Here’s what managed healthcare executives should keep an eye on moving into the new year.
Here are 12 trends managed care executives can expect in 2017.
While it is impossible to predict what healthcare policy changes will occur in the new year, based on historical stances we may see a repeal or modification of some aspects of the Affordable Care Act (ACA), such as the excise tax on medical device manufacturers; the “Cadillac” tax on high-cost plans; taxes and fees on self-insured plans; and the penalties and limits that the ACA placed on health savings accounts (HSAs), flex spending accounts, and health reimbursement accounts (HRAs). In place of some of these changes, look for the potential for the expansion of consumer-directed healthcare options (HSAs, HRAs), increased support for health insurance portability, purchasing across state lines, expanding opportunities for pooling, and pressure for meaningful medical liability reform.
With the Federal Trade Commission’s (FTC) opposition to the proposed Anthem-Cigna and Aetna-Human mergers now headed to court, federal judges will decide whether consumers will be better off if the mergers move forward. Should the companies lose the cases and appeal, it is unlikely that the FTC, under a new administration, would drop the cases, as there is a history of bipartisan support of antitrust enforcement in healthcare. While megamergers may be slowed or stopped where antitrust is evident, the pressures leading to industry consolidation will not. Look for continued merger activity among smaller insurers, such as WellCare’s recent announcement to buy Universal American.
Health plans will be under continued pressure to reduce premiums in the face of escalating costs related to burgeoning pharmacy and behavioral health expenses as well as ACA health exchange exposure. Employers will continue to look to high-deductible plans as a way to mitigate premium increases and move more risk and costs to their employees and families. Providers must seek opportunities to negotiate value-based contracts that align their reimbursement with quality, access, and cost outcomes.
More than 98 million Americans are now covered by Medicaid at any point in a given year.One in four dollars
in the average state budget is spent on Medicaid coverage, and the total state and federal support for the program exceeds $545 billion. By 2025 the U.S. Government Accountability Office (GAO) projects that 108 million Americans will be covered by Medicaid, the federal share will exceed $600 billion, and combined state and federal spending in program will approach $1 trillion. Limited access to physicians and inconsistent quality remain significant obstacles to improving health outcomes for Medicaid beneficiaries. The new administration favors block grants to states to fund Medicaid, and allowing states more flexibility to establish Medicaid standards and coverage. Many states have moved to value-based or managed-care models for Medicaid; this could accelerate in the future. Expect increased focus on long-term services and support services, as this sector has been largely unmanaged and fragmented in the past. There will be increased efforts to rebalance with a shift to home and community-based services.
The lines between provider and payer will continue to blur, with providers experienced with managing risk forming provider-sponsored health plans, and payers acquiring physician practices (to complement narrow networks), telehealth companies, and urgent-care facilities to become “payviders.” Expect the trend of providers moving into the payer space as Medicare Advantage plans and Medicaid waiver plans to continue to grow, especially for those systems that are already effectively managing medical expense and utilization, and now want to build premium and benefit management skills. We also expect to see the continued increase of providers forming captives as a complement to their clinically integrated networks (CINs), integrated delivery networks, and large physician organizations. These strategies can be complex but worthwhile to differentiate the system by designing coverage to meet its specific degree of risk-tolerance, creating better access to the reinsurance markets, and various other benefits that will eventually create value for both the employer and provider hats
On the “payvider” side, expect to see fewer payers purchasing heavy assets such as hospitals or large integrated delivery networks, like Highmark did when it formed Allegheny Health Network in the Pittsburgh market. Instead payers will be more focused on building a competitive network through the acquisition of high-performing narrow networks, management service organizations, and urgent-care centers in retail settings helping to elevate a “one brand” concept. We may also see payers becoming providers through purchase of or contracting with large telemedicine programs, which will be used to augment their existing wellness, disease management, and population health programs.
We expect the trend of build vs. buy decisions to establish the necessary managed care infrastructure to start to follow a pattern. Do not be surprised to see providers, investing in direct infrastructure close to the care continuum (i.e., building the care model and care management infrastructure needed on their own). Meanwhile when it comes to big data, information technology, and analytics, expect solutions focused on buying proven capabilities on a contracted per annum, per member per month, and even payment solutions aligned with quality and cost effectiveness goals set by government or large payers.
