The three trends that will carry into next year.
The managed care industry has seen a range of trends emerge over the past year. Many of these developments reflect the need to address the rising costs of care, while others are the result of regulatory mandates. Legislative and regulatory issues that arose this year, and will likely continue evolving in 2016 include:
Network adequacy has been a hot topic in 2015. Efforts to keep plan costs low through narrower contracted networks have raised access concerns across all markets, though particularly in the individual and small group sectors. In response, regulators are reassessing their network adequacy standards and review processes to ensure that plans can provide appropriate access. The National Association of Insurance Commissioners is updating its model network adequacy rules, which federal regulators will take into consideration as they further develop network adequacy standards for the health insurance exchange markets. Medicare is moving to include network adequacy review in its annual plan audit protocol. In addition, proposed Medicaid rules would require states to establish time and distance standards, and would include physical accessibility and cultural competence in determining network adequacy.
There were 206 breaches in the healthcare sector as of September 29, 2015, which represents 36% of all reported breaches in all sectors as of that date, according to the Identity Theft Resource Center.
Unfortunately, health plans have increasingly fallen victim to these breaches, impacting tens of millions of members in 2015 alone. Some of the breaches resulted from employee carelessness, such as a lost laptop, but many are the result of active hacking and cyber theft. Healthcare organizations remain especially vulnerable to cyber attack because they are large repositories of desirable sensitive data and they typically lag behind other industries in terms of the money and effort spent on cybersecurity. As the number of attacks increase and the costs of remediation, fines, and class action lawsuits continue to rise, the healthcare industry will need to rethink its approach to privacy and security threats in 2016.
2015 has been an active year for both large and small healthcare payer transactions. The mega deals include Aetna-Humana ($37 billion, 33 million members), which adds significant government program membership to Aetna’s rolls; and Anthem-Cigna ($54 billion, 53 million members). On a smaller scale, Centene, which operates managed care plans for state Medicaid programs, will acquire Health Net, a California-based HMO that operates heavily in the Medicaid and Medicare space ($6.8 billion).
The Centene/Health Net transaction may provide a useful platform in the likely event that state or federal regulators force divestiture of some assets as a result of the Aetna or Anthem deals.
Where acquisition transactions do not make sense, nontraditional alliances have become increasingly prevalent between payers and providers as well as among providers. However, adding size adds antitrust scrutiny by state and federal regulators as well as industry stakeholders. Already the American Medical Association and American Hospital Association have testified and issued reports claiming that the resulting market concentration will negatively impact premiums, innovation and the quality and/or quantity of healthcare services.
The aforementioned trends will continue to impact managed healthcare in 2016. They reflect the industry’s ongoing efforts to better manage increasing costs while meeting the market demand for healthcare quality. Stay tuned to see what else the future holds.
Helaine I. Fingold is a senior counsel in the healthcare and life sciences practice in the Baltimore office of Epstein Becker Green. John W. Eriksen is a member of the healthcare and life sciences practice in the Washington, DC office.