Category: Insurance

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.

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.

Originally published on Healthcare Dive.

The Medicare Advantage (MA) program seems to be hitting the sweet spot, with more interest from beneficiaries as well as insurers. It now includes one-third of all Medicare beneficiaries, and a large chunk of payer profits.

With more money, however, comes greater scrutiny. And the federal government is finding reason to ramp up efforts as it issues more allegations of insurers changing diagnoses to bring in higher MA payments and covering up the actions.

Congress created Medicare Advantage as a risk adjustment payment program that pays insurers more for sicker beneficiaries. Payers in Medicare Advantage now receive a yearly fee for each enrolled member and monthly risk adjustment payments for each enrolled beneficiary, based partly on the person’s health status. This means a person with diabetes and other chronic health conditions will bring a larger monthly reimbursement than someone who needs few services.

Such a program is open to fraud. CMS estimated that it overpaid $14.1 billion in 2013 to MA organizations. Medicare Advantage payers received about $160 billion in 2014 for approximately 16 million beneficiaries. CMS estimated about 9.5% of those payments were improper.

Intensive coding

Kip Piper, an expert on Medicaid, Medicare and health reform, told Healthcare Dive plans differ in their internal capabilities and data quality. “Each insurer is incentivized to make sure their data supports the highest risk score — as high as can be justified but of course no higher,” he said, adding, “Sometimes insurers will ‘leave money on the table’ because they are unable to show that their risk score really ought to be higher.”

Timothy Layton, an assistant professor at Harvard Medical School who researches the health insurance markets, told Healthcare Dive Medicare Advantage overpayments are driven partly by fraud, but mostly by “legal intensive coding.”

“CMS has a fairly broad definition of an acceptable diagnosis. Each diagnosis just needs to be justified by some record from a face-to-face encounter with a physician. This allows insurers significant ability to maximize their risk scores without resorting to fraud,” he said.

Layton said there is fraud, but that’s “small potatoes” compared to excessive payments because of intensive coding. “It’s also small relative to the massively inefficient expenditures insurers are investing in coding that has basically no social benefit whatsoever,” he said.

UnitedHealth cases

The U.S. Department of Justice (DOJ) is involved in two high-profile False Claims Act cases involving one of the largest health insurers. The DOJ joined two lawsuits involving UnitedHealth Group (UHG), which is the largest Medicare Advantage payer with more than 50 Medicare Advantage and drug prescription plans.

The lawsuits allege UHG overcharged the federal government for Medicare Advantage. In 2016, CMS reportedly paid UnitedHealth $56 billion for covering 3.6 million Medicare Advantage beneficiaries.

Two whistleblowers have said UnitedHealth changed diagnosis codes to make patients seem sicker. These “data-mining projects” can raise Medicare reimbursements by nearly $3,000 for every diagnosis. The suit alleges that employees collected bonuses for making these changes.

The lawsuit said UHG didn’t notify the CMS of at least 100,000 invalid diagnoses that caused it to overpay. Those incidents alone led to $190 million in overpayments, according to the lawsuit.

UnitedHealth Group denies the claims. “We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS about our approach under its unclear policies. The complaint shows the Department of Justice fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously,” Matt Burns, UnitedHealth spokesman, told Healthcare Dive in a statement.

Piper said he expects a “long, protracted and expensive battle” involving these cases. The case is complex because the payments are from years ago and federal policies were “particularly muddy back then.”

If United were to lose, Piper expects a multi-billion dollar payment and a corporate integrity agreement with the HHS Office of Inspector General that would include oversight and imposed processes to make sure it doesn’t happen again.

Piper doesn’t think the cases would hurt UnitedHealth financially because the large payer is “well-capitalized and in a position to cover the loss if it comes to that.”

Piper doesn’t expect the CMS would restrict UnitedHealth’s participation in Medicare Advantage or Part D because of its market size. Such restrictions would affect millions of beneficiaries.

“It will, and likely already has, resulted in greater scrutiny of United’s practices in regards to risk adjustment. But federal policies have tightened. All Medicare Advantage plans are now on guard to be extra cautious and take steps to support risk scores with data, analyses and independent verification or audits,” said Piper.

DOJ investigating other MA insurers

Investigators will follow the money, and with billions of dollars at stake, Medicare Advantage plans now get extra attention, undesired by payers. False Claims Act cases and settlements have become relatively common.

