What we don't know about health reform

Last month, the Obama administration halted new enrollment in the Pre-existing Condition Insurance Plan because of financial concerns. Industry observers knew the program would run short of funding, so the announcement was hardly a surprise.

Other aspects of the Patient Protection and Affordable Care Act (PPACA) are much more difficult to forecast, for example whether Accountable Care Organizations (ACOs) will be successful or whether employers will abandon health benefits. MANAGED HEALTHCARE EXECUTIVE reached out to several key industry thought leaders to find out what we don't know about health reform.

Click to jump to their full responses:

Karen Ignagni  |   Martin P. Hauser  |   Barbara Morales Burke  |   Dan Hilferty  |   Margaret Murray Vik Mangalmurti  |   Don Hall  |   Joel Brill  |   Jim Fox  |   Bill Fera  |   Rebecca L. DitmerScott W. Van Valkenburg  |   Bill Copeland  |   Liam Walsh  |   John Meerschaert  |   David CalabreseAl Lewis  |   Perry Cohen  |   Kathy Prosser  |   Tamara M. O'Reilly

Karen Ignagni
CEO
America’s Health Insurance Plans

Will younger, healthier individuals under 40 purchase health insurance or will they choose to wait to buy coverage after they need medical services?

The Affordable Care Act will expand coverage to millions of Americans, but major provisions of the law, such as the $100 billion health insurance tax, minimum essential health benefits requirement, and new restrictions on age rating, will result in significantly higher healthcare costs for individuals and families. While the law does provide premium and cost-sharing subsidies to help low- and moderate-income families afford healthcare coverage, millions of people are not eligible for subsidies and many that are eligible will still pay more for their premium than they do today. When faced with higher healthcare costs, many younger, healthier people may choose to forgo purchasing coverage until they need it, especially when the penalty for not having insurance is as low as $95. If this happens, costs will go up for everyone, young and old.

Martin P. Hauser
President
SummaCare
MHE Editorial Advisor

Will the government be able to create a viable, long-term solution to the Sustainable Growth Rate (SGR) payment model?

It will be interesting to see what type of solution is developed in both the short and long term to this ongoing problem, which has not been addressed for so many years. Any solution will have far reaching impact including, but not limited to: the impact on commercial rates as most insurers follow the same methodology; whether the ‘fix’ helps to alter the current mix and distribution of primary care and specialist physicians; whether the fix impacts the decisions of physicians to retire early or becomes a barrier to students pursuing a career in medicine.

Barbara Morales Burke
Vice President of Health Policy and Chief Compliance Officer
Blue Cross Blue Shield of North Carolina

We don’t really know what impact the introduction of premium and cost-sharing subsidies will have on the larger conversation about government entitlements.

Due to the 400% federal poverty level cap, subsidies will go to a larger percentage of Americans, many of whom are not accustomed to receiving support of any kind from the government. Will these subsidies change public expectations about government assistance in general? Will these subsidies change the conversation about subsidies or will it change the conversation about the cost of healthcare?

When the cost of subsidies grows at a faster pace than the revenue sources identified to pay for it, there will need to be further discussion and debate on tradeoffs within or beyond the bounds of healthcare. What will be politically acceptable-or generally acceptable-to the American people as the debate continues about revenue needed to support the increasing cost of healthcare?

Finally, the subsidies under the Affordable Care Act are based on modified adjusted gross income rather than general wealth. A person living off substantial savings could qualify for a premium subsidy while a neighbor with higher annual income but no savings may not qualify. While perhaps not frequent, will these subsidies cases generate confusion and misunderstanding or will it generate controversy?

Dan Hilferty
President and CEO
Independence Blue Cross
MHE Editorial Advisor

At Independence Blue Cross, we’re prepared for healthcare reform. But we’re not sure consumers are ready for reform-even people who are uninsured.

We’ve done consumer research in our region and many people had no idea about the big changes coming in 2014. In some focus groups, uninsured people had not heard of healthcare exchanges and had no idea that under the reform law they could be eligible for subsidies or tax credits. Some people think that the law provides free government healthcare. It’s really awakened us to the serious responsibility we have to go where consumers are and help educate them about healthcare reform.

Margaret Murray
CEO
Association for Community Affiliated Plans
MHE Editorial Advisor

We don’t know how much churning will go on between Medicaid and the exchanges.
A significant question is how smooth the transition will be for those who move from eligibility for Medicaid to subsidized coverage in the exchanges. Small, short-term changes in income may result in significant numbers moving between the two programs and streamlining transitions between the two programs will be critical. California has introduced a ‘bridge’ plan, where managed care plans serving Medicaid populations may continue to do so once they become eligible for subsidized exchange coverage.

