Healthcare

Providers Go Deeper with Population Health, Weighing Social Factors

Originally published on Healthcare Dive.

The industry transition to value-based payments is leading to more population health management programs, but providers are finding it’s difficult when patients lack secure housing, access to food or a way to get to appointments.

So many are now going beyond one buzz word, population health, and taking into account the role that another, social determinants of health, play in a person’s health.

“Population health management efforts are most successful when they are tied to efforts to address social determinants of health issues, since the challenges that patients face around housing, food and transportation, for example, are completely tied to their ability to engage in the healthcare system, manage their chronic conditions and stay well,” said Dr. Amy Flaster, an assistant medical director for the Center for Population Health at Partners HealthCare in Boston, told HealthCare Dive.

Flaster, also a physician at Brigham & Women’s Hospital and vice president for health management and care management at Health Catalyst, said a population health management infrastructure, such as working with community-based nurses and organizations that help at-risk people, allows health systems to address medical issues before patients wind up in the emergency room.   

“The key to population health is truly about taking care of patients across the care continuum.”

Dr. Sarika Aggarwal, chief medical officer, Beth Israel Deaconess Care Organization

Leveraging an entire team within and beyond her office’s four walls, she gets help from social workers, community resource specialists, community health workers, pharmacists and nurses.

Across town at Beth Israel Deaconess Care Organization, Chief Medical Officer Dr. Sarika Aggarwal has seen PHM both from the provider and payer side. She’s led initiatives at both BIDCO and Fallon Community Health Plan.

“The key to population health is truly about taking care of patients across the care continuum,” she said. “I have not found a (population health management) program that hasn’t helped the patient.”

For these programs to work, they need invested partners on all sides —payers, providers and communities.

Still, ROI is difficult to prove. Potential cuts to Medicaid and an apparent lack of interest in population health at the federal government level could also stand in the way of organizations looking to go down that road.

Social determinants of health

Providers can’t ignore tackling social determinants of health in many communities.

Boston Medical Center, for example, treats a large at-risk patient population.

“They’re trying to look at patients more holistically,” said Rosemarie Day, who runs consulting firm Day Health Strategies, noting examples like physicians writing prescriptions for food and then sending the patient to the hospital’s own food pantry.

Another factor: Patients with mental health challenges may have a harder time caring for themselves, especially when they have co-morbidities, Day noted.

Some state Medicaid programs, health plans and providers are starting value-based payments for behavioral health services. Arizona, Maine, New York, Pennsylvania and Tennessee have all created Medicaid managed care organizations with value-based payments that target behavioral health.

“If you can manage mental health issues, you actually have a big opportunity to reduce medical cost spend,” said Day, who served as chief operating officer for Massachusetts’ Medicaid program and deputy director and chief operating officer at the state’s Health Connector.

Three legs of a stool

Population health programs can be considered as a three-legged stool, made up of a provider side, the payer side and community programs. Providers serve on the front line with patients, Payers use analytics to coordinate care and provide value-based payments and community programs help patients outside the physician’s office.

Payer involvement is crucial, offering claims data to match patients with the most appropriate interventions and providing contract incentives to providers.

Of course, physicians are tasked with treating patients the same regardless of the payment model, but alternative payment models can provide the extra funding to help compensate for that care coordination.

“The creation of ACOs and other alternative payment models are directly changing how health systems think about delivery care for their patients,” Flaster said.

Community programs provide services that patients can’t get during a physician visit. Community organizations help people find food and housing and resolve transportation issues for appointments.

Are they worth it?

So providers say the programs can help improve patient health and tackle social determinants.

But the big questions are: Can they save money in the long run? Are they worth it?

Aetna Chairman and CEO Mark Bertolini has touted the goals of the company’s foundation, which invests in population health projects that aim to reduce chronic diseases, provide walkable neighborhoods and improve quality of life.

An Aetna Foundation-financed study found that investments in certain areas did result in better health outcomes. For example, getting residents active is connected to decreased diabetes and cardiovascular disease; and cutting smoking rates reduced asthma and improved mental health. The study additionally found areas with the highest unemployment rates are also the unhealthiest, which goes back to social determinants of health.

With this in mind, Aetna’s Healthiest Cities and Counties Challenge provides $10,000 grants to 50 communities or organizations. Programs promote healthy foods, increase mental wellness and seek ways to decrease prison reentry. The programs that show an improvement are eligible for more funding — as much as $500,000.

A Health Affairs report recently highlighted a Colorado program called Bridges to Care, involving an emergency department and the community to promote primary care. The Center for Medicare and Medicaid Innovations funded the program through a grant.

The program offers medical, behavioral health and social care coordination services, such care coordinators, health coaches, behavioral health specialists and community health workers.

Six months after Bridges to Care intervention, there was a 28% reduction in ED visits and 114% more visits to primary care physicians compared to patients in the control group.

Digging further, the researchers found that patients with mental health co-morbidities had 30% fewer ED visits and 30% fewer hospitalizations — and 123% more primary care visits compared to the control group.

However, PHM programs aren’t always cost-effective, despite their success with patients. Aggarwal gave the example of a program that offered home visits to the more costly patients with comorbidities. She said the program was successful with patients and staff, but ultimately it was too expensive.

So instead, Beth Israel spun off the cost-effective parts of the program into one for pharmacists and disease management. Improving a patient’s medication management can result in improved outcomes quickly.

In that case, BIDCO initially connected patients with out-of-control diabetes to pharmacists, who provided recommendations to providers. Aggarwal said 40% of patients involved saw a significant decrease in their A1C levels.

Beth Israel then expanded the effort to health coaches and added similar chronic obstructive pulmonary disease and depression programs, with hopes to move into other chronic illnesses.

Potential barriers

Despite signs of success, the hurdles are many: Potential pushback from leadership, funding crunches and the difficulty in measuring what’s working are among the big ones.  

The first piece of PHM is creating a cross-disciplinary team. Each stakeholder needs to set aside territorial hangups. Respect is needed for each stakeholder no matter their background or whether they have a medical degree. “Getting a team to truly come together and flourish to reach that ideal of a patient-centered medical center is not easy to do,” Day said.

Leaders of these efforts must become “a champion of change,” she said.

“Generally, you can throw a lot of money (at population health), but if they’re not led well and they’re poorly executed, you don’t get the results you want,” she said.

They require planning, outreach to other stakeholders and physician buy-in. Health system leaders need to communicate with providers and fully explain the programs.

“You need to engage them and put in the right incentives. A lot of my work is spent with providers in our system. That is important to the core of the population health,” Aggarwal said.

Flaster said one way to get physician buy-in is through data. Physicians will buy into the program if they can see it will lead to better care.

Aggarwal said modifying patient behavior and achieving a positive ROI isn’t always easy. Programs may take 18 to 24 months to show a significant impact. And one can never be sure which part of the intervention was successful.

Plus, the care teams need to coordinate to eliminate duplications in post-acute care. Aggarwal gave the example of a discharged patient who may receive calls from multiple stakeholders. The patient becomes frustrated by the multiple calls and stops answering the phone. That doesn’t help the quality of care and is a waste of resources.

Instead, population health requires continual dialogue among the stakeholders to limit duplications.

Future of population health

Population health programs are expected to expand as payment incentives become more aligned with value rather than volume. Aggarwal said infrastructure, data, financial incentives and administrative pieces will all become better aligned, as well as the model to identify patients who would most likely benefit from the programs.

Day believes that states and the private sector will continue to innovate. Oregon and New York both have Medicaid ACOs and Massachusetts’ Medicaid program called MassHealth will soon start its own managed care ACO. Massachusetts was the first state in the nation in October 2016 to create a payment model that added SDH variables to medical diagnoses, age and sex.

Seventeen healthcare organizations are taking part in the Massachusetts ACOs, including Partners HealthCare, BIDCO and Lahey Health on the provider side and Tufts Health Public Plans, Fallon Community Health Plan and Neighborhood Health Plan on the payer side.

Starting March 1, the ACOs will be financially accountable for cost, quality and member experience for more than 850,000 MassHealth members. The program includes investments in primary care and community support services.

The federal government is providing $1.8 billion to restructure MassHealth via a five-year 1115 Medicaid waiver. ACOs will receive more than $100 million in new investments this year to support the change to value-based care.

Day said having states try these kinds of initiatives in Medicaid is a positive — as long as the federal government doesn’t cut Medicaid funding. Day doesn’t think the current administration will undermine population health, but also doesn’t think it will be a priority either.

“I don’t feel too optimistic at the moment about the national level,” she said.

Healthcare, Insurance

5 Payer Trends to Watch in 2018

Originally published on Healthcare Dive.

The past year has been an eventful one for payers, from the tumultuous Affordable Care Act (ACA) exchange markets to potential mega-mergers. Insurers continue, however, to keep their efforts focused on lowering healthcare costs where possible, with the intention that quality of care is not sacrificed.

Those payer efforts are working. Healthcare spending growth dropped to the lowest level in nearly two years, and hospital spending growth lags behind all other healthcare sectors. Hospital spending increased by only 0.8% year-over-year in June, which was the slowest growth rate since January 1989.

Payers have ratcheted down hospital payments by creating policies with an eye toward providing care at less-costly locations, designing health plans that put more healthcare utilization costs on members and by replacing fee-for-service payments with value-based contracts. Providers have also teamed up with insurers in partnerships that look to offer better outcomes.

