tier 1 provider” for those patients who purchase insurance through the marketplace. This will result in these patients paying less for care from Meridian than they would have if they had chosen “tier 2” providers whose contracts with insurers may be costly to the insurers.
Manna provided some details of how this will affect patients through co-insurance – the costs that patients must pay after they have reached their annual deductible. Those who purchase a “gold” plan from Horizon will pay for 20 percent of the cost of their care from Meridian and other tier 1 providers, while the health plan will cover 80 percent of cost. However, patients who choose to go to tier 2 providers will have to pay for 40 percent of the cost of their care, Manna said.
“There’s a real financial incentive for patients” to use the tier 1 providers, he said.
McKean Kelly, the hospital association spokesperson, said these tiered agreements have become increasingly attractive to hospitals.
“Some hospitals most certainly are testing this concept with the payers and are having some good conversations with them to see if they can negotiate being a tier 1 provider,” she said.
McKean Kelly said these agreements could prove beneficial to all participants. Insurance companies are able to negotiate payment rates lower than their agreements with tier 2 providers, while hospitals can have more patients due to the incentive for patients to go to a less-expensive provider.
The marketplace is designed to be a one-stop shop to enable people without employer-sponsored health plans to buy insurance and learn whether they are eligible for insurance subsidies. They are able to enroll for insurance through a website, by phone, in person or by mail.
A key feature of the 2010 Affordable Care Act requires most Americans to have insurance or pay a penalty. The open enrollment period that starts today will last until March 31. Coverage purchased before December 15 will start on January 1, 2014.
Manna noted that Monmouth and Ocean counties have 10 percent of the state’s uninsured population.
Meridian operates Jersey Shore University Medical Center and K. Hovnanian Children’s Hospital in Neptune; Ocean Medical Center; Riverview Medical Center in Brick; Riverview Medical Center in Red Bank; Southern Ocean Medical Center in Manahawkin; and Bayshore Community Hospital in Holmdel.
Horizon and AmeriHealth are two of the three companies offering insurance on the marketplace. Meridian has also been in talks with the third insurer, Health Republic of New Jersey, which is one of 24 Consumer Operated and Oriented Plans established in different states under the ACA.
Manna said at least one other company might join the marketplace after its first year, potentially increasing competition. Healthcare advocates have cited the competition between insurers as having the potential for driving down the premiums that will be available through the marketplace.
He predicted that Aetna – which recently dropped its plans for offering insurance through the marketplace in 2014 in New Jersey – would choose to enter the market in 2015. He said the company may not have had the time to manage a plan on the marketplace because of the work involved with acquiring Maryland-based managed care company Coventry Health Care Inc. Aetna currently sells a small number of individual health plans in the state.
“My own personal belief is that Aetna is committing a lot of resources to its recent Coventry acquisition and (considering) the fact that they only serve 1.7 percent of the state’s individual market, I do believe they will want to sit back and wait and see, and probably get back into the game in 2015,” Manna said.
Along with the marketplace expansion, Manna added that local providers like Meridian will also serve a growing population that will be covered under the state’s Medicaid eligibility expansion. Meridian officials estimate that 10,000 new Medicaid enrollees will file an average of 2.3 health claims – such as visits to the hospital — annually.
“We have an infrastructure throughout the health system to be able to – whether it’s an inpatient setting or an outpatient setting – educate our uninsured of the options that they have under Medicaid and to steer them through the enrollment process,” Manna said.