And come 2015, the Basic Health Program holds significant promise to provide a continuum of coverage for persons with incomes of up to 200% of the federal poverty level. Bringing quality coverage within reach for millions is the best feature of health reform. It’s critical that policymakers take steps to make sure that people moving between Medicaid and the exchanges don’t fall through the cracks. That’s why ACAP has long championed making 12-month continuous eligibility upon enrollment in Medicaid and CHIP mandatory, and we hope to see such a bill introduced in this Congress.

Now that agreements are in place for the duals demonstration projects, what’s next?

We look forward to learning from the soon-to-be-implemented demonstrations how people enrolled in both Medicare and Medicaid respond to the opportunity to be enrolled in an integrated plan. It will be interesting to see which models of care improve quality and access while helping to contain costs; whether decline in functioning can be slowed by better care coordination and states with a dependence on institutional care achieve a rebalanced long-term care system. It bears noting that rates for health plans have not yet been set in the states where the demonstrations are set to launch. Properly balancing the need for savings with actuarially sound rates will be critical to the success of this initiative.

Vik Mangalmurti
Vice President, Office of Health Care Reform
Highmark Inc.

What kind of latitude do employers feel they have as far as altering their employee health benefits?

This question has been the source of a lot of discussion and study since the law was passed, with no definite or consistent conclusions. I sense a growing realization among employers that offering good benefits-particularly health coverage-makes for happier, more productive employees, and that happier, more productive employees are the number one most important and most strategic competitive advantage.

Don Hall
Principal
Delta Sigma LLC
MHE Editorial Advisor

One of the biggest unknownsin the upcoming implementation of the state healthcare exchanges is whether we will see the appearance of a paradigm changing, low-cost, great service, health plan that will change the health insurance game. Ellipsis

This Southwest Airlines-like plan could appear in the form of an ACO or new market entrant. If this happens competition will truly reign.

Joel Brill, MD
Chief Medical Officer
Predictive Health LLC
MHE Editorial Advisor

We don’t know whether there will be enough primary care providers (PCPs) to accommodate the 32 million-plus individuals who will now have health insurance on Jan. 1, 2014.

While hospitals are buying up every PCP in sight, physician productivity drops with employment. Who will see these patients? Is this the opportunity for retail-based clinics and urgent care centers to become integrated into population health management and the care delivery system?

Jim Fox
Director and Senior CFO Consultant
Warbird Consulting Partners

There are many more things about the future that we do not know than there are those we do know. Will the health exchanges be a success? Will ACOs be a failure? The only thing that can probably be said for sure is if we can provide better value to our customers, it is positive for all involved. So, if our focus remains on providing better patient outcomes, better service, and reducing unnecessary care and costs, we will be better prepared for the future.

One of the items that concerns me the most is will the health exchanges actually be able to perform as they are envisioned? If they do not, what alternatives have we in the health industry done to prepare for the fall out? Have we analyzed or thought through the potential consequences of their failure or delay?

Bill Fera, MD
Principal, Health Care Advisory Services
Ernst & Young LLP

Will exchanges be successful? Will individuals enroll at the level that is expected? Or will people risk paying the penalty? What level will small businesses enroll at? When they are eligible, will large businesses opt to have employees participate on the exchange rather than continue employee-sponsored healthcare? In other words, will we see acceleration in the movement to defined contribution versus defined benefit for healthcare? The biggest question of all for providers is: what will reimbursements look like? Appropriate reimbursement would make providers whole, compared with the discounted or “charity” care they provide today. If reimbursement is too low, access may become an issue, and providers could suffer if commercial payers of today wind up being discount payers on the exchange tomorrow.

Can providers and payers align? If accountable care constructs are really going to work, it will take payers and providers working together in a truly integrated fashion. This requires trust. Can payers and providers grow to trust each other quickly? Some payers are bypassing the trust question by buying their own providers and creating instant integrated delivery systems. It will be interesting to see how this trend of payers becoming providers fares compared with the trend in the 1980s and 1990s of providers trying to become payers (which did not go so well). On the face of it, the integrated delivery system, and the control of the healthcare premium dollar from start to finish that comes with it, makes sense. To the extent that transparent, evidence based protocols deployed and adopted, quality metrics are collected and published, a skeptical public may yet buy into the concept of Managed Care 2.0.

