It was just a matter of time  before insurance companies passed on their ACA losses to physicians.   I mark is just the first  insurance company to announce that they will cut physician pay by 4.5% to help mitigate their losses from the Obamacare plans.   As multiple insurance companies have announced that they suffered significant losses from the exchange plans, is  probably just a matter of time before all of the insurance companies all cut payments to physicians so that they can maintain their profits.

The CEO of Hallmark, which is often the first to make financials moves, made some interesting comments in stating that he doesn’t understand what the big deal is because prior to Obamacare his company offered a low-cost limited benefit plan that paid physicians 27.5% less their commercial rates rates and physicians freely accepted those rates so the insurance companies think this is still a win for physicians.

UnitedHealth Group reported a $720 million loss in this line of business in 2015. The giant insurer has warned that it may pull out of the exchanges in 2017 if profitability is not in sight. Other insurers such as Aetna and Anthem also lost money on the exchanges last year, but they claim to see signs of an upswing in 2016. For all these insurers, the red ink results from a risk pool of beneficiaries that is riskier than first anticipated. Total enrollment fell short of initial projections, and enrollees are more chronically ill than expected, driving up healthcare costs. Highmark said that the rate of congestive heart failure among its ACA members, for example, is 43% higher than that for members of its regular commercial plans. The rate of chemotherapy claims per ACA member is 49% higher. Spokesperson Aaron Billger explained that many individuals who signed up for coverage previously had been either uninsured or underinsured, which translated into unmet medical needs.

The financial pain of insurers might not be as acute if the ACA worked as originally designed. Foreseeing that insurers may initially struggle to make a profit on exchange plans, the ACA’s drafters pencilled in “risk corridor” subsidies to offset any losses for the first 3 years. However, a Republican Congress has limited the ability of the Obama administration to dispense most of those funds. As a result, insurers will get only about 13% of the subsidy money they counted on, which was about $220 million for Highmark in 2014. And the insurer has yet to receive any of that federal aid.

It is important when physicians agree to contracts they do with complete understanding of the bottom line.  Physicians cannot continue to agree to accept “underinsurance” that pay less than the average cost of care.   The economic modeling of medicine is evolving so that physicians have to be responsible and accountable like all businesses
Insurer Cuts Doctor Pay After ACA Losses: Will Others Follow?