1. www.decosimo.com
Cost of the Future Newly Insured
under the Affordable Care Act (ACA)
Ken Conner, CPA, Principal, – Healthcare Practice Leader, Decosimo, CPAs
Bobby Huffaker, American Exchange, LLC
Disclaimer: These materials are designed to provide general information. Although prepared by professionals, these materials should not be
utilized as a substitute for professional legal or accounting advice in specific situations. If legal or accounting advice or other expert assistance
is required, please consult with an attorney or certified public accountant.

2.  Purpose - to review and reflect the nature and impact
of the newly insured patient and the impact of non-
group exchanges on the healthcare market
 Ken Conner, Decosimo, CPAs –
 From the old world of providers and the TennCare
wars
 Looking from the Top down
 Bobby Huffaker and David Yoder – American
Exchange
 Embarking on a new world of individual enrollment
 Looking from the bottom up
Introduction – déjà vu or all new

3.  American Exchange is a marketplace for health
insurance that creates an effective one-stop-shop for
price comparison and enrollment options (online,
telephone) for individuals wanting to participate in
the cost savings and subsidies through the State
and Federal Health Insurance Exchanges.
Introduction – déjà vu or all new

4.  Time is running short before the implementation of
ACA and the exchanges.
 Uninsured and those who may lose their employer
insurance lack the information, motivation and
connectivity to choose to enter exchanges.
 Hospitals and physicians will become the frontline to
patient questions and options, as they seek care
under the new system – after all, wasn’t it suppose
to insure everyone?
Overview

5.  Do you as a hospital want to capture these patients?
 Who are these patients?
 How much will the hospital be paid?
 How will the patient select a plan that includes a
particular hospital? Or physician?
 A patient has already been treated without
insurance. How does the hospital get them to an
exchange for the next episode of care?
 In limited networks, out-of-network management
needs to be proactive.
From the Hospital View

6.  Five reasons that Healthcare Reform will fail
1. Health insurers will keep most of their leverage.
2. Premiums will continue to rise.
3. It will encourage job and R&D outsourcing, as
well as domestic hourly cutbacks.
4. Hospitals and physicians will be overwhelmed
with the influx of millions of newly insured
people.
5. The middle class will pay, pay, and pay some
more.

7.  Five Reasons that Healthcare reform will succeed
1. It will reduce hospitals' exposure to doubtful
accounts.
2. It will bring 16 million previously uninsured
Americans under the Medicaid umbrella.
3. It will cap insurers' profits and require them to
spend 80% of premium costs on health-care
services.
4. It will expand the benefits of the average health
plan.
5. It will promote preventive health-care visits and
should therefore reduce long-term care costs.

8. Who are the Uninsured?
CMS, Audience Segmentation for the Emerging Health Insurance Marketplace

9. 1. Individual Health Agent- Contracted by the Health
Insurance Companies
2. Navigator- Federal Government Employee
1. Navigator is a federally funded employee to help
educate individuals on how the exchanges work.
2. Navigators will not make eligibility determinations
and will not select Qualified Health Plans (QHP) for
consumers or enroll applicants into a QHP.
How do the uninsured find coverage?

10. Key Findings - What is the anticipated enrollment for
the currently uninsured under the ACA?
% Uninsured Pre-ACA % Uninsured Post-ACA
TN 15.0% 5.3%*
US 16.6% 6.8%*
TN 15.0% 8.6%
US 16.6% 9.5%
*Represents an average oftwo models.
Assuming All States
Expand Medicaid
Assuming No States
Expand Medicaid
 The percentage of uninsured individuals in the U.S.
are projected to decrease from 16.6% to 6.8% or 9.5%
without Medicaid expansion, after three years of
exchanges and insurance restrictions.
 This compares to a decline from 15% to 5.3% or 8.6%
without Medicaid expansion in TN.

11. Key Findings -
 Non-group participants will have to rise from
281,000 to 654,000 (or 132 percent).
Size of Non-
Group Pre-ACA
Size of Non-
Group Post-ACA
% of Non- Group
in Exchange
TN 281,421 $532,091 81.7%
US 11,931,125 $25,618,984 80.4%
TN 281,421 $654,610 85.0%
US 11,931,125 $30,149,705 83.4%
Assuming All States
Expand Medicaid
Assuming No States
Expand Medicaid