Rebecca L. Ditmer
Principal, Health Care Advisory Services
Ernst & Young LLP

One of the biggest unknowns will be the impact and cost of serving new customers under health insurance exchanges. Our clients have performed significant analyses to understand the financial impact of administering the metal tiers within the exchanges, but the total cost to serve their customer/patient bases is unknown. What our clients can do is evaluate and assess today's customer service and experience models to evaluate their flexibility and scalability to address the expected call volumes-especially in anticipation of the awareness campaigns that will begin this summer by the federal government. By using past models like Medicare Advantage, we can expect a 25% or greater increase in customer inquires through phone, web and social media. What will be different, however, are the types of questions being asked; tax and financial questions focused on member/patient affordability. For example, “Am I eligible to purchase insurance on the exchange?” and “How do I apply for advance payments of premium credit?”

Another unknown is the impact of the higher deductible metal tiers on physicians’ and hospitals’ abilities to effectively identify patients’ liabilities and manage that collection to minimize the impact on their accounts receivable and bad debt.

For members/patients now covered through a metal tier under the exchange, physicians and hospitals may be used to more than 90% of the payment coming from a government subsidy or private payer. Tomorrow, the members/patients may have large deductibles that must be collected before benefits are paid out. It's important for physicians, hospitals and payers to understand the shift of payment liability, work together to educate members/patients and set expectations for effective payment assurance.

Scott W. Van Valkenburg, MD
Senior Manager, Health Care Advisory Services
Ernst & Young LLP

The biggest unknown related to ACOs is, of course, how successful will ACOs be in improving value to their attributed populations-with value being defined as quality over cost-and will that value be sustainable given the capital costs required to support effective ACO operations. Additionally, if ACOs or other integrated systems of care are successful in decreasing unnecessary admissions and preventing readmissions, what will be the long-term effect on the number and size of acute care facilities? Another question is how fast will provider organizations move to an integrated system, such as an ACO, if significant value is demonstrated by those early movers?

A larger question going forward relates to the role of the acute care facilities in the future. In addition to decreased admissions due to more effective care coordination and incentives to decrease admissions, the growth in innovative healthcare technologies to allow for more and more home monitoring, telehealth and virtual home visits will have an impact on the number of admissions.  

We don’t know the outlook for patient engagement and accountability.

PPACA will enable a significant number of more Americans-estimated at 30 million-to now have insurance. Patient engagement and motivation to be and stay healthy are critical components of population health. The unknown is how effectively the current healthcare model will encourage patient engagement in taking an active role in their health.

Bill Copeland
Vice Chairman, U.S. Life Sciences & Health Care Leader, U.S. Health Plans Leader
Deloitte LLP

Will co-ops be able to compete? Co-ops have the best chance to gain traction in rural areas and other underserved communities. Several new co-ops have been recently authorized by states.  But it will be considerably more challenging for co-ops to take root in the more developed markets.

Will health plans' market share get so watered down they can no longer negotiate with providers?

I don’t think plans will see a drastic difference in their ability to negotiate, because they already operate in an environment in which physician reimbursement in most markets is comparable among the major competitors. There is a spread of about 5% to 10% advantage for the leading competitor when it comes to unit cost pricing for inpatient and outpatient facility pricing. At the same time, the nationals have an advantage over the regional players in negotiations around drug pricing.

Will ACOs fail? Not from the perspective that any group that creates a robust governance function and invests in the enabling tools and processes-including analytics, EMRs, HIEs, consumer engagement models and evidence-based practices -has an advantage in the new world of health reform.  So groups with the necessary platform should outperform the existing fee-for-service models.  How many ACOs will invest in the required capabilities is a harder question to answer.

Liam Walsh
Principal, U.S. Healthcare and Life Sciences
Advisory Industry Leader
KPMG

[How will healthcare technology evolve as] PPACA dynamics and payment model transformations which focus on population care and quality results, over per unit reimbursement, necessitate greater consumer engagement and unique approaches?

Phased implementation of PPACA is driving disruptive situation dynamics across the healthcare ecosystem. These dynamics and payment model transformations, which focus on population care and quality results over per-unit reimbursement, are necessitating greater consumer engagement and unique approaches to serving consumers. Consumer engagement is growing in the following ways:

Increased expectation for transparency of care costs and quality; Consumers assumption of greater risk-making consumers more aware of and accountable for their discretionary healthcare spending, further motivating them to be more participatory in their healthcare; Greater awareness of premium healthcare expenses (e.g., imaging, premium pharmaceuticals); and Increased use of consumer health advisors to maximize effectiveness of discretionary out-of-pocket spending.

This increased engagement and generational technology expectation will-and is already-forcing healthcare technology to evolve. Healthcare technology has to enable more immediate consumer access to data, and more mobile tools will emerge to facilitate connectivity between consumers and providers. This more remote, but more persistent business-to-consumer connectivity will also help bend the cost curve, increase access to care, and, if early results are an indicator, improve quality of care through more continuous connectivity with providers.