Looking ahead to next year, you can expect payers to implement more cost-saving measures and push for value-based contracting. Here’s a look at five payer trends to watch for in 2018, and some tips for preparing to deal with them.

1. Payers will continue to ramp up ways to cut costs

Insurance companies have created policies, designed plans and narrowed provider networks to bring down healthcare costs. They’ve shown success. Expect payers to accelerate those programs and policies and search for more cost-saving levers in 2018.

The most public example of health insurers cutting costs over the past year was Anthem’s policies to not pay for unnecessary emergency department visits or imaging services at hospitals. Anthem’s policies looked to nudge patients to less costly outpatient facilities, including urgent care centers and freestanding imaging centers.

Michael Abrams, co-founder and managing partner at Numerof & Associates, told Healthcare Dive that Anthem’s decision to not reimburse hospital outpatient MRI and CT scans without precertification is “an important message to the provider community.” Anthem’s policy is in response to “ballooning growth in outpatient imaging — both in volume and in unit cost.”

For hospitals searching for ways to improve their bottom lines, many health systems viewed imaging as a way to make up for lost reimbursements and less utilization elsewhere. However, Abrams said the payer’s message was that medical necessity is the stronger consideration and that unit pricing needs to reflect broader market pricing.

“Many provider institutions had turned this under-regulated service line into a profit center,” Abrams said. “Anthem’s action made it clear that such actions would not be acceptable.”

Aneesh Krishna, partner in McKinsey & Company’s Silicon Valley office, told Healthcare Dive payers will likely roll out similar policies for imaging, lab, diagnostic testing and low-risk surgeries. “We see a trend toward rationalizing the levels of payments across various sites of service,” he said. “Imaging-related initiatives are the first steps in that direction.”

In addition to pushing for more services outside of hospitals, Fred Bentley, vice president at Avalere, told Healthcare Dive that he expects payers to focus on readmissions. Providers will need to manage patients post-discharge and keep them healthy in their homes rather than in hospitals.

Though not as high profile as Anthem’s policies, payers have been narrowing provider networks to bring down costs. This has been especially true in ACA exchange plans and Medicare Advantage (MA). In fact, a recent Kaiser Family Foundation study found that 35% of MA enrollees were in narrow-network plans in 2015, while only 22% were in broad-network plans.

Bentley said narrow provider networks haven’t had a huge impact yet. However, the “significant value” associated with narrow and tiered provider networks will ultimately cause more payers to expand narrow provider networks in the employer-based market.

2. Greater emphasis on value-based care and contracting

Payers and the CMS have pushed for more value-based care and payments, but it’s been slow going.

“Payers see potential to contain costs and improve quality in such contracts. However, the pace of adoption is tempered by provider resistance to taking on risk and by payer reluctance to push providers to do so before they are operationally prepared to be successful,” Abrams said, referencing findings in Numerof & Associates’ 2017 State of Population Health Survey.

Krishna believes payers may move more into bundled payments, bonus payments and capitation as it pushes providers to care for the whole patient rather than receiving payments for individual services.

Krishna said the shift toward cost-effective sites of service will require payers to align provider incentives to get the best outcomes. It also gives providers greater flexibility to choose the right care for their patients. This will additionally mean payers will need to share the right data with providers. “Increasing levels of data availability and easier integration between payer and provider systems will make the transition easier and scalable,” Krishna said.

Steve Wiggins, founder and chairman of Remedy Partners, told Healthcare Dive payers will continue to leverage payment models that encourage patients to find care in the most cost-effective locations and use those service efficiently. This will lead to more bundled payments that trigger at diagnosis rather than only at inpatient admission, which is already happening in Medicare, he said.

“Orthopedics, all post-acute services, oncology care, most elective surgeries, all episodes that patients control and a wide range of chronic conditions lend themselves to bundled payments that start at diagnosis,” Wiggins said.

3. More outpatient and virtual care utilization

Payers have been pushing more patients to outpatient facilities as a way to cut costs.

“Care delivery is moving out of the acute care setting and into the community. Such a trend is responsive to consumer demands for fast, convenient access, and it offers the potential for higher volume and lower costs in specialized clinic settings. An increasing portion of hospital system revenues comes from outpatient services, and that ratio will continue to define the progress of systems in a market-driven, value-based healthcare environment,” Abrams said.

Wiggins said innovations will also play a larger role in keeping down costs. He said shifting away from traditional delivery models and fee for service to bundled payment models will lead to more remote monitoring and telemedicine.

“Bundled payments hold great potential to become the driver of innovations that leverage the explosion of wearables, remote monitoring and greater patient engagement,” Wiggins said.

A recent KLAS Research and the College of Healthcare Information Management Executives survey found that reimbursement remains the main barrier to telehealth expansion, but Krishna said virtual care will play a bigger role in the coming year, including for initial consultations and follow-up visits that don’t require an onsite doctor visit.

“Overall, these trends will likely shift significant patient volume from higher-intensity settings to lower-intensity settings while maintaining — or in some cases even improving — quality of care or patient experience,” Krishna said.

Abrams said the cost consequences of virtual care are not fully known, but consumers want that access to providers. More virtual care could include nurses offering guidance on day-to-day health issues and physicians monitoring and visiting virtually with chronically ill patients at home.

“As larger and better capitalized healthcare systems move toward risk-based contracting, we expect to see growth in the use of such services,” Abrams said.

4. Consumers want cost, quality transparency

Consumers are demanding more healthcare cost data on procedures. A recent HealthFirst Financial Patient Survey found that 77% of healthcare consumers say it’s important or very important to know costs before treatment.

Higher out-of-pocket costs and high-deductible health plans are the biggest reasons for this greater interest in transparency. A recent Kaiser Family Foundation study found that out-of-pocket spending is outpacing wage growth.

Deductibles went from accounting for less than 25% of cost-sharing payments in 2005 to almost half in 2015. The average payments toward deductibles rose 229% from $117 to $386, and the average payments toward coinsurance increased 89% from $134 to $253 in that period. Overall, patient-cost sharing increased by 66% from an average of $469 in 2005 to $778 in 2015.

With members taking on more healthcare utilization costs, payers and employers view cost and quality data as a key to reducing healthcare costs. However, the information is not always easy to find for consumers.

Bentley said consumers are frustrated and confused by their bills. Health systems understand they need to provide pricing and outcomes information and payers like Anthem have created comparison shopping tools for consumers, he said.

That is just the start of a greater move toward consumerism as patients take on more out-of-pocket costs.

“In the new market-based healthcare landscape that is evolving, buyers will look for transparency, accountability for cost and quality across the continuum and consumer choice based on real competition,” Abrams said.

5. More payer/provider partnerships

Payers have pushed more cost controls that are affecting provider bottom lines, but there have been some moments this year when payers and providers have seen eye-to-eye. Providers and payers have increasingly worked collaboratively.

Payer-provider partnerships vary in type, size, location and model. There are 50/50 joint ventures with co-branding, and less intensive partnerships like pay for performance, accountable care organizations, patient-centered medical homes and bundled payments. Oliver Wyman found the partnerships can be broken down depending on providers’ appetite for risk.

They involve national payers like Aetna, Cigna and various Blues and new players in the payer space like Oscar Health and Bright Health.

Bentley said healthcare is becoming a “messy hybrid world” in which payers get more involved in the provider side and vice-versa. Increasingly, providers and payers are more concerned about managing patients’ health rather than viewing them as volume. Bentley said to expect more experiments and partnerships as the lines in healthcare continue to get blurred.

How hospitals and providers should prepare for these trends

Now, the important question for hospitals and providers is: What should we do to get ready?

Here are five suggestions from experts:

  • Strengthen your acute care core. Krishna suggested providers do this by addressing the acute care cost structure, improving care coordination/continuity and expanding efforts to deliver lower costs of care in post-acute care.
  • Think about a patient’s total episode of care, including what happens to patients long after discharge. Wiggins said providers should think like a product manager in industrial America who is responsible for the entire value chain. Stop organizing hospitals into specialty silos and organize around patient conditions, episodes and needs. Providers should also track behaviors and identify failures and inefficiencies in patient care. “With those insights, dive into value-based payment models, especially bundled payments that are most closely aligned with the role hospitals play,” said Wiggins.
  • Consider your approach to value-based care and long-term transition in the market. Krishna said systems need to find the right balance to move into value-based care. Moving too quickly from fee-for-service will reduce near-term earnings, but moving too slowly could leave you behind.
  • Bolster revenue cycle management capabilities to manage both patient responsibility and payer denials, said Krishna. The revenue cycle is a key aspect for hospitals, and that’s morphing as patients take on more responsibility. Tracking down patient payments is quite different from working with payers, but hospitals and health systems will need to make sure they are prepared to handle both.
  • Focus on efficiencies on operating costs. Hospitals and health systems have turned to M&A as a way to improve profit margins. Some systems like Community Health Systems, which is divesting at least 30 hospitals this year, are shedding unprofitable facilities. Health systems will need to continue that process to sell off facilities that don’t make sense financially or don’t fit a health system. “I do think it is time for them to review their portfolio of assets on inpatient and outpatient to figure out is this something we need to own,” Bentley said.
Healthcare

Why Payers are Flocking to the Medicare Advantage Market

Originally published on Healthcare Dive.