Chief Counsel to the Inspector General Gregory Demske of the HHS Office of Inspector General said his office will continue to make sure “Medicare Advantage insurers . . . play by the rules and provide Medicare with accurate information about their provider networks and their patients’ health.”

Being the largest Medicare Advantage payer puts a large bull’s-eye on UHG’s back, but investigations into overpayment to Medicare Advantage payers aren’t just connected to UHG. Investigators are also checking into other Medicare Advantage payers, including Aetna, Cigna, Health Net and Bravo Health.

Also, Freedom Health, another Medicare Advantage payer, agreed to pay $31.7 million to settle a False Claims Act case after the Tampa, Fla.-based insurer submitted or caused others to submit “unsupported diagnosis codes to CMS,” which led to larger than owed reimbursements from 2008 to 2013. The company reportedly made “material misrepresentations to CMS regarding the scope and content of its network of providers” in applications in 2008 and 2009, said the DOJ.

Congress is also interested in the overpayment issue. Sen. Charles Grassley, 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.”

“CMS must aggressively use the tools at its disposal to ensure that it is efficiently identifying fraud and subsequently implementing timely and fair remedies,” Grassley wrote.

What should MA payers do now?

Layton said payers need to be more careful about submitting only justified codes. This will mean more payer oversight, which will lead to more costs for them and healthcare in general.

“They’ll just switch from trying to derive codes out of thin air to trying even harder to get docs to write things down. Given that the fraud was likely for cases that could have been justified with a written record with a bit more effort, they’ll likely just exert that extra effort. Unfortunately, the cost of that extra effort will represent additional socially wasteful spending on top of an already enormous amount of waste,” he said.

Anand Shroff, founder and chief development officer at Health Fidelity, told Healthcare Dive that health plans need to focus on risk adjustment coding accuracy to ensure they submit information to the CMS that’s substantiated by documented clinical evidence.

“Medicare Advantage insurers use outdated risk adjustment coding methods, including archaic data acquisition and document review systems. They should invest in the latest risk adjustment technology solutions that pull together patient risk factors and clinical evidence for accurate results using advanced technology, such as natural language processing and clinical analytics,” said Shroff.

Piper said some payers have already adapted its systems and staffing to improve risk adjustment payment compliance.

“Financially, risk adjustment plays a critical role in how plans are paid. This will only increase if CMS moves forward to improve the risk adjustment methodology to increase its accuracy and to better adjust for socioeconomic factors that heavily influence patient complexity and utilization,” he said.

Piper offers a few suggestions to payers involved in Medicare Advantage. Payers need to work closely with the CMS to work out technical issues and have the federal government agency understand how the plans operate and how federal guidance impacts the plans.

Piper said payers need to collaborate with providers to improve “the completeness and accuracy of their claims and encounter data and underlying medical records, including full use of electronic health records.”

MA plans should also consider using “red teams” to test their management and controls, look for compliance weaknesses and identify policies, systems, incentives and even cultural factors that may unintentionally encourage gaming or create risks, said Piper.

“Part of this, frankly, is having a multi-disciplinary team of in-house and outside experts — white hats — thinking about risks and vulnerabilities and then closing them,” he said.

Improving education and training and removing corporate silos, as well as hiring regulatory experts can also help payers, said Piper.

“A surprising number of companies that do business with Medicare or Medicaid have few, if any, board members with real-world government experience or policy expertise. Companies need to bring that talent in at the board level, just as they do at management levels,” he said.

Originally published on Healthcare Dive.

As the June deadline for payers to decide whether to continue in the Affordable Care Act (ACA) exchanges and set their rates is approaching, insurance companies are running the numbers, reviewing their member populations and analyzing how they’ve made out on the exchanges market over the past year. But it’s not just their numbers that are influencing the decision.

What’s happening in Washington is also playing a major role — specifically, whether Republicans will pay cost-sharing reduction (CSR) payments to insurers. The payments help insurers cover lower income Americans.

Last week Trump reportedly told staff he was still considering withholding payments to push the hands of those reluctant to support the AHCA, so payers and patients advocates are quite leery of what would happen to the exchanges market if CSR subsidies stop.

Without those payments, insurance companies warn of higher rates and more payers dropping out of the exchanges market.

