PwC: Top 5 ACA trends affecting health plans, providers

April 30, 2015

PwC researchers recently identified five of the biggest ACA-related trends.

The Affordable Care Act (ACA) was signed into law just over five years ago on March 23, 2010.  Since then, the healthcare industry has experienced massive change, from new reimbursement models to the opening of the health insurance exchanges to new regulations. But changes associated with the ACA are far from over.

Five years post-implementation, health plans, health executives, and healthcare providers must continue to adapt to changes associated with the ACA, and develop strategies to thrive in the new healthcare environment.

During a recent webinar presented by PwC's Health Research Institute, an organization dedicated to analyzing healthcare issues and policies, PwC identified five of the biggest ACA-related trends.

Here's how those trends are affecting health plans and providers:

More risk.

With the shift to value-based reimbursement that rewards providers based on the quality and cost of care provided, "risk," from a financial, enterprise, operational and market-share standpoint, is something that every healthcare player is encountering, said Ceci Connolly, leader of PwC's Health Research Institute, during the webinar.

"Medicare in particular has put in place a number of new payment strategies that are going to emphasize ... value," she said, noting that combined penalties associated with three Medicare quality programs - the Hospital-Acquired Condition Reduction Program, the Hospital Readmission Reduction Program, and the Hospital Value-Based Purchasing Program - put 5% of Medicare inpatient payments at risk for providers. "That's probably an important enough number for every hospital and health system to take notice [of] and think about what they need to do to deliver the right care, at the right time, at the right place."

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Payers also face significant changes due to the shift to value-based reimbursement, said Connolly, noting that many are beginning to invest in systems that propel value-based reimbursement forward. For example, UnitedHealth Group is using its Optum system, a data and analytics and technology solutions company, to "really move in the direction of value-based care." Connolly also points to Aetna's Accountable Care Solutions arm, which provides population health management, technology and health plan services to providers.

 

NEXT: A renewed emphasis on primary care

 

A renewed emphasis on primary care 

The ACA has "elevated" primary-care teams to a very prominent role in the healthcare system, said Connolly. PwC numbers show that the ACA has distributed more than $31 billion to primary-care services, including establishing the Community Health Center Fund that provides $11 billion over a five-year period for the operation, expansion, and construction of community health centers, which offer preventive and primary healthcare to patients regardless of their ability to pay.

The growing number of accountable care organizations is also helping to establish primary-care physicians as the center of the care continuum, as success in the shared-savings reimbursement model requires a team-based approach and a heavy emphasis on prevention. The Medicare Shared Savings Program now serves about 7.8 million seniors, has reported savings of $417 million, and about 425 participating physician practices, said Connolly. "Each step along the way [has] a greater emphasis on primary care, a greater emphasis on a team-based approach ..."  

Connolly also noted that primary care telehealth is gaining traction as regulatory barriers fall and more health plans reimburse for such services. "You really see that when it comes to primary care, more and more Americans will have the ability to do virtual visits with the hope that that can control the cost but continue to maintain that nice relationship between doctor and patient."

New partners 

Another major trend is the number of new, "nontraditional" players joining the healthcare space, said Connolly. More than 90 new health companies, many of them technology-focused, have been created since 2010. "It's really quite a significant boost to the economy," she said.

One of these new companies, Connolly said, is Innovation Health Plans, a jointly-owned health plan serving Northern Virginia that was recently formed by Inova, a not-for-profit healthcare system and Aetna. The companies are embracing a "consumer-centric" technology-supported business model, said Connolly.

A March 2015 PwC report, "Healthcare reform: Five trends to watch as the Affordable Care Act turns five," includes additional details about the healthcare-related companies that have emerged since ACA implementation:

  • Twenty nine of these companies focus on telehealth (connecting patients and clinicians via technology);

  • Fifteen focus on consumer education (increasing transparency to inform health decision-making);

  • Fourteen focus on process improvement (streamlining operations to enhance efficiency and patient experience);

  • Nine focus on connecting patients and physicians with treatment and support networks;

  • Nine focus on health and wellness benefits (offering insurance services or individual wellness incentives);

  • Seven focus on model innovation (helping develop new payment and delivery models); and

  • Seven focus on analytics (collecting and processing patient health data).

NEXT: Shifting strategies

 

Shifting strategies

For health plans, one of the biggest ACA-related trends has been, and will continue to be, the shift in health insurance from "wholesale to retail," said Sandi Hunt, a principal at PwC's Health Industries Practice. "We've seen a big shift from the business-to-business model that has been prevalent for the last several decades in health insurance and a movement toward the business-to-consumer model."

Though that movement was already underway pre-ACA, it accelerated as public marketplaces developed and as employers look ahead to the "Cadillac" tax in 2018, which will place a 40% excise tax for premiums paid by insured and self-insured employers exceeding $10,200 for individual premiums or $27,500 for family premiums.

According to the March PwC report, public exchanges and the Cadillac tax have "sparked a second look at private exchanges by employers seeking cost-effectiveness, budget certainty and fewer administrative hassles."

Many health plans are now working to refine how they deliver the "retail experience," said Hunt, adding that the health insurance marketplaces demonstrate that simply providing choice to consumers is not enough. Consumers want choice, plus information, plus convenience, she said. They want to know what care will cost, where to get care, and where to get it quickly. "Insurers are responding to that desire for information in developing tools that consumers can use," she said.

Already about 12 million people are covered by the state and federal health insurance exchanges and that number is expected to grow to roughly 25 million over the next 10 years, said Hunt. Add to that the Medicaid expansion and "Insurance carriers are really looking at what their opportunities are to expand their footprint."

States become key players 

The final trend is the growing role states are playing in health reform. They have "a huge role" in deciding what their state insurance marketplaces look like, said Hunt. Many states, she said, have elected to take a more active role in creating these marketplaces, while others have stayed on sidelines and let the federal government take the primary role.

The big state-related question now, said Hunt, is which states will participate in the Medicaid expansion. Currently 29 states and Washington, D.C., are participating; and at least six are in active conversation with CMS about participation, she said. 

Health plans need to pay close attention to the varying approaches states are taking to the exchanges and the Medicaid expansion, according to the PwC March report.

"... The law’s implementation has led to highly diverse, geographically dependent health reform experiences," the report states. "For health plans specifically, operating in multiple states means they must assess each one individually."