Over the past several years, both payers and providers have begun the journey to establish alliances and collaborations. Many have invested executive and physician leadership and organizational time and talent and made great strides in building a trusted relationship with each other. The biggest driver behind this relationship has been a growing transparency of information, as payers have become more comfortable with sharing traditionally well-guarded data (e.g. out-of-network medical expense), and providers have become more comfortable elaborating on their internal cost pressures so that payers understand the driver behind rate negotiation strategies. Payers and providers are also learning how to create “win-win” deals where payers are considerate of how solutions built for payers can affect a provider’s ability to compete and invest, and providers are beginning to be cognizant of the fact that the payer needs a deal that allows it to offer value-added services as well as highly competitive premiums to serve and grow its membership. While not all payers and providers are singing “Kumbaya” in unison quite yet, we expect to see the trend of trust building between these two partners continue to build.
Providers are building “smart” networks focused on key geography, specific populations, IT interoperability, and reporting transparency to meet the needs of the payers and the various sized communities for smart investment in costly infrastructure and support systems. A smart network example is a post-acute preferred network. Payers appreciate providers being aware of referrals to high-cost skilled-nursing facilities and home health agencies, and providers see this as a win for their accountable care, bundled payment, and episode of care strategies. This has led to real answers regarding with whom and where to partner as these provider networks learn more of the capabilities, locations, and skills of their network and the use of post-acute care providers so that the network can articulate an ROI strategy for the payer by selection of a value network with the “right members” in the selected networks. Providers across the country are continuing to use CINs as the vehicle for their smart network and as embedded product differentiators for payer products..
We have started to see firsthand the power of big data through the redesign of clinical care pathways, and we expect to see this accelerate in the managed care industry as near instantaneous actions become possible through the interoperability of IT and communications between care givers. This provides a huge volume of interconnected data entered and embedded in the networks, driving early knowledge of actions planned, just completed, and reported to the care team, the patient, and their families. The use of data scientists in conjunction with finance and actuaries for claims projections is proof that one can't rely solely on the IT department for the procurement and analysis of data. All managed care leaders should be involved in decisions around what investments are made, how ROI is measured and maximized, and how each investment will create value for not just the system, but for patients and payers as well. The need for a clear data governance structure and integrated architecture is paramount as organizations accumulate massive quantities of data through various systems and tools.
Hospitals have long been focused on designing greater efficiency and patient satisfaction into their programs. Many are now including physician office flows, referral flows, ED and acute care redesign, coupled with real-time capacity management command centers to focus on care that makes the difference and increases effective use of high-value resources and treatments while decreasing overuse of these resources. Many are seeing real wins as they create high-value alternatives to ED usage, hospital admission or hospitals’ short stays for the community. The Judy Reitz Capacity Command Center at The Johns Hopkins Hospital is a recent example of this new capability to increase the efficiency of the system of care as well as the effectiveness of the total system of care. Look for managed care to integrate with service line planning specifically around back-fill strategies as ambulatory sensitive admits move from the inpatient to outpatient settings. Capacity management strategies can be used to backfill lost admits with a targeted patient population.
While MACRA has a direct impact to physician organizations, there is still a large role for hospitals and facility providers to play in reshaping their managed care strategy. As facility providers react to the reduction in admissions from physicians participating in both the Merit-based Incentive Payment System and Advanced Alternative Payment Models, managed care executives will push for greater physician alignment and benefit structures to drive domestic utilization. Additionally, as physicians move into various advanced payment models under the Quality Payment Programs, we expect to see managed care leaders realizing a different incentive model and conducting the analysis to find their “tipping point” between risk-based and fee-for-service reimbursement.
The idea of becoming the “one brand answer” to patients and families is an important trend. As a network becomes more driven by patient satisfaction and higher quality, look for trends in higher deductibles or benefit plan changes such as the lowering of in-network out-of-pocket costs to incent the use of owned resources. This strategy creates wins for the providers and the consumer. One of the reactions to this strategy is that states are upgrading their regulatory requirements, increasing oversight, and taking action to protect consumers’ rights and improve access.
James R. Smith, FACHE, is executive vice president, GE Healthcare Camden Group; David DiLoreto, MD, is senior vice president, GE Healthcare Camden Group; and William Ringwood is manager, GE Healthcare Camden Group.