Beth Fritchen, partner at Oliver Wyman Actuarial Consulting, told Healthcare Dive that the best way to describe payers in the exchange market is “hesitant.”

“CSR is definitely something people are looking at and watching for,” Fritchen said.

Payers are also waiting to see the Senate’s healthcare reform, which will likely look quite different than the House bill.

ACA exchanges market stabilizing

You wouldn’t know it from the drumbeat from Washington, but one recent study found that the ACA exchanges market is stabilizing after years of losses.

A Kaiser Family Foundation study found that the individual market insurers’ medical loss ratio, which is the percentage of premium dollars that an insurer spends on medical claims, dropped 7 percentage points between 2015 and 2016 to 96%. That’s the best number since the ACA created exchanges, but is still higher than the 85%-90% figure needed to make the individual market profitable.

Despite those improved numbers, payers are still uncertain about the exchanges. Insurance companies usually don’t like the unknown, but that’s what they’re facing in the healthcare industry and specifically the individual market.

Brian Wright, senior financial professional at communications and advisory firm ICR, told Healthcare Dive that the unease comes because payers need a risk pool that doesn’t change dramatically from one year to the next.

The Center on Budget and Policy Priorities said the uncertainty will lead to higher rates and fewer insurers willing to continue in the exchanges. To stabilize the market, the group suggested Congress stop talking about repealing the ACA and focus on improving the current law.

Stopping short of agreeing not to repeal the ACA, there are other ways that Congress can help stabilize the market. America’s Health Insurance Plans President and CEO Marilyn Tavenner spoke before the Senate Committee on Health, Education, Labor and Pensions in February about the need to stabilize the individual health insurance market. Tavenner gave short-term and long-term solutions that she said would create “lower costs, more choices and better quality care.”

For this year, AHIP suggests continuing the CSR payments, creating premium tax credits, which help make coverage more affordable, and fully pay federal reinsurance payments for 2016. The reinsurance program helps cover high-need people, including those with chronic conditions.

Who’s in, who’s out for 2018?

As some payers have announced they are cutting back on the ACA exchanges or even pulling out completely in 2018, those who support repealing the ACA have stoked that instability to their advantage. ACA foes say payers pulling out shows that the exchanges are in a “death spiral,” but others point to the ACA foes as the ones promoting the fears, which lead to uneasiness.

So, where are we at this point in the ACA exchanges market? Aetna announced it is leaving the exchanges in its remaining states — Delaware, Nebraska, Iowa and Virginia. The payer said it could lose $200 million this year for its individual insurance after losing nearly $700 million between 2014 and 2016.

Wellmark Blue Cross Blue Shield is another payer that’s completely dropping out. The company will drop the exchanges plans for next year after reportedly losing $90 million from them over the past three years. Wellmark already dropped out of South Dakota’s exchanges last year.

A former big player in the exchanges market, UnitedHealth, scaled back from 34 states to three this year. For 2018, the company said it will remain “in only a handful of states.”

Not all payers are leaving the exchanges. CareFirst BlueCross Blue Shield plans to stay in the Maryland, Virginia and D.C. exchanges despite losing $500 million on the exchanges so far and another $100 million expected this year. Though the payer is staying, CEO Chet Burrell said the insurer plans a 58% increase for individual insurance plans next year.

BlueCross BlueShield of Tennessee announced last week that it planned on moving back into 16 counties in eastern Tennessee that would not have had any insurers in the exchanges after Humana announced it was pulling out in 2018. Humana is down to fewer than 200,000 members in the individual market in 11 states this year and plans to stop offering all ACA exchanges plans in 2018. Instead, it will redouble efforts on Medicare offerings.

Anthem is also expecting to stay in the exchanges. The company, which has 1.1 million members in ACA exchanges, is working on 2018 rates.

Kaiser Permanente is also staying onboard. Though acknowledging the market instability, Chief Executive Bernard Tyson recently said the market isn’t in a “death spiral.”

Will more drop out? Oliver Wyman conducted a survey in early April and asked insurers about the 2018 ACA exchanges markets. Of all the payers surveyed, a “vast majority” said they are committed to the exchanges, though they are still cautious. Only one survey respondent said it plans to leave the exchanges.