Payers are already evolving their organizations to face these challenges and develop new strategies for interacting with consumers. They understand they need to be viewed more as healthcare service providers and are purchasing provider organizations to achieve this. Consumer participation will continue to drive consolidation of payers and providers. Business strategies will shift emphasis to focus on population health instead of individual health, and payers will have to seek new alliances in the industry to help with funding out-of-pocket investments. These may include retail alliances to create alternative lower cost options.

John Meerschaert, FSA, MAAA
Principal and Consulting Actuary
Milliman

How many states will expand Medicaid eligibility up to 133% of the FPL?

Some states have already definitively accepted or rejected PPACA’s enhanced federal funding for expanding Medicaid eligibility up to 133% of the federal poverty level. Other states are still analyzing the pros and cons of accepting the federal funding, or are looking for creative alternatives to use the funding for private insurance options. For example, Arkansas has received a conceptual go-ahead from the Centers for Medicare and Medicaid Services (CMS) for its proposal to use Medicaid funding to enroll individuals eligible for the Medicaid expansion in exchange products. 

It will be interesting to see how many states end up accepting or rejecting the money given the financial, policy and political considerations.

David Calabrese
Chief Clinical Officer
Catamaran
MHE Editorial Advisor

What are the likely drug utilization patterns and financial impact for the millions of individuals soon to be accessing care through the health insurance exchanges?

Based upon learnings from the launch of healthcare reform in Massachusetts several years ago, one could expect that drug utilization within this population is likely to be significantly greater than that of the general commercial payer population. Remember that these are individuals that have historically had little to no prescription drug coverage, and now will have access to a fairly generous drug benefit based upon current Essential Health Benefit requirements. Many of these individuals are in and out of lower paying jobs, and a component of that dynamic may be health-driven. In my experience, we have seen high prevalence of mental illness, substance abuse, diabetes and other key chronic illnesses, several of which might require costly specialty therapies. Thus, one should not be surprised to see higher than average prescription volume per member, average costs per script, and overall drug expenditures.

Al Lewis
Executive Director
Disease Management Purchasing Consortium
MHE Editorial Advisor

We have absolutely no clue how many companies are going to move to the exchanges.

My suspicion is that there will be a major unintended consequence-which is the young and healthy companies sticking with self-insurance while the old economy companies move to the exchanges-if not right away then within 24 months. This will create all sorts of adverse selection issues.

Perry Cohen
Principal
TPG Family of Companies
MHE Editorial Advisor

We don’t know the true costs on the U.S. healthcare system of expanding access to Americans.

We need to know if the people that will now access the healthcare delivery system (the working poor) will drive up the cost of the healthcare system (physician visits, hospitalizations and drug costs). If we get these people into integrated care systems (Kaiser Permanente, Geisinger) with the right financial incentives (health plans and accountable care organizations) the costs can be managed.

Kathy Prosser
Senior Partner
Mercer

Will PPACA have an adverse effect on the productivity of U.S. employees, an unintended consequence?

While some companies-particularly retailers and employers with high part-time workforces-are solving for one problem, they may unknowingly be creating another, bigger problem.

Tamara M. O'Reilly
Senior Manager
Health Care Advisory Services, Ernst & Young LLP

I would say our largest "unknown" concerning meaningful use and electronic medical records (EMRs) pertains to the CMS audits that have just begun by Figloiozzi and Company. For example, there are "blindspots" providers need to consider during an audit.

Auditors will expect providers to produce documentation representative of the attestation they made claim to, regardless of when the audit is being conducted (e.g. documentation that aligns to an "eligible Medicare provider during the 2011 reporting period"). Henceforth, this may or may not be a challenge if providers have upgraded their certified electronic health record (EHR) technology since the reporting period. Because audits can occur several years after attestation monies have been received, it is especially important that they retain their documentation for each and every year, just as they would retain documentation for income taxes.

Audit reviews of all or some of the attestation measures, including Clinical Quality Measures, may be conducted during the audit activities. It is not a natural conclusion that every measure will be reviewed; however, providers and hospitals should be prepared with documentation associated with all meaningful use and Clinical Quality Measures (CQMs).

Suspicious audit review can occur around security measures, protected health information (PHI) and personally identifiable-information (PII). So, providers should ensure their documentation covers the standards adopted by the Department of Health and Human Services (HHS). It should be noted that this may or may not be a module and/or configuration within certified EHR technology, necessitating manual processes and documentation.

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