12. TN $260 $380 46.4%
US $314 $413 31.5%
TN $260 $372 43.4%
US $314 $405 28.9%
Assuming All States
Expand Medicaid
Assuming No States
Expand Medicaid
Average Non-Group
PMPM Pre-ACA
Average Non-Group
PMPM Post-ACA
% Change in Non-Group
PMPM
 The non-group cost per member per month are projected
to increase 31.5% in the U.S. and 46.4% in TN.
 Value in the State of Tennessee – $2.0 billion less the
amount lost from those losing employer coverage.
 High risk pool members.
 Increased morbidity from selection by those currently
uninsured who now purchase group coverage.
Key Findings - what is their relative morbidity, and
what could reasonably be expected for relative costs

13. How the Exchange Works
 The four levels of coverage available are based on
“actuarial value.” Actuarial value is a measure of the
level of protection a health insurance policy offers
and indicates the percentage of health costs that for
an average population, would be covered by the
health plan. The four levels provided in PPACA are:
Bronze Silver Gold Platinum
60% 70% 80% 90%

14. How the Tax Credit Work
 The government will proved a tax credit for
those between 133-399% of the FPL based on
a percentage of income.
 The amount of the credit that a person can
receive is based on the premium for the lowest
cost silver plan in the exchange.
 The amount of the tax credit varies with
income such that the premium a person would
have to pay for the silver plan would not
exceed a percentage of their income.

15. Amount of Premium Limited by Income
Income Level Premium as % of Income
133-150% 3-4% of income
150-200% 4-6.3% of income
200-250% 6.03-8.05% of income
250-300% 8.05-9.5% of income
300-400% 9.5% of income

16. Penalties
 $95 in 2014 (1%), $325 in 2015 (2%) and $695 (2.5%)
of household income in 2016.
 For those who do not pay taxes, the penalty will
come off of the refund.
Forced from Employers Dropping Coverage
 Only way to have access to the subsidy is through
individual Market - Employers will give employees
stipend to enter the exchanges.
Incentives to Enter the Exchange

17. How the Tax Credit Works
 Pat has a family of four and he is 45 years old and has an income
in 2014 that is $35,657 (149% of the federal poverty level).
 The cost of the second lowest cost silver plan in the exchange in
Pat’s area is projected at $10,500.
 Under PPACA, Pat would not be required to pay more than 4% of
income or 1,426.
 amd
Coverage Bronze Silver Gold Platinum
Premium $9,450/787.50 $10,500/875 $11,550/962.5
0
$12,705/1058.
7
Credit
Available
$9,074 $9,074 $9,074 $9,074
Cost of Plan $376/31.33 $1426/118.83 $2,476/206.33 $3,631/302.58
The tax credit available to pat would be 9,074 (premium minus limit Pat
must pay).
The Bronze plan will only cost Pat 31.33 per month for a family of four.
Figures come from KFF

18. So What Does It Look Like to an Individual
Coverage Bronze Silver Gold Platinum
Premium $9,450/787.50 $10,500/875 $11,550/962.5
0
$12,705/1058.
7
Credit
Available
$9,074 $9,074 $9,074 $9,074
Cost of Plan $376/31.33 $1426/118.83 $2,476/206.33 $3,631/302.58

19. Notes
 Urgent Care Copays are 35% or $20 for the platinum plan and D&C for the other medal plans
 Emergency Room Copays are $100 for the platinum plan and D&C for the other medal plans
 Actuarial Value has been calculated using the value calculator put out by HHS
Patient Copays

20. How the Cost Sharing Subsidies Work
 Cost-Sharing subsidies protect lower income people
with health insurance from high out of pocket costs
at the point of service.
 These subsidies are available for families at or below
250% FPL, making them eligible to enroll in health
plans with higher actuarial values.
Income Level Exchange
Coinsurance
Actuarial Value
100-150% FPL 70% 94%
150-200% FPL 70% 87%
200-250% FPL 70% 73%

21.  No single state’s projections were considered a
“typical” scenario. Wisconsin was chosen because
of its familiarity to several member of the oversight
committee.
 The following analysis is based on an example state
(Wisconsin).
Example State

22.  What is the anticipated enrollment for the currently
uninsured under the ACA?
Question 1
Age
Under 19 59.6%
19-24 26.9%
25-34 44.7%
35-44 44.7%
45-54 39.8%
55 & over 30.2%
%Remain
Uninsured

23.  Projected transitions in coverage:
 Many individuals previously covered by small
employers (2-50) will transition into the employer or
individual exchange (31%).
 Many individuals previously enrolled in other non-
group coverage will enroll through the individual
exchange (42%) or Medicaid (10%).
Question 1

24.  Projected transition from uninsured:
 26% will enroll in Medicaid
 19% will enroll in the individual exchange
 14% will enroll in employer coverage through the
exchange or privately
 40% will remain uninsured
 Under the age of 19 (60%)
 Excellent self-reported health status (43%)
Question 1