Medicare Advantage (MA) and the Affordable Care Act (ACA) exchanges are both federal programs, but they couldn’t be more different in payers’ eyes. Insurance companies are entering or expanding their footprints in the MA market, while simultaneously pulling back or out of the ACA exchanges. They’ve found success in MA. Not so much in the ACA exchanges.

Payers see MA as a stable market. That’s evident in the fact that MA premiums are expected to decrease by 6% next year. Insurance companies like stability. Insurers increase premiums by double digits when there isn’t stability, which is the case with the ACA exchanges.

A large part of the ACA exchanges’ problems is linked to actions and inaction in Washington, D.C. President Donald Trump’s administration stopped paying cost-sharing reduction payments to insurers, cut the exchanges’ open enrollment in half, reduced the exchanges’ advertising budget by 90%, offered proposed rules and executive orders that hurt the ACA and threatened not to enforce the individual mandate that requires almost all Americans to have health insurance.

Congress, meanwhile, has tried and failed to repeal the ACA this year. All of this created an unstable exchanges market, which resulted in payers leaving the exchanges or jacking up premiums by 20% or more for 2018.

Meanwhile, the MA market is a picture of stability and payer success.

  • There is a steady stream of new people eligible for Medicare daily, and many choose MA.
  • People usually don’t switch back from MA plans after leaving traditional Medicare.
  • Payers can easily convert members from traditional Medicare to MA via marketing campaigns.
  • The MA demographics are usually people who once had an employer-based plan, so they know insurance and how healthcare works. That also means they usually don’t have pent-up healthcare needs.
  • The CMS pays MA plans upfront for covering people with high healthcare costs and payers have enjoyed stable MA payments from the CMS.

So, MA members are easier to get and keep, they usually have fewer health needs and payers like the MA payment structure better than the exchanges, which get compensated at the end of the year. All of that equals a stable market for payers.

One-third of Medicare beneficiaries are enrolled in an MA plan this year compared to 25% just six years ago. Enrollment grew by 8% between 2016 and 2017 and the CMS recently announced that MA membership will grow by 9% to 20.4 million members in 2018.

Gretchen Jacobson, associate director with the Kaiser Family Foundation’s (KFF) Program on Medicare Policy, told Healthcare Dive that more than half of those in Medicare will have MA plans in many counties next year.

That growth isn’t expected to slow — especially with Republicans controlling both houses of Congress and the White House, according to Steve Wiggins, founder and chairman of Remedy Partners.

“With Republican control of the federal government, it is conceivable that Medicare Advantage will become a centerpiece of CMS’ strategy to control spending growth,” Wiggins told Healthcare Dive.

What more MA members and payers means for hospitals and providers

With more MA members expected next year, the continual shift to MA will have mixed benefits for providers. Jacobson said it’s not entirely clear how more MA members will affect hospitals and providers. “One of our studies recently showed that the provider networks for Medicare Advantage plans greatly varies and these networks will become even more important as enrollment in Medicare Advantage plans grows,” she said.

Fred Bentley, vice president at Avalere Health, told Healthcare Dive that MA’s growth will present a whole new set of challenges for hospitals and health systems.

Bentley listed two issues:

  • Narrow networks
  • Tighter utilization management compared to Medicare’s fee-for-service model

recent KFF report found that 35% of MA enrollees were in narrow-network plans in 2015. Payers have increasingly turned to narrow networks to control costs and improve quality of care. To take part in the narrower networks, physicians usually have to agree to payer demands concerning cost and quality.

“Differences across plans, including provider networks, pose challenges for Medicare beneficiaries in choosing among plans and in seeking care, and raise questions for policymakers about the potential for wide variations in the healthcare experience of Medicare Advantage enrollees across the country,” KFF said.

Another issue for hospitals and providers is that more payers involved in capitated plans like MA will result in more pressure on providers and hospitals to focus on the cost of care, Michael Abrams, partner at Numerof & Associates, told Healthcare Dive.

There’s also the issue of having too few MA payers in some regions. Aneesh Krishna, partner in McKinsey & Company’s Silicon Valley office, told Healthcare Dive the concentration of MA plans in certain markets is a worry for providers. “This concern would be magnified in markets where there is a similarly high concentration in commercial segments from the same payers, and where overall MA penetration is high,” he said.

There’s also a potential payment issue. MA generally reimburses at a slightly higher level than traditional Medicare, but utilization is managed more tightly. Krishna said providers willing and capable of sharing medical cost savings are “likely to see more benefit from the shift to Medicare Advantage plans.” However, MA networks are often narrow, which means providers will need to weigh the relative price/volume trade-offs of accepting MA.

More MA growth in the coming years

MA will have more payers and members than ever next year and the two largest payers, UnitedHealth and Humana, are expected to increase their footprint. Despite new payers showing interest in the market, Jacobson expects the market break down will look similar in 2018. She said small payers entering the market will offset the plans exiting MA next year.

The Congressional Budget Office (CBO) and HHS both project MA enrollment will continue to grow over the next decade. The CBO estimated that about 41% of Medicare beneficiaries will have an MA plan in 2027. UnitedHealth even predicted half of Medicare beneficiaries will eventually have an MA plan.

MA’s popularity with payers is easy to understand — 10,000 people turn 65 every day. The CBO expects 80 million Americans will be eligible for Medicare by 2035.

There’s also an opportunity in the MA market to sign up members quickly. Rachel Sokol, practice manager of research at Advisory Board, told Healthcare Dive that utilizing a strong marketing engine allows payers to grow MA membership. This is quite different from the employer-based market, which relies on payers working with companies.

Potential MA barriers

The MA market is largely positive for payers, but it does face challenges, including:

  • A small number of payers dominate the market
  • The CMS expects improved efficiency and savings
  • There is increased federal oversight, especially concerning possible overpayments to MA insurers

CMS is all in supporting MA plans and its market space. The agency last week proposed a rule with an aim toward improving quality and affordability in contract year 2019. According to the agency, the number of plans available to individuals will increase from about 2,700 to more than 3,100.

The agency is proposing to expand the definition of quality improvement activity to include fraud reduction activities, changing the medical loss ratio (MLR) requirements for Medicare Advantage plans. This change should excite payers because they can add the administrative service to the MLR ratio they are required to spend on healthcare, which is at least 85%. CMS states it believes the service will help combat fraud.

For now, the MA market is consolidated around only a handful of payers. UnitedHealth and Humana have more than 40% of the market. UnitedHealth has one-quarter on its own. KFF said UnitedHealth, Humana and Blue Cross Blue Shield affiliates make up 57% of MA enrollment and the top eight MA payers constitute three-quarters of the market.

Also, CMS is imposing improved efficiency in the traditional Medicare program. This could ultimately affect MA. Accountable care organizations (ACO) and bundled payments will “put downward pressure on the benchmarks used to set payment rates for Medicare Advantage plans,” Wiggins said.

This pressure will result in MA payers needing to either cut costs or trim benefits. “The former is difficult, except through narrow networks, and the latter will diminish the attractiveness of Medicare Advantage plans,” he said.

Then there’s the 800-pound gorilla in the market — potential overpayments. The Department of Justice (DOJ) has joined whistleblower lawsuits against UnitedHealth Group concerning MA overpayments. The lawsuits allege that UnitedHealth changed diagnosis codes to make patients seem sicker, which resulted in higher reimbursements to the insurer. A federal judge threw out one of the lawsuits in October.

The DOJ is investigating other MA payers for the same reason, and Congress is also interested. Sen. Charles Grassley (R-Iowa), chairman of the Senate Judiciary Committee, sent a letter to CMS Administrator Seema Verma in April questioning what CMS is doing to “implement safeguards to reduce score fraud, waste and abuse.” Grassley said there was about $70 billion in improper Medicare Advantage payments between 2008 and 2013 because of “risk score gaming.”

It’s understandable that investigators and Congress have grown interested in MA payers. The federal government paid $160 billion to MA payers in 2014. The CMS estimated about 9.5% of those payments were improper.

The combination of billions being paid to insurers, the potential for fraud and growing membership numbers make MA ripe for oversight. The stability of the market, particularly compared to other options for payers, however, will mean growth continues.

Healthcare

How Will Instability in the ACA Exchanges Affect Healthcare in 2018?

Originally published on Healthcare Dive. 

Threats, actions and inactions from Washington, D.C., have left the Affordable Care Act (ACA) exchanges teetering and insurance companies fleeing the individual market for 2018. This state of affairs can be harmful for payers, who are sometimes unable to share population risk with other insurers. It’s also an issue for providers, who will see fewer people with coverage and will lose leverage in payer negotiations on reimbursement and provider networks.

The effects of an uncertain individual market are already showing in premium rate hikes, but 2019 will likely be even more troublesome — unless there are policy changes.

Congress has failed to pass major healthcare legislation this year, and critics charge the executive branch has been undermining the exchanges, including:

  • President Donald Trump has ended cost-sharing reduction (CSR) payments to insurers. CSR payments help keep down out-of-pocket costs for lower-income Americans.
  • The Trump administration may not enforce the individual mandate. This would lead to fewer members and cause younger, healthier people to leave the exchanges. The result would be an imbalanced risk pool with not enough healthy people to offset the sickest members.
  • The administration cut the open enrollment period for ACA plans in half this year, slashed its advertising budget by 90% and moved healthcare.gov offline on Sundays, which is when many working people may try to sign up for an ACA plan. These moves could reduce ACA plan membership.

