An unstable political climate and evolving regulations have left many healthcare leaders uncertain of their future.
Moody's Healthcare Quarterly outlined the top risks facing hospitals and insurers:
Hospitals
- Inpatient base rates will increase but will be offset by quality factors and proposed outpatient changes. CMS Medicare inpatient payments rates for 2019 will increase by 3 percent, but hospital payments will also be affected by quality measures. These will include penalties of up to 3 percent off diagnosis-related group rates in the case of excess readmissions.
- Medicaid is in flux as states seek to change their programs. CMS encourages states to take control of their own Medicaid programs, and some states are looking to expand their coverage, which would result in more insured patients and lower bad debt rates for hospitals. Other states have looked to introduce Medicaid work requirements, which would lower the number of Medicaid recipients.
Insurers
- ACA developments are generally credit-positive. Recent rules changes allow states to adjust their essential health benefits, expand association health plans and offer short-term plans. These changes allow insurers to price their plans more attractively, and while there is a chance these lower-cost options may draw people away from ACA exchanges, Moody's estimates the risk of this is low because most enrollees receive government subsidies and have less incentive to leave their plans.
- Group capital enhancements could affect highly diversified insurers. Regulators are considering adopting a group capital standard to complement stand-alone-insurer risk-based capital standards. This would apply to the broader group of which the insurer is a part, including unregulated financial and nonfinancial entities, to better understand risks that would affect insurer's ability to fulfill their claims obligations. This could adversely affect insurers housing a mix of entities that have consolidated debt levels above the average for insurance-only groups.