25.  What is the newly insured’s relative morbidity
compared to the currently insured? What could
reasonably be expected for relative costs?
Question 2
Age
Under 19 80.6%
19-24 97.8%
25-34 61.8%
35-44 76.5%
45-54 254.9%
55 & over 92.1%
%Change in
Average Costs

26.  If you did not have health insurance during the past
two years, what healthcare services would you have
delayed or postponed indefinitely?
 Prescription drugs
 Physician visits
 Outpatient procedures
 Emergency room visit
 Would you have been as quick to have a test such as
an MRI performed or would you wait to see if the
injury got better?
 Would you have the same attitude towards your
children’s healthcare?
Asks yourself

27.  Number of physicians visits per 1,000 individuals
under the age of 65:
 For the uninsured - approximately 1,366.
 For the currently insured - 3,282.
 Hospital stays for the insured are more than double
that of the uninsured.
Part of the difference in utilization rates is due to the fact that the
uninsured are on average younger than insured individuals.
Question 2

28.  Two anticipated effects of extended coverage:
 An increase in access to primary care will result in
savings due to a reduction in preventable emergency
room visits and hospitalizations.
 A general increase in the use of elective services
such as primary care, corrective orthopedic surgery,
advanced diagnostic tests, and other care that the
uninsured either forgo or delay.
Question 2

29.  The research on “pent-up” demand for health care
services as individuals become newly insured has
shown mixed results:
 A study of near-elderly uninsured approaching
Medicare eligibility found:
 Pent-up demand for physician care (30% more physician
visits in first two years of Medicare enrollment).
 But not for hospital inpatient care.
 A study of near-elderly uninsured prior to Medicare
eligibility found:
 Elevated hazard of diagnosis for nearly every chronic
condition and increased utilization after age 65.
Pent-Up Demand for Services

30.  A study of children newly enrolled in Medicaid found:
 No evidence of pent-up demand.
 A study based on the one-year effects of the Oregon
Medicaid lottery found:
 No evidence of a larger initial utilization effect.
 However the longer run impact could differ from one-year
effects.
Pent-Up Demand for Services

31.  How will premium rates in the non-group market be
impacted by the new population mix? How will
health care costs be impacted by the presence of the
high risk pools under the ACA, and how are current
costs impacted by current state high risk pools?
Question 4
Age Avg. Monthly Cost Avg. Monthly Cost
Under 19 $167 $189 13.0%
19-24 $172 $186 8.3%
25-34 $219 $322 47.1%
35-44 $227 $380 67.5%
45-54 $322 $688 113.8%
55 & over $384 $896 133.2%
Non-Group under
ACA Change in Average
Monthly Cost
Non-Group Under
Current Law

33.  Influx of 25 million new patients.
 Cost Sharing Subsidy- now the government is
helping with uninsured out of pocket, the hospitals
should collect exchange copays upfront at the time
of check in.
 BCBSTN will allow its consumers to choose the
network; P, S, and new E network in the exchange.
 Will have more details on the reimbursement rate of
the E network with BCBSTN when the contract is
finalized on 6-1-2013.
Why Providers Participate

34. Who are people talking to about ACA?

35.  Be creative in how you reach the uninsured before
they reach you
 American Exchange has partnered with Liberty Tax
Service to identify individuals eligible for tax credit
 Point of service intervention
 Easy access via a call center
 Outbound responses
 Inbound transfers
Reaching the Individual

36.  Clearwave has a kiosk based self-service
registration solution that:
• Reduces provider costs associated with registration
and eligibility verification
• Reduces patient wait times
• Reduces claims denials
• Increases cash collections
• Improves patient satisfaction
Reaching the Patient

37.  Clearwave presents patients with an “Opt-In” screen.
 If a patient wishes to be contacted about options for
health insurance, they are provided with a HIPAA
Authorization to allow the provider to share patient
contact information with American Exchange.
 We are now putting providers in the driver seat for
outreach to the patients.
 It is in the Provider’s best interest to increase the
percentage of insured patients.
 Provider will also have access to detailed information on
how many current patients will be entering the insurance
exchanges.
Reaching the Patient

38. Create a front door to Insurance Options

39. Questions and Comments

40. H. Kennedy (Ken) Conner, CPA
Principal – Healthcare Practice Leader and Alabama
Practice Development
Direct - 423.267.4084
kenconner@decosimo.com
On LinkedIn:
http://www.linkedin.com/in/kenconner