These actions and threats have resulted in some payers exiting the ACA exchanges or proposing more than 20% premium increases.

“Insurance markets work best when there’s stability and when everyone has a pretty good sense of how the market is going to operate. Sadly, we’re not there right now,” Ken Wood, senior vice president of health plan development at Evolent Health, told Healthcare Dive.

During her time at HHS, Chiquita Brooks-LaSure, a managing director at Manatt Health, saw firsthand how much insurers worry about uncertainty. As director of policy coverage at HHS during President Barack Obama’s administration, Brooks-LaSure was there at the start of the ACA exchanges. She recalled how insurers’ No. 1 concern was uncertainty.

Brooks-LaSure told Healthcare Dive insurers care less about specific rules and regulations than not knowing what to expect. They can price bad risk and design products when they know the market.

“Uncertainty has caused a lot of insurers to say (the exchanges are) too volatile,” said Brooks-LaSure.

Only one ACA payer in nearly half of counties in 2018

The ACA market uncertainty almost resulted in counties without any options in the exchanges. Major payers like UnitedHealth Group, Aetna, Humana and Anthem pulled back or completely out of the exchanges for 2018, which left state insurance commissioners scrambling to fill the gaps.

Nevada, Ohio, Missouri, Indiana, Virginia, Tennessee, Washington and Wisconsin all feared that they would have counties with no ACA payers in 2018. Ultimately, state officials and payers were able to get all counties covered. However, nearly half of counties will have only one ACA plan option in 2018, which is far from ideal for payers, providers and members.

Entire states like Kentucky, Oklahoma, Iowa, Nebraska, South Carolina, Mississippi and Wyoming will have only one payer for the entire state. Other states like North Carolina, Georgia, Tennessee, Alabama and Arizona will have most counties with only one payer.

Counties with only one payer option are mostly rural areas. Higher population areas mostly have multiple payers competing for business. For instance, Texas has four or more ACA payers in metro areas like Dallas-Fort Worth and Houston, while the more rural areas have only one or two ACA payers.

Having only one payer doesn’t provide members any choice, leads to higher health costs and gives insurers more leverage over physicians and hospitals. Chris Sloan, senior manager at Avalere, told Healthcare Dive that payers can pretty much say “we want to pay X or you’re not in the network.”

Brooks-LaSure said those insurers also can set prices, provider networks and cost-sharing structures without any competition.

“States don’t have a lot of leverage if there’s only one insurer,” she said. “(The payer) has no incentive to try to compete better because they’re not competing against anyone.”

What does having only one ACA payer mean for hospitals and providers?

Payer contracts are likely already signed for 2018, so reimbursements won’t be affected in the counties with only one ACA payer next year. That impact may come in 2019.

This lack of competition will mean higher premiums. Sloan said Avalere’s research found that premiums are higher with lower competition. Places with one insurer had about 10% lower premiums than those with two and 15% less than places with three or more carriers.

There are three major concerns for hospitals in areas with only one ACA payer:

  • Out-of-pocket costs could increase. Higher out-of-pocket costs, especially in high-deductible health plans, may result in more bad debt for providers.
  • Narrower networks may nudge members toward HMOs, which will affect doctors not in those networks.
  • Decreased ACA plan enrollment will result in people using the emergency room for non-urgent healthcare. If this happens, hospitals will see more bad debt and uncompensated care because of fewer insured Americans.

To prepare for 2018, Sloan suggested hospitals in lone ACA insurer areas review their patient population. Find out the percentage of patients in ACA plans. Think about what would happen if say 10% of those patients drop out of the plans in 2018. Then, determine whether you need to set aside more money for charity care next year.

Wood said providers can also help patients who lose their insurer and need to choose a new plan. “I think the most important thing that hospitals and physicians can do is get the word out for people to get coverage,” Wood said.

Sloan suggested another way to help is for providers to advertise open enrollment in their waiting rooms. Having those patients insured is not only important for their health, but providers’ bottom lines.

What will this mean for payers?

Being the only game in town isn’t exactly great news for insurers either. Sure, they get all the business, but that’s not a positive. There’s a reason the other payers pulled out of the counties.

“There is clearly a reason why plans didn’t want to stay in those counties. There are clearly risk issues,” Sloan said.

Without any competition, the insurance companies don’t have another payer in which to share the risk. This means the remaining insurer will need to find ways to balance the risk and figure out how to reach profitability.

Given the increasing costs and reduced outreach and open enrollment period, insurers will likely see fewer members enrolled in ACA plans next year. Sicker members will remain in the plans. This will lead to higher premiums and out-of-pocket costs, which in turn may make more people leave the ACA plans.

Payers in rural areas especially will need to work on getting enough healthier members to offset those who need the most care, Wood said. Those insurers may also need more innovation, such as using telehealth, to help keep down costs.

“If you’re in a rural area and you’re the only health plan, you’re just hoping for an adequate mix of enrollment,” Wood said.

Sloan will closely watch how the only insurers in counties perform in 2018. He’s especially interested to see if they can manage risk and price plans correctly for the patient population.

“It’s going to be interesting how these health plans do,” Sloan said.

How will payers perform in 2018?

Sloan said one reason some of the larger payers pulled out the ACA exchanges is they’re publicly traded, and need to explain to shareholders why they’re losing money in the exchanges. The Blues, on the other hand, are nonprofit and have a mission to serve the individual market. Sloan said Blues plans cover about 90% of counties with only one payer in 2017.

“The Blues are holding up the market,” he said.

The Blues were in the individual market well before the ACA. So, while insurers with limited individual experience have pulled out of the ACA exchanges, the Blues continue to largely stay in the exchanges except for Anthem, a Blues plan that pulled out of nine of 13 exchanges for 2018.

“The Blues have been in this market and, in general, have been interested in making it work,” Brooks-LaSure said.

Beyond the Blues, another insurer to watch is Centene, which is expanding its ACA plan footprint. The St. Louis-based payer is growing ACA plan coverage in six states and entering three new ones (Kansas, Nevada and Missouri).

Centene has experience in Medicaid managed care plans. Those plans are closer to the ACA plan population than employer-based plans, so that could be a reason company officials spoke positively about their experience in the ACA market. Centene, which has 1.2 million ACA plan members, announced earlier this year it saw 69% growth in the first quarter of the year.

What about 2019?

Will more insurance companies drop out of the ACA exchanges for 2019? A lot can change over a year — or even over a week given the current political climate. Predicting the future is difficult when everything keeps changing.

However, health insurance experts agree that unless Congress passes legislation to provide CSRs — and take the decision out of the hands of the president — more payers will leave in 2019 and members’ costs will continue to skyrocket.

This scenario would lead to counties with no ACA plan options in 2019, more counties with only one payer, difficult negotiations with payers, higher costs for members and likely more bad debt for providers.

One possible solution may come from the states. States are seeking their own reinsurance programs, which helps insurers manage risk. Brooks-LaSure said states could create reinsurance programs to help balance the market.

Ultimately, however, she would prefer a federal solution. “A national reinsurance program would be great. I’m not sure if it’s feasible now,” she said.

Healthcare, Insurance

How Will Expanding Catastrophic Health Plans Affect Providers?

Originally published on Healthcare Dive.

President Donald Trump’s recent executive order to expand catastrophic health insurance plans would offer a low-cost alternative to people in the Affordable Care Act (ACA) exchanges. However, there are serious questions about what they would mean for consumers, providers and hospitals.

The expansion of catastrophic plans would likely result in less utilization of providers and could increase costs as patients put off care until their medical issues are more serious, and therefore more costly. But it could also push providers to improve their patient engagement and embrace the increasing level of consumerism in healthcare, experts say.

It’s a mixed bag for payers as well. These plans could upset the balance of risk pools, but insurers can benefit from offering more options to beneficiaries.

Bret Schroeder, healthcare expert at PA Consulting Group, told Healthcare Dive there is market demand for less-costly plans. Expanding catastrophic plans could help patients who can’t afford more comprehensive plans. The downside is consumers will pay more out-of-pocket costs if they need care.

“If you’re unemployed and seeing skyrocketing premiums, this is an attempt to get care at lower costs. On the other hand, there’s a slippery slope in terms of the financial impact, which can be significant,” Schroeder said.

What are catastrophic plans?

Catastrophic plans are meant as a low-cost safety net from financial ruin. Members in those plans pay little for premiums, but also have the highest deductibles allowed by the ACA. How high? This year, the deductible was $7,150 for an individual plan and next year that increases to $7,350 per person and $14,700 for a family policy.

These plans cover you if you have a serious health issue that surpasses your deductible, but you’re on the hook for out-of-pocket costs until you reach that deductible.

Unlike his executive order to stop cost-sharing reduction (CSR) payments to insurers, Trump’s order including catastrophic plans won’t cause any changes soon. Instead, his action directed the Departments of the Treasury, Labor and Health and Human Services to “consider expanding coverage through low-cost short-term limited duration insurance,” also known as catastrophic insurance. That executive order also trumpeted association health plans.

