ARM Professionals Discuss Senate Plan to Expand Medicare

It is widely believed among health care analysts and policy experts that Senate Democrats’ newest proposal to expand Medicare coverage to some people aged 55 to 64 years old will have a negative effect on hospital profits.

Not only does Medicare pay less than commercial insurance, but the group eligible for coverage under the program tends to be users of more expensive and intense services, said Standard & Poor’s For-Profit Health Care analyst Jeffrey Englander.

“Pricing is going to be lower than what people expected,” Englander said. “It’s positive in that people who would otherwise be uninsured will get coverage, but rates are not going to be as high as some expected…Commercial rates would have been better.”

Meanwhile, the American Hospitals Association denounced the plan, citing concerns about Medicare’s fiscal future and the possibility that expanding Medicare eligibility will encourage people 55-64 to choose Medicare over a higher reimbursement plan offered through a new low-cost insurance exchange.

Some industry experts, however, say that the compromise reached Tuesday by a small group of moderate and liberal democrats to move health care reform forward isn’t all bad for hospitals and the accounts receivable management professionals who serve them.  The expanded Medicare eligibility would only apply to an estimated 2 million to 3 million people who don’t have coverage through an employer or have difficulty obtaining coverage elsewhere.

“If it’s not a broad buy in option for everyone,” said Fitch Ratings Health Facilities Analyst Lauren Coste. “That would mitigate the impact on hospitals.”  

Likewise uncompensated care expense, which is running at about 20 percent on average at for-profit hospitals, would decline if most of the remaining uninsured Americans get coverage through a low-cost health insurance exchange modeled after the federal employees’ plan. Although the plans in the exchange are likely to pay hospitals less than employer-sponsored plans because the rates will be negotiated by the Office of Personnel Management, the plans are expected to pay higher rates than Medicare, Englander said.

Lawmakers are far from agreeing on a final health care reform bill and the Congressional Budget Office has yet to score the Senate’s recent proposals. But healthcare collections expert Chris Wunder, president of medical ARM firm Receivables Outsourcing, Inc., (ROI) in Timonium, Md., said he believes hospital reimbursements will be negatively impacted no matter what happens because government insurance plan reimbursements force health care providers to shift costs to private insurers. He said the problem will only grow as more Baby Boomers become eligible for Medicare.