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Telehealth Grows, but Medicare Has Woes

MHE PublicationMHE January 2022
Volume 32
Issue 1

Cost pressures may increase as the Medicare Hospital Insurance Trust Fund runs low, but the reliance on telehealth that the pandemic wrought is likely to continue, especially for mental health services.

In the first half of 2020, the coronavirus forced the healthcare system to transform itself in dramatic ways that continue today. Those changes are likely to remain in place throughout the early part of 2022, if not through the entire year and beyond.

In interviews with Managed Healthcare Executive®, executives and experts predicted that the American healthcare system will continue to add more telehealth to the delivery system, particularly for those needing mental health and substance abuse treatment. At the end of 2021, this form of care delivery was becoming so popular that insurers were offering telehealth as a virtual-first product.

In addition, experts predicted, the healthcare system will continue to focus on the never-ending battle to rein in costs.

Rising pressure for cost control

This year and next, two forces will come into play and increase the focus on the need to control healthcare costs, predicts David Muhlestein, Ph.D., J.D., chief strategy and chief research officer for the consulting firm Leavitt Partners. One is the perilous state of the Medicare trust fund, which will be exhausted unless Congress changes how the program is paid for, the amounts paid, or some combination of the two, according to Muhlestein.

The other is healthcare cost pressures on health plans and employers as the nation moves out of the acute phase of coping with the COVID-19 pandemic to what seems likely to be an endemic respiratory disease.

“In 2022, cost pressures will start to come back,” Muhlestein says.

The estimates vary. Medicare’s Hospital Insurance Trust Fund is projected to be exhausted in about three to six years, Muhlestein notes: “No one is certain about when it will happen, but it’s definitely on the horizon.”

Given that the Medicare program covered about $830 billion in healthcare costs in 2020, roughly one-quarter of total U.S. healthcare expenditures, the financial health of the trust fund should be one of the most pressing topics for discussion in Washington. But politics and the midterm elections this year will likely postpone any such serious consideration of the problem till late this year or early next year, according to Muhlestein.

“There has to be a conversation around how to address the Medicare trust fund,” he says, “but my guess is that the election will distract Congress for the next year or so.”

Muhlestein sees an “or else” scenario for Medicare: substantive changes in the program or else some drastic cuts in payments. “That would be incredibly disruptive for physicians, hospitals, health plans and anyone who has Medicare or Medicare Advantage or is in a managed Medicaid plan because they would all be affected by those changes,” he points out.

At about the same time, the entire U.S. healthcare system may be entering what Muhlestein sees as a post-acute COVID-19 period. Providers and payers will need to adjust and perhaps manage costs without the significant levels of funding that the federal government has invested in shoring up the health system during the height of the pandemic. Another factor may be an uptick in the use of healthcare services as people who held back from getting care start needing it, possibly when their disease is at a more serious stage.

Healthcare providers will need to be more flexible than they have been in the past, Muhlestein predicts. “For a long time, the health system has been based on building capacity around well-reimbursed procedures,” he notes. Space and resources were devoted to a single purpose. Now and in the immediate future they will need to be more nimble, reallocating room and resources from one kind to another.

“The analogy I use is a hotel ballroom, which can handle a big conference all in one room or …provide space for a luncheon or a small wedding,” continues Muhlestein. “Whatever it is, the space can be repurposed very quickly to fit certain needs.”

If there are just a few cases of COVID-19 in a community, some rooms — indeed, whole facilities — may not be needed. But if serious cases spike, those rooms or facilities, and the doctors and other healthcare professionals needed to staff them, could be put to use quickly, he notes.

More virtual mental health care

The toll the pandemic has taken on people’s mental health has been well documented. Isolation has increased. The stress of unemployment has affected millions of workers who were laid off. Now labor shortages are affecting those who have stayed in their jobs. Research findings have shown that the prevalence of depression has increased.

“The pandemic has elevated mental health as an area of focus for all stakeholders, but particularly for employers and all purchasers more generally,” says Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions.

Employers want to see changes, such as greater integration of mental health across the entire spectrum of health care services, including primary care, Thompson says.
Physicians, hospitals and health systems need to demonstrate with data that they are doing more to diagnose mental health issues earlier and to assess patients’ progress while in treatment, he says.

But Thompson sees a bright spot in the pandemic: greater access to telehealth, especially for mental and behavioral health services. In his view, telehealth can help fill the void in underserved areas. “For too long,” he says, “employers and other purchasers have tolerated unequal access to mental health services.”

In a survey of 142 employers that Thompson’s organization conducted last year, almost all (92%) of the respondents said that access to care for mental health conditions and substance use disorders would be a priority over the next two years. Telehealth has become one of the main sources for providing access.

“Telemedicine and tele-behavioral health care are here to stay,” says Thompson. “You can’t put that toothpaste back in the tube because it’s more convenient and safer than conventional face-to-face counseling. Also, in many ways, efficacy is higher, in part because it integrates measurement over the course of treatment into the care process.”

What’s more, he continues, telehealth allowed more mental health providers to deliver care than ever before, a problem policymakers had struggled to solve before the pandemic.

For health insurers, the pandemic has demonstrated the benefits of providing care via telehealth. This is shown by the rising number of health insurers that have embraced what they call virtual-first care, in which physicians and other providers meet with patients first and almost exclusively via telehealth.

Joseph Burns is an independent journalist in Cape Cod, Massachusetts, who writers about healthcare.

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