The departments would need to partake a process of proposing rules and getting public input, which could take years. So, it’s going to be a while before catastrophic health plan expansion happens. Catastrophic health insurance is already part of the ACA exchanges, but it’s not open to everyone. The only people eligible for the short-term plan are those under 30 or with a hardship exemption or affordability exemption. Trump’s order would open up the-short-term plans to more people, possibly everyone.

Currently, the short-term plans hold a small portion of the ACA exchanges market. Out of the 12.2 million people with exchange plans altogether at the beginning of the year, only about 110,000 people were enrolled in ACA catastrophic plans.

People currently enrolled in catastrophic plans are covered for the same essential health benefits as those in the other ACA plans. However, in Trump’s executive order, he suggested catastrophic plans could be exempt from ACA provisions, which could lower costs of the plans, but also offer fewer benefits.

Trump’s proposal also looks to increase the length of the short-term plans. Now, the plans are meant strictly as a stop-gap measure to provide a low-cost option before the person enrolls in a “metal” plan in the exchanges or an employer-based plan. The ACA only allows for three-month catastrophic plans. However, Trump is looking to making them a more permanent option, with people being able to stay on the plans for a year.

What could this mean for providers and hospitals?

Rita Numerof, co-founder and president of Numerof & Associates, told Healthcare Dive studies on high-deductible health plans (HDHP), such as catastrophic health plans, show they reduce healthcare costs, at least in the short-term, but that’s not always positive.

HDHP members often delay care because those plans require the consumer to shoulder more of the cost. Delaying care can lead to long-term health problems for the patients — and less utilization for providers.

“Based on this evidence, we should expect an increase in catastrophic health plan enrollment to result in decreased utilization and lower short-term healthcare costs,” Numerof said. She added that not getting appropriate health services and not adhering to medication can cost more in the long run and lead to more severe health issues over time.

Having more patients pay a larger percentage of their healthcare bills also likely means more uncompensated care and bad debt for providers and hospitals. Stenglein said health systems are already seeing patients paying more out-of-pocket. A recent Kaiser Family Foundation study found that the average deductible for people in employer-based health insurance increased from $303 in 2006 to $1,505 in 2017.

Having people pick up a larger portion of healthcare bills also complicates the billing cycle. Hospitals and providers need to track down payments from patients rather than dealing directly with payers. That’s harder on health systems and more time intensive.

Expanding catastrophic plans may cause issues for providers, but reimbursements to hospitals and providers likely won’t see a change. Numerof said healthcare companies have already seen downward pressure on reimbursements and she doesn’t see that ending, but catastrophic plans won’t quicken that.

What does this mean for payers?

Beyond helping people between jobs, Trump views catastrophic plans as a solution to those who live in counties with only one insurer offering ACA exchange plans, people with limited provider networks and those who missed open enrollment. Nearly half of counties will only have one ACA exchange payer in 2018.

Numerof said the executive order looks to promote competition within the health insurance market and offer more choices for consumers. Numerof said the order is a step in the right direction regarding healthcare consumerism.

There are questions as to whether catastrophic plans could help insure more Americans. Gallup reported recently that the percentage of uninsured Americans increased for the first time since 2014 and is now at 12.3%. Numerof said it’s difficult to know whether expanding short-term plans might improve those numbers. “Ultimately, if the goal is to ensure everyone has access to healthcare in this county, we must first focus on bringing down the overall cost of healthcare,” she said.

Chris Stenglein, CEO of Provider Web Capital, which works on both the practice and patient side of financing, told Healthcare Dive that catastrophic plans could help people who are currently uninsured. “If you don’t have insurance today and you have a high-deductible plan, it’s better than nothing,” he said.

For payers, there is a worry that expanding catastrophic plans may result in healthy people abandoning other types of plans. This could create an unbalanced risk pool in the other plans, which will lead to higher costs for the remaining members.

However, UnitedHealthcare, for one, is speaking positively about catastrophic health plans. During a recent third-quarter earnings call, UnitedHealth officials said they are interested in both types of plans in Trump’s executive order (short-term and association plans).

What can providers and hospitals do?

More HDHPs and catastrophic plans could spark further healthcare consumerism. Numerof said more patients will demand data from providers so they can make better healthcare choices. That information could include costs and quality data for facilities, physicians and treatment options.

Consumers already have difficulty finding information about cost, quality and outcomes. That needs to change, she said.

“Consumers that are responsible for a greater share of the healthcare dollar will also expect a more convenient healthcare experience — from scheduling initial appointments and the intake process to the discussion and scheduling of follow-up treatment,” she said. She added that patients will likely prefer getting care at lower-cost settings, such as ambulatory surgery centers, retail clinics and even within their own homes. That means fewer dollars for hospitals.

Healthcare consumerism is already forcing hospitals and health systems to rethink their business models to remain viable, Numerof said.

“(Healthcare delivery executives) need to place less emphasis on site-level reimbursement and more emphasis on finding new and innovative ways to increase market share. One way to do this is by shifting elements of care delivery away from high-end, expensive settings to more convenient and affordable options for consumers,” she said.

Stenglein said greater consumerism is an opportunity for providers to engage patients. One way to accomplish this is to offer multiple payment options, including extended billing options that give patients a longer time to pay for services, he said.

Stenglein suggests caregivers remain focused on providing healthcare and delegate financial tasks to administrators, front-end staff or outsource to another company. What’s important, he said, is for providers to innovate and practice medicine and let others handle the financial aspect.

Stenglein offered these solutions for providers:

  • Implement more affordable tech-based health solutions like text messaging services or appointment scheduling apps
  • Provide counseling with onsite billing staff to make bills easier to pay and understand
  • Supply patients with estimation tools from practice management & EHR systems
  • Consider practice financing options to bridge any revenue gaps from patients
  • Offer flexible patient financing options — including longer terms — to provide more manageable solutions for families by offsetting costs

Despite the potentially negative impacts to providers and hospitals, Numerof said catastrophic plans are an opportunity for hospitals and providers to compete for business and help patients make better healthcare decisions.

Numerof said providers that will benefit from more catastrophic plans include those that:

Offer patients alternative products and services

  • Demonstrate and communicate economic and clinical value through the use of costs and outcomes data
  • Manage variation in cost and quality across the continuum of care
  • Operate efficiently
  • Show transparency about cost and quality of services

“This is an opportunity for those organizations that want to move to total cost of care and are focused on caring for patients in a more comprehensive way to compete for patients,” said Numerof.

Healthcare

Trump Eyes Executive Order to Cripple Individual Mandate

Originally published on Healthcare Dive.

President Donald Trump’s administration has reportedly prepared an executive order to end the Affordable Care Act’s (ACA) individual mandate. Trump may direct his departments to not enforce the mandate and could allow for more hardship exemptions that let people avoid fines for not having coverage.

Trump is reportedly not following through until he sees whether an individual mandate repeal winds up in major tax legislation. Republicans are trying to pass a tax bill by the end of the year, but they need to find ways to fund the $1.4 trillion tax cut over 10 years. One way is by repealing the individual mandate, which could save $416 billion over a decade.

 

House Speaker Paul Ryan (R-Wis.) said the individual mandate repeal isn’t part of the current tax bill, but leaders could add it to the legislation.

The Congressional Budget Office predicted earlier this year that about 15 million Americans would lose coverage over 10 years and premiums would increase 20% for individual plans without the individual mandate.

Scrapping the individual mandate would result in fewer people seeking health insurance and fewer government subsidies to help people buy coverage.

Repealing or seriously weakening the mandate would also result in healthier people leaving the insurance markets. Healthier members help offset the sickest members. Without that offset, the health insurance markets will become unbalanced, which would likely result in higher premiums and out-of-pocket costs for those who maintain coverage. Ending the individual mandate would also cause more payers to flee the ACA exchanges.

Increasingly frustrated by the Republican-led Congress not passing ACA repeal legislation this year, the president has taken other ways to chip away at the ACA law. One of his first executive orders in January requested the HHS “exercise all authority and discretion” to delay ACA provisions that impact members and states financially.

That order led to the CMS’ recent proposed rule that would allow states to bypass the ACA’s essential health benefits (EHBs) and let them decide on their own EHBs. It would also remove regulations that require payers in the ACA exchanges to pay a certain amount of premium dollars on claims. Right now, the ACA requires payers in the exchanges to uphold at least an 80% medical loss ratio. In the proposed rule, states would also have more influence over deciding what’s considered a qualifying health plan.

Trump additionally signed an executive order to allow small businesses and groups of people to come together to buy insurance as an association health plan. That order also expands short-term catastrophic plans, which offer barebones insurance coverage with high deductibles. Currently, only young people and those who meet hardship requirements can buy catastrophic plans in the exchanges. Trump’s order could open catastrophic plans for everyone.

In addition to the executive orders, the Trump administration has slashed the ACA advertising budget by 90% and cut the open enrollment period in half this year.

ACA opponent on Capitol Hill haven’t been as successful as the president in weakening the law. The House could add an individual mandate repeal to its tax bill, but the legislation may face impenetrable obstacles in the Senate. The Senate has already failed to pass ACA repeal legislation multiple times this year. Trying to wipe out a key plank to the ACA in the Senate likely won’t happen.

If Congress fails to repeal the individual mandate, the president may once again take aim at the ACA. The president’s previous executive orders and policies have wounded the ACA, but harming the individual mandate could be the final trump card that topples the ACA exchanges.