The survey also found that 70% of respondents expect to stay in the exchanges without any major strategy shift in 2018. The remaining 30% said they are looking for ways to stabilize their ACA lines of business, including modifying plan offerings, such as eliminating gold-level plans, and changing to plans with tighter benefit design, such as HMOs or narrower network plans, according to the survey results.

Nearly half of respondents said early April was too early to determine rate increases. However, for those that were ready to set rates, half of respondents said they plan to increase rates by 10% to 20%. One-quarter said they planned to increase rates by less than 10% and the other one-quarter said they expect to raise rates more than 20%. The average rate increase was 22% in 2017.

Fritchen says that disparity isn’t surprising given the exchange market’s fluidity. That said, Fritchen says payers are cautiously moving forward and some states have even said they will allow insurers to set rates and then change them if there is a new development, such as no CSR payments.

“Their number one goal is solvency,” she says.

The survey results found that payers plan to wait as long as possible before setting 2018 rates in hopes of getting more guidance from the government.

One important thing to remember about the survey is that it was conducted in early April. The longer payers don’t get reassurances that CSR payments are on their way, the more instability for the market and the greater likelihood that some payers may decide to drop out.

How much will rates increase? Cori Uccello, senior health fellow at American Academy of Actuaries, told Healthcare Dive “premium rate changes for 2018 will vary by state, and will reflect cost trends and changes in expected enrollment and composition of the risk pool.”

Uccello says factors that will affect decisions include the CSR payments, “whether the individual mandate is enforced, and the effects of new regulations that shorten the open enrollment period and tighten special enrollment rules.”

Payers will also soon know what risk-transfer payments they’re getting from the federal government. These numbers traditionally come at the end of June. The payments pay insurers for coverage, which keeps premiums and out-of-pocket costs lower than if there were no payments. You can expect rates to jump if the federal government decreases those payments.

Payers to watch

There are insurance companies whose decisions will greatly influence the ACA exchanges debate. Here are three payer decisions to watch, whose decisions could cause people with no option in the exchanges:

• Anthem — The only payer in 59 counties in Kentucky.
• Centene — The only option for all exchanges in Mississippi.
• Cigna — The only insurer in 14 counties in Tennessee.

If any of these three pull out of those markets, there could be counties with no insurer option in the exchanges market, which could cause panic and send states scrambling. An insurer pulling out of those counties could lead to more uninsured or people going onto Medicaid, which will affect payments to hospitals and doctors.

What do unease and fluctuations mean for healthcare industry as a whole?

CSR payments don’t directly affect hospitals and doctors. These payments help payers cover lower income Americans. However, cuts to the CSR payments would lead to rate increases for individuals.

It could even cause payers to leave the exchanges. If rates skyrocket or if payers pull out, more Americans could be uninsured or go onto Medicaid, which has lower reimbursement rates than private payers. At that point, hospitals and doctors would feel the pain of uncompensated care and lower payments.

How does location affect payer decisions about whether to stay in exchanges?

Before the ACA, there was wide variety in regard to state regulations. Some states required certain types of coverage, while others had fewer mandates. The ACA leveled out a lot of those regulations and created a single risk pool.

However, states do vary in terms of population, cost, competition and provider networks. Payers with experience already in particular states know the market, the competition and how to price rates adequately. Highly competitive exchanges markets actually bring in more payers.

A recent Robert Wood Johnson Foundation study found that more competitors lead to lower premiums. Regions with only one or two insurers “tended to be sparsely populated and heavily concentrated in southern states.”

States with fewer rate fluctuations bring in more payers, said Fritchen.

Payers look at pricing, network strength and their relationships with provider networks when deciding whether to stay in a market or expand into another one.

“For the most part, they’re going to look at their block of experience to date and can they sustain any losses or can they fix it,” said Fritchen.

The future of the individual market

No one knows what plan the Senate will bring forward. There is only a two-vote swing in favor of the Republicans so the Senate will need to create a plan that doesn’t lose more than two Republican votes unless they get Democrats to support their plan.

Centralist Republicans will push for a similar ACA system or maybe even tweaks to the current system. They will also want to avoid Medicaid cuts. Conservatives, on the other hand, will want Medicaid cuts and will look to completely repeal the ACA.

Threading that needle will likely mean an even more difficult process than the onein the House, which narrowly passed the AHCA earlier this month.

What they decide and whether the government will continue to fund CSR payments will be major factors as to whether payers continue in the ACA exchanges or flee the market.