 

Healthcare

What Will be the Fallout from Anthem’s New Imaging Policy?

Originally published on Healthcare Dive.

A movement health systems have been dreading is gaining speed, as commercial and government payers are implementing more and more policies that restrict reimbursements for services that can be performed outside a hospital. Anthem’s recent announcement that it will no longer pay for MRIs and CT scans performed at a hospital in an outpatient basis could be a harbinger for what’s to come.

Several hospitals and health systems have already taken steps to recapture revenue lost to these demands for pushing patients outside their walls whenever possible. But with the industry already suffering from reduced patient volumes and lower reimbursements in general, policies restricting the services hospitals count on for steady cash flow could be a major disruption.

Anthem’s new rule

Anthem plans to implement the policy in 13 of its 14 states by March 2018, with only New Hampshire exempt from the new policy. The payer has already implemented it in nine states.

Hospital officials are predictably concerned about what this could mean to their margins. Higher in-hospital reimbursement for MRIs and CT scans made them profitable, even though they’re not a major service for hospitals. One estimate said some health systems collect more than half of their profit from imaging services.

Anthem’s new policy is part of a payer movement to reduce healthcare costs by pushing patients to get care at locations less expensive than hospitals. That’s also true for another controversial Anthem policy to stop paying for Emergency Department (ED) care it deems unnecessary.

Trying to cut healthcare costs is nothing new for insurance companies, or the industry in general. For many years, payers and employers have created health plans that reward members for getting care at less expensive locations. That benefit design has resulted in patients paying more to go to specialists rather than primary care physicians and going to EDs rather than places like urgent care centers. Payers have also nudged members to get more services as an outpatient and avoid being admitted to a hospital.

Those cost-cutting efforts seem to be working. Altarum’s Center for Sustainable Health Spending’s recent Health Sector Economic Indicators reported overall national health spending growth decreased in the second quarter. A major reason for the slower spending growth was connected to hospital spending growth, which was only 1.3% rather than the expected 4% growth rate. Hospital spending growth was the slowest major healthcare category over the past year. Hospital spending increased in June by 0.8%, which was the slowest growth rate year-over-year since January 1989.

While payers have looked for passive ways to re-direct patient care in the past, Anthem’s two new policies extend beyond benefit design and go to the heart of hospital funding. In recent years, hospitals overcame lower Medicare reimbursements by making more on imaging and ED services, which have been steady profit centers. Now, hospitals in 13 states will see that funding dry up.

Anthem said its new Imaging Clinical Site of Care program dovetails with the Institute for Healthcare Improvement Triple Aim Initiative, which seeks to improve the patient experience, improve population health and reduce per capita cost of healthcare.

Anthem subsidiary AIM Specialty Health is administering the program to identify when hospital outpatient services for services like MRIs and CT scans are medically necessary. Lori McLaughlin, Anthem communications director, told Healthcare Dive getting services in a “clinically appropriate setting” like a freestanding outpatient clinic or imaging center is less expensive and clinical research shows those locations are safe.

Anthem said the policy will result in lower healthcare costs for members and the healthcare industry overall. Imaging services in a hospital can cost $1,000 more than a freestanding clinic, and that cost could fall to the patient if they haven’t met their plan’s deductible.

Anthem said AIM Speciality Health will only review the level of care if there are at least two alternate freestanding imaging centers nearby. So, imaging would be approved in rural areas that might not have more than one option for an MRI or CT scan, according to the payer.

McLaughlin said Anthem doesn’t know how much it has saved or how many hospital scans it has reduced because the plan is still so new. With the imaging policy set, McLaughlin said Anthem will continue to look for more ways to save healthcare costs.

“Anthem’s primary concern is to provide access to quality, safe and affordable healthcare for our affiliated health plan members. We’re always looking at new approaches to ensure clinical quality and improve affordability and we are committed to reducing overall medical cost where possible when the safety of the member is not put at risk,” she said.

Will other payers follow suit?

Anthem is a major insurer in more than a dozen states, so any decision will have a ripple effect in those areas and beyond.

Lea Halim, senior research consultant at Advisory Board, told Healthcare Dive other payers will likely watch how Anthem’s policy plays out.

“Will Anthem get a lot of pushback from patients and employers? Will hospital lobbies succeed in getting state governments to force Anthem to roll back the policy? If Anthem does not face, or successfully overcomes these types of challenges, other payers may very well follow suit,” Halim said.

Payers are working to bring down costs in other ways, too. One example is insurance companies buying surgical centers, said Gregory Hagood, senior managing director at SOLIC Capital Advisors, which works with hospitals on mergers and acquisitions. Another example is payers creating networks that encourage members to use alternative (i.e., less expensive) services.

Hagood expects payers will continue to look for more ways to cut costs, including reviewing elective services performed in hospitals. “We’re seeing all insurance companies trying to create an alternative network where, theoretically, the quality of these centers are what you get in the hospital, but at a lower rate because you don’t have all the overhead of hospitals,” he told Healthcare Dive.

Private companies like Anthem aren’t the only payers creating policies that cut costs and affect hospital finances. The CMS also recently announced a proposal to make costs more site neutral. With this change, CMS would pay services at off-campus hospital outpatient departments by 25% of regular outpatient rates (while increasing outpatient payments overall by 1.75%). The CMS expects the proposal would save about $500 million this year. The American Hospital Association has spoken out vociferously against the proposal.

Medicare is also proposing hip surgeries in surgery centers in addition to just hospitals. Knee and hip surgeries have the highest margins for hospitals, but Medicare is pushing more volume to outpatient services.

“Those are huge dollars you’re talking about there,” Hagood said. “It’s another where a hospital’s lucrative services like joint replacement and imaging are starting to get squeezed from both sides — from CMS and private payers.”

Impact to hospitals

Anthem’s size and importance in the 13 states where it is active means its imaging policy will affect hospital finances. However, Paul Keckley, healthcare researcher and managing editor of The Keckley Report, told Healthcare Dive many hospitals are already competing with freestanding and physician-owned facilities. So, though Anthem’s policy will affect hospitals, Keckley said those facilities are already “accustomed to the downward pressure on their margins.”

Hagood estimates that MRIs and CT scans make up only 5%-10% of a hospital’s business, but those services are profitable and have huge profit margins for hospitals.

Hagood said an MRI for a knee or shoulder would cost about $500 on average in a physician’s office, but that would swell to somewhere between $1,000 and $2,000 at hospitals in many markets. This means hospitals are making an average of $1,000 more on each procedure, he said.

Spread over a year, that’s about $800,000 more profit for hospitals, which these facilities stand to lose with Anthem’s new imaging policy.

Halim said hospitals stand to lose the reimbursements from Anthem, but those with their own freestanding imaging facilities that bill at a lower rate already should be able to capture a portion of the lost revenue.

Beyond hospital finances, the policy change would impact patients both positively and negatively. Anthem patients in a high-deductible plan will pay less out-of-pocket for an MRI or CT scan at freestanding facilities. However, patients not in a high-deductible plan and who may not pay much out-of-pocket anyway, may feel inconvenienced if they’re told they can’t get the services at their local hospital. Plus, if the ordering physician doesn’t direct the patient to a freestanding facility and the person gets the services at a hospital, Anthem could deny the claim and the patient will get stuck with the bill, said Halim.

What will hospitals do?

Hagood doesn’t think hospitals will make up the lost funding in other areas. Instead, he expects staffing cuts and hospitals squeezing vendor contracts for supplies and maintenance.

One way hospitals could respond is by working with the payer to get a little more money for imaging than a freestanding imaging center, but much less than what Anthem has been paying hospitals. Hagood said hospitals may get a “modest premium,” such as maybe get another $100 or $200 for a scan instead of the extra $1,000 Anthem has been paying them.

Halim said hospitals may accept the outpatient payment rate for hospital-based facilities in exchange for a policy waiver. Plus, they may invest more in their own freestanding imaging centers.

“If Anthem represents a significant portion of their revenue — and if the new policy sticks — that may lead some hospitals to consider investing in freestanding facilities so that they can still capture Anthem’s outpatient imaging business,” Halim said.

Healthcare, Insurance

CareSource Will Cover Final County Without an ACA Option in 2018

Originally published on Healthcare Dive.

CareSoure announced Thursday it will cover the last county at risk of having no Affordable Care Act (ACA) plans in 2018. CareSource will offer health insurance plans in Paulding County, Ohio, which the Kaiser Family Foundation (KFF) said was the only “bare county” left.

The Dayton, Ohio-based payer was also one of five insurers that recently announced they will cover 19 other bare counties in Ohio. Altogether, more than 11,000 Ohioans have ACA coverage in those counties.

All U.S. counties are now expected to have at least one ACA plan option. However, nearly one-quarter of ACA plan enrollees will only have one option, which means there is no competition in those areas.

In a statement from CareSource, the company said its decision to offer plans in bare counties “speaks to our mission and commitment to the marketplace and serving those who are in need of healthcare coverage.”

Ohio Department of Insurance Director Jillian Froment said filling the bare counties has been a priority for her department. “There is a lot of uncertainty facing consumers when it comes to health insurance and these announcements will provide important relief,” she said.

The Ohio Department of Insurance said it is working with payers to finalize products and rates in the ACA exchanges next year. The department expects to complete review of insurer filings by early September, before payers must sign contracts with the federal government by late September to offer ACA plans.

Although she is pleased to have the bare counties filled for 2018, Froment said the move is only a “temporary solution and one that only applies to 2018.” She called on Congress to pass legislation to stabilize the individual insurance market. Congress is expected to take up the issue when it returns from break.

One area that is causing much unease is whether President Donald Trump will continue to pay cost-sharing reduction (CSR) subsidies to insurers. The CSR payments help ACA insurers cover lower income Americans. Trump has threatened multiple times to stop CSR payments to insurers, but so far he has ultimately paid the subsidies. Without those subsidies, the Congressional Budget Office predicted ACA premiums would skyrocket another 20%.

“Insurers are still looking for predictability in the health insurance market. Now is the time for Congress to work on reforms that will strengthen our health insurance markets in ways that improve access and affordability,” said Froment.

There was a time not too long ago when healthcare and state officials fretted about dozens of potential bare counties in 2018. That included nearly all Nevada counties. However, Nevada Gov. Brian Sandoval announced last week that Centene agreed to sell ACA plans in the 14 bare counties in Nevada. Centene also recently filled the final county in Indiana.

The St. Louis-based insurer has been expanding its ACA footprint this summer, while other major payers are pulling back or completely out of the exchanges. Centene is also entering Kansas and Missouri and expanding its footprints in Florida, Georgia, Indiana, Ohio, Texas and Washington.

Filling in all of the counties is good news, but there is still the issue of competition. Nearly one-quarter of members in ACA plans will have only one choice and another one-quarter will have just two choices. There is also concern about large premium increases. Early rate filings have already shown the negative effects of uncertainty.

Opponents of the ACA plans say the market is in a “death spiral.” However, the KFF found in a recent report the individual health insurance market is actually stabilizing, and insurers are regaining profitability. KFF warned there are “more fragile” parts of the country and uncertainty coming from Washington could destabilize the market.

So, the question remains: Is 2018 a year of transition for the ACA market that is stabilizing? Or will political fighting continue to cause unease and ultimately topple the exchanges in some parts of the country? Congress could go a long way to stabilize the market by agreeing to fund the CSR subsidies long-term and take that decision out of the hands of the president.

Healthcare

Health Reform Driving Payer-Provider Partnerships

Originally published on Healthcare Dive.

Payers and providers have for decades stayed in their silos, leading to a more fractured and adversarial healthcare system. That relationship, however, is starting to soften for many in the industry. Payer-provider partnerships put the two groups on the same team in hopes of reducing costs and improving care and outcomes through sharing data and better communication.

A major driver of these partnerships is the move away from fee-for-service payments and toward valued-based payments and population health management.

“We’ve been tracking these partnerships for many years now and of the approximately 200 that have launched in the last five years, 92% are emphasizing value-based compensation in some shape,” Thomas Robinson, partner at Oliver Wyman, told Healthcare Dive.

The payer-provider partnerships popping up across healthcare vary in type, size, location and model. There are 50/50 joint ventures with co-branding, and less intensive partnerships like accountable care organizations (ACO), patient-centered medical homes (PCMH), pay for performance and bundled payments. Oliver Wyman found the partnerships can be broken down depending on providers’ appetite for risk.

The differences are endless, but they all focus on improving care for the individual patient. They do this through close communication between stakeholders, better interoperability and data-sharing, using data analytics to track patients and reducing administrative burdens.

Keys to partnerships: Trust, communication and a focus on the patient

The first step in these partnerships is building trust between payers and providers. Robinson said that can be difficult, as payers and providers may have an fractured relationship. Payers and providers can overcome differences by aligning around the big issues as early as possible, and establishing the right governance model.

Chuck Lehn, president of Banner Health Network, told Healthcare Dive a successful joint venture allows each organization to offer its administrative strengths and have a clear understanding of its roles and accountabilities.

“In our experience, we have found that streamlining the administrative pieces of our product can lead to better efficiency and a great member experience,” said Lehn.

Brigitte Nettesheim, president of transformative markets for Aetna, told Healthcare Dive partnerships necessitate a culture change, and participants need to understand they’re both in it for the long run. This requires aligning responsibilities and carefully crafting, negotiating and planning down to the most minute detail before the partnership is signed and executed.

Another key is communication. Lehn acknowledged that communicating across systems and platforms between two organizations and healthcare providers requires time, attention and resources. In a successful partnership, both sides need to communicate regularly and invest in technology, such as portals, so the two sides can share data seamlessly.

Caring for the whole patient works best when payers and providers share data, so there is improved care management, better interventions and better analytics around population health. This requires a capital commitment, so there is communication between not only payers and providers, but also between those two groups and patients, said Robinson.

The two sides can go much deeper into care for patients by going beyond claims. In partnerships, payers shouldn’t have to wait for claims to see how their members are doing and doctors shouldn’t have to hope that their patients tell them when they have received care elsewhere. All of that data should be shared freely and promptly.

“Most communication has been traditionally centered around transactions. That’s just not sufficient anymore, ” James Leatherwood, marketing communications manager at Availity, told Healthcare Dive.

In addition to regular back and forth, payers and providers need regular meetings, whether monthly or quarterly, that focus on strategic issues about the partnership, said Leatherwood.

The third part of a successful partnership is aligning incentives that focus on keeping people healthy and creating a positive healthcare experience, said Robinson.

Partnerships must provide patients the right incentives, integration, investment, insight and innovation to work with the plan to deliver improvements across cost, quality, outcomes and experience, said Robinson.

“The point of these partnerships is to create something new, rather than just building the same old offerings with a narrow network. Successful partnerships will take the opportunity to innovate around the product and experience now that the incentives, insight, investment and integration are all for it,” said Robinson.

Partnerships to watch

Payers that are involved in partnerships vary from new players in the payer space like Oscar Health and Bright Health to large, established insurers like Aetna, various Blues and Cigna.

Here is a handful of the closely watched partnerships:

Aetna is one payer to watch in the partnership arena. Nettesheim said the company has committed to moving 75% of its contracts to value-based arrangements by 2020. Aetna is currently at 48%.

Aetna and Banner Health agreed on the partnership in October 2016 and have been laying out the groundwork before its launch this month in Maricopa and Pinal counties in Arizona. The two companies hope to expand the program statewide ultimately.

To prepare for the partnership, Tom Grote, who became CEO of Banner | Aetna joint venture in May, told Healthcare Dive that Banner Health and Aetna have developed joint operating committees, including marketing/sales and population health, that include members from both organizations.

The partnership looks to improve consumer experience by fully integrating providers, Aetna and administrative services, while eliminating redundancies in care and administrative problems. Aetna and Banner Health expect streamlining care and services will lead to savings for patients and employers.

Nettersheim said the partnerships are about “each side playing to its strengths, aligning incentives and driving scale.”

The two companies have worked together for more than five years on a separate ACO. The ACO has resulted in nearly $10 million in savings, a 24% drop in avoidable surgical admissions and increased generic drug prescribing rates by 4%, according to Aetna.

Grote said the key to partnerships is a common vision between the entities and leadership that healthcare needs to move to a value-based system.

“If we keep the customer — the end user — in mind and build partnerships with that as our North Star, we believe we will have a more successful, efficient and collaborative health system,” said Grote.

Nettersheim said most provider-sponsored health plans formed since 2010 haven’t shown a profit yet. In some cases, this is because they aren’t yet able to scale up to what is needed to create profits.

Aetna’s partnerships with Banner, Allina and Sutter Health are still too new to find results, but Nettersheim is confident that Aetna’s partnerships will achieve scale by offering stability, expertise, volume and market power.

Another partnership to watch is Blue Cross Blue Shield of Michigan’s (BCBSM) PCMH, which is the largest medical home project in the country. The model is part of BCBSM’s Value Partnerships, which works with physician organizations and hospitals to improve patient care and provide value to members and customers.

The PCMH program isn’t a 50/50 co-branded joint venture like Banner | Aetna, but is an example of a less intensive partnership looking to have a similar result. The PCMH started nine years ago and includes 4,692 physicians in 1,709 practices. There are PCMH practices in 81 of Michigan’s 83 counties.

The idea of a PCMH began a decade ago as a way to improve care and outcomes while cutting costs. The model has primary care physicians leading care teams, which include specialists, that focus on each patient by tracking conditions and making sure patients get care “at the appropriate time and in the most appropriate setting,” according to BCBSM.

The payer said they have seen success. This year, PCMH practices are performing better than other practices. Blue Cross Blue Shield of Michigan said PCMH practices have seen 19% lower rate of emergency room (ER) visits for adults; 23% lower rate for primary care sensitive ER visits for adults; 25% lower rate of ambulatory care sensitive inpatient stays for adults and 15% lower rate of pediatric ER visits.

“If we keep the customer — the end user — in mind and build partnerships with that as our North Star, we believe we will have a more successful, efficient and collaborative health system, ” Tom Grote, CEO of Banner | Aetna joint venture, told Healthcare Dive.

A recent Health Services Research report also found that hospital per-member per-month cost was reduced by 17.2% and emergency department per-member per-month cost was reduced by 9.4% for Blue Cross PCMH patients with asthma, angina, diabetes, chronic obstructive pulmonary disease, high blood pressure and congestive heart failure.
Tom Leyden, director II of the Value Partnerships Program at BCBSM, told Healthcare Dive members actively engaged with their primary care physicians are seeing better outcomes. What’s made the BCBSM program a success is “strong relationships that have been cultivated within the Michigan healthcare community,” he said.

Leyden said providers want to be active participants in system transformation.

“This requires ongoing support from the payer and demonstrated evidence of practice transformation and clinic results from the provider community,” said Leyden. “Administration of these programs is an integral aspect of measuring performance.”

Leyden said the payer strives to make the programs as manageable as possible because physicians need to perform many administrative tasks on an ongoing basis. BCBSM regularly solicits feedback from providers during quarterly meetings and phone calls, emails, webinars and in-person meetings on what’s working, what’s not and what needs to be changed.

Barriers to overcome

One barrier that still needs resolution in partnerships is moving providers away from phone communication. Availity recently published a survey of 40 health plans and more than 400 practice- and facility-based providers that found respondents said phone communication is the preferred way for providers to communicate with payers.

Leatherwood said a more efficient way is a queue system. In this system, a provider could check the status of all claims and get alerts when they need to provide more information. The system would allow providers to look in one queue, update the claims information and then move on with their day. Payers would have their own queue and would get alerts when providers have questions. This would reduce phone calls and create immediacy.

Leatherwood said the healthcare system is stuck in a “chart chase” between providers and payers, and moving to an automated queue system would be a gamechanger.

Another big question is whether partnerships can scale. Expanding these partnerships beyond local or state boundaries may be difficult. Grote said partnerships are intensive and require close relationships, so joint ventures work best on a regional or state level.

It’s still too early in the process to say how partnerships will morph down the road. There are many different types of partnerships and more are likely to develop depending on locations, providers, payers and needs.

“I think in the near-term what we’re going to see is larger healthcare providers are going to be more strategic, working directly with payers. The health plans are going to be more interested not just in working with the staff level, but executive levels,” said Leatherwood.

Healthcare

Alzheimer’s patients need special care, but providers aren’t ready to give it

Originally published on Healthcare Dive.

Diagnoses of Alzheimer’s disease have been increasing and are expected to skyrocket, but the health system has been slow to respond. Death rates are going up and there are still no prevention methods or long-term treatments.

The neurological disease is the leading cause of dementia and is one of the most feared conditions. It also leads to twice as many hospital stays and has an overall high cost of treatment.

“I think America, in general, is waking up to the fact that we haven’t done enough,” Rob Egge, chief public policy officer at the Alzheimer’s Association, told Healthcare Dive.

People are living longer and there is better recognition of the disease. Now, 1 in 10 Americans 65 and older has Alzheimer’s disease. Diagnoses will increase as more Baby Boomers reach their elderly years. Alzheimer’s is now the sixth leading cause of death in the U.S. and kills more than breast cancer and prostate cancer combined.

Alzheimer’s disease diagnoses and deaths have increased over the past 20 years —  and those numbers are expected to skyrocket over the next 30 years.

The Centers for Disease Control and Prevention recently released a study showing death rates from Alzheimer’s increased 55% from 1999 to 2014. About 5.5 million Americans are living with Alzheimer’s and that’s expected to reach 16 million by 2050.

It’s not just the elderly. About 200,000 Americans under 65 have younger-onset Alzheimer’s. “That alone would be a major health problem,” Egge said.

There doesn’t appear to be much immediate help either. While fatality rates have decreased for other diseases thanks to medical breakthroughs and treatments, there is still no prevention, cure or even a way to slow Alzheimer’s. Healthcare can only offer Alzheimer’s and dementia patients short-term symptom relief. Egge said that might help for six months, but much more is needed to improve patients’ lives.

Some health systems are taking steps toward better preparation, however. Experts recommend using staff training and interdisciplinary physician teams as well as simpler measures like adjusting patient visiting hours.

Alzheimer’s and healthcare costs

Healthcare costs skyrocket when someone has dementia. More than 85% of people with Alzheimer’s have one or more other chronic conditions, which increases healthcare costs. People with Alzheimer’s often can’t manage their co-morbidities, which leads to more health problems, hospitalizations and costs.

Alzheimer’s is expected to cost $259 billion in 2017 with $175 billion directly from Medicare and Medicaid. That’s expected to reach $1.1 trillion by 2050. Twenty-four states will see Medicaid spending for people with Alzheimer’s disease increase at least 40% before inflation by 2025, according to the Alzheimer’s Association.

Nearly one dollar of every five Medicare dollars is spent on dementia care. Within 20 years, that’s expected to rise to one in three.

Hospitalizing Alzheimer’s patients

People with Alzheimer’s and other dementias are more likely to have co-morbidities and staff may not even know about other health issues because of a patient’s communication limitations.

Older people with Alzheimer’s have twice as many hospital stays per year as other older Americans. They also have four times longer hospital stays and nearly three times more emergency department visits.

Caring for someone with Alzheimer’s is complicated and can take more nurse and doctor resources, which can put a strain on staff. Hospitalization can often raise anxiety and confuse people with Alzheimer’s. They’re in a different environment and might not know what’s happening. That anxiety is increased and is often coupled with pain. Often they’re hospitalized for issues not related to the disease, such as heart disease or a hip fracture.

“People with Alzheimer’s really need a lot of care,” Dr. Kostas Lyketsos, professor of psychiatry and behavioral sciences at Johns Hopkins Medicine, told Healthcare Dive.

The Alzheimer’s Association suggests avoiding unnecessary hospitalizations and says doctors should perform procedures, tests and treatments in an outpatient client whenever possible.

How hospitals are facing the crisis

Demands will increase on doctors, hospitals, payers, Medicare and Medicaid as the number of people with Alzheimer’s increases.

Hospitals and health systems do have options for improving their ability to care for people with Alzheimer’s.

Lyketsos said an important first step is to make sure hospitals are evaluating patients with the disease. Johns Hopkins started the Memory and Alzheimer’s Treatment Center, which is a partnership between the departments of psychiatry, neurology and geriatric medicine, and sees close to 1,000 new patients annually. The center performs a patient assessment, diagnosis and comprehensive treatment that includes counseling, education and guidance for family caregivers.

The center developed a program called Maximizing Independence (MIND) at Home, which is a home-based coordination program for people with Alzheimer’s and other dementias. The program lets people stay in their homes, while receiving care through care coordination with community-based agencies, medical and mental healthcare providers and community resources.

The interdisciplinary team uses six basic care strategies: resource referrals, attention to environmental safety, dementia care education, behavior management skills training, informal counseling and problem-solving.

The program’s main tenets are to assist family caregivers and allow people to live safely and with dignity in the community.

Johns Hopkins is in the research phase of the program and is testing whether MIND at Home is an “effective and cost-efficient approval to providing community-based dementia care to a diverse population.”

So far, program leaders have found that MIND at Home reduces a caregiver’s burden and that Alzheimer’s patients need a whole package of services to meet their myriad needs, including making sure they’re complying with medications and setting up a proper home environment for the Alzheimer’s patients.

Lyketsos said the program can delay Alzheimer’s patients from being forced out of their home and into a nursing home. Lyketsos said Johns Hopkins hopes to expand the program to a larger audience after the project’s research phase.

What hospitals can do better

Egge said the most important thing hospitals and health systems can do to tackle the influx of Alzheimer’s patients is to track the patient’s cognitive impairments from admissions to post-discharge. Hospital staff should be aware of a patient’s Alzheimer’s and deliver care accordingly.

Lyketsos said hospitals need to improve Alzheimer’s detection. Treating someone with Alzheimer’s in the hospital and post-discharge is more complicated than other patients.

Only 30-40% of Alzheimer’s patients are recognized by hospitals. So, knowing at the time of admission of a person’s Alzheimer’s diagnosis is key to the rest of the patient’s hospital stay and post-discharge.

Another issue is that doctors and nurses might not recognize symptoms of younger people with early onset Alzheimer’s. “That, too often, is a fumble,” said Egge.

In addition to better detection, hospitals need to plan carefully for a patient’s post-discharge care to reduce rehospitalizations. Transitioning a patient back to the home with caregiver support can help keep an Alzheimer’s patient from returning to the hospital.

Beyond care, Egge said hospitals should create policies that help Alzheimer’s patients. For instance, don’t enforce visiting hours strictly for caregivers. Sundowning is a time of confusion and restlessness for patients. Having a caregiver there during those times can calm the patient, but strictly enforcing visiting hours may limit when a caregiver is with the patient.

Lyketsos said the CMS also needs to do a better job reimbursing doctors who are caring for Medicare patients. Paying doctors for half-hour visits for older people, especially those with complicated conditions like Alzheimer’s, is often not enough.

CMS recently took a positive step by implementing a Medicare billing code G0505 that is for cognitive assessment and care planning for patients with cognitive impairment. The services can include cognition-focused evaluation, functional assessment, review of high-risk medications, evaluating neuropsychiatric and behavioral symptoms, safety evaluations and creating a care plan.

Egge said G0505 will lead to “more holistic reimbursements for care planning services.” He said he hopes the CMS will apply the code broadly to include other offerings, such as Medicare Advantage.

Looking ahead, Egge said the explosion of Alzheimer’s patients over the next 30 years is going to cause serious issues in healthcare. “It’s going to be tremendously profound and difficult for the healthcare system,” said Egge.