By Meghan Marx and Jenna Phillips, healthcare experts, PA Consulting.
Meghan Marx
Now that the 2019 health insurance Open Enrollment period has concluded, healthcare industry stakeholders are watching closely for any shifts in consumer behavior regarding enrollment and the overall uninsured rate. After a record drop in the uninsured rate from 2008 to 2016 in response to the Affordable Care Act (ACA), the uninsured rate has begun to increase again, by 1.3 percentage points from 2016 to 2017, according to data from Gallup and Sharecare reported on the Health Affairs blog. Additionally, at the December 15 close of the 2019 open enrollment period, the Centers for Medicare and Medicaid Services announced that 300,000 fewer individuals enrolled for 2019 than for the previous year. Under the policies of the current administration, the trend of decreased enrollment in exchange market plans, coupled with an increase in the U.S. uninsured rate, is expected to continue.
Jenna Phillips
The uninsured rate has fluctuated over time, but factors like the Congressional repeal of the individual health insurance mandate and reduced funding for health insurance enrollment counselors to support consumers to enroll in health insurance mean that the uninsured rate is expected to climb further in 2019. The increases in the rate of uninsured may seem small, but a 1.3 percent increase in the number of uninsured Americans represents 3.2 million more adults who were uninsured in 2017, compared to 2016. While the upward trend in the uninsured rate is consistent across population segments, a few specific demographics are at especially high risk of becoming uninsured, including young adults, low-middle income earners, and Hispanics.
Here’s what we know:
Young people are less likely to purchase coverage than older adults, who tend to have higher healthcare utilization. The 18 to 25 age bracket was the least likely demographic group to have health insurance in 2017, while those aged 65 and older were the most likely group to be covered. Notable is the 2.9 percent rate difference in coverage of individuals who are 25 to 26 years old, the age when parent’s health plans end coverage, an option guaranteed under the ACA.
Lower rates of employment and education are also associated with lower rates of health insurance enrollment. Low wages for unskilled labor are typically paid on an hourly basis, rather than as an annual salary, and employees in this situation may struggle to secure work with healthcare benefits. As a result, there is a lower rate of access to employer-sponsored coverage. While the poorest individuals and families qualify for government-sponsored coverage, there is a sizeable segment of the population that cannot afford to purchase commercial insurance but is disqualified from Medicaid based on income or personal assets.
In 2017, Hispanic Americans had the lowest coverage rate of any U.S. demographic, at 83.9 percent, and the lowest rate of private insurance coverage, at just 53.5 percent. This gap in the insured rate was especially apparent in states where Medicaid has not been expanded to cover the undocumented population. Language and cultural barriers and economic disempowerment might also have exacerbated the disparity of coverage between Hispanics and other racial groups.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
On May 23, the Department of Health and Human Services (HHS) released a report on individual market premium changes from 2013 to 2017 for the 39 states using the federal government’s healthcare.gov platform. The report provided a good gauge of the affordability of the ACA marketplaces.
The HHS report found that all 39 states experienced increases in individual market premiums since 2013. Average premiums rose during the four-year period by 105 percent, which translates to an average annual premium increase of $2,928. To put the 105 percent premium hike in perspective, it was more than 20 times the growth in the Consumer Price Index (CPI) and more than eight times the nation’s healthcare inflation over the same period. While 16 states had premium increases under the national average of 105 percent, 20 states had premium increases between 105 percent and 200 percent. Moreover, three states—Alabama, Alaska and Oklahoma—saw premiums triple, rising more than 200 percent.
A comparable analysis of the 11 states running their own marketplaces has not yet been conducted, but from 2016 to 2017, their average approved individual market rate increase was 19 percent, over nine times CPI growth and over five times U.S. healthcare inflation.
Multiple interrelated factors have driven these premium increases, including lower-than-expected enrollment, as estimates ranging from 12 million to 15 million people—disproportionately young and healthy—who were expected to enroll in the marketplaces by the end of 2016 did not do so. Because of the lower-than-expected enrollment and relative non-participation by the young and healthy, the marketplaces have been left with an older, sicker risk pool, producing huge losses for many health plans, in spite of the previously mentioned substantial premium increases. Consequently, in 2017, 80 insurers left the ACA marketplaces while 11 entered, yielding a net decrease of 69.
The inordinate premium inflation of the marketplaces reflects a cycle that appears to be worsening, so much so that some have described it as a “death spiral.” As health insurers exit the marketplaces, competition decreases, which naturally leads to premium hikes, as well as to a narrowing of plan choices. The higher premiums and fewer choices dissuade people from signing up or cause current enrollees to drop out, further shrinking the risk pool.
If the ACA marketplaces prove to be unsustainable then access to affordable healthcare plans for millions of Americans—regardless of the availability of premium credits—will be at risk.
During the past few months, hospital organizations have lobbied for changes to the American Health Care Act (AHCA), with core concerns about possible growth of uncompensated care resulting from increases to the uninsured population and separately, the popularity of high-deductible plans with many of the insured, which raises concerns about patients’ ability to pay their hospital bills. However, as the recent HHS report compellingly points out, hospitals should not only be worried about possible ramifications of the AHCA—the serious, fundamental weaknesses of the ACA’s health insurance marketplaces constitute a clear, present and increasing challenge to hospital finances.
Healthcare providers or physicians in the US have lately been facing an increasing number of challenges on multiple fronts; from unresolved insurance issues to juggling the administrative and medical aspects of their work. Some of these issues are more pressing than the others, and directly impact the health care provider’s productivity, cutting down on the quality time that needs to be given to their patients. Thus, physicians find it hard to cope with the recent changes introduced on the national level in the medical health sector.
Some of the major challenges that have put healthcare providers in hot water have been discussed below:
Seeking Reimbursement for Provided Services
Getting paid for services from insurance companies has emerged as one of the major challenges in the recent past. The problem is all the more vexing when it comes to filing claims to seek their due payment. Claims often get denied on the pretext of not being supported with enough documentation, rendering the claims weak to be accepted. This issue has forced some providers to opt out of accepting health insurance altogether, moving to the simple ‘pay as you get treated’ method.
Moreover, the passing of Affordable Care Act or Obamacare on a national level implies a shift to value based compensation to the health care providers, instead of the straight method of payment. The problem escalates for physicians working with patients on Medicaid right now.
Losing Time in Administrative Concerns
Many of the health care providers, because of privacy breach concerns, control the patients’ record keeping and sensitive information in their own hands; handling which requires a huge amount of time. This involvement and handling of all the administrative work becomes challenging as it impacts their ability to tend to the actual work that they’re qualified for; being a doctor and treating the patients. Moreover, a major chunk of what’s left after sorting out the administrative concerns is spent in preparing prior authorizations which are instrumental to having important procedures; getting hold of crucial drugs and medicines while improving the overall value of the treatment of the patients.
Getting Deductibles
The patients that have registered themselves under the Obamacare/ACA are entitled to an extra time frame of three months to pay the cost of their treatments, as part of the act. Healthcare providers find it increasingly challenging to keep up with these patients and recover premiums from them. One of the major problems that many complain about is the ultimate inability of ACA covered patients to pay the premiums, which the doctors then have to forego completely. This is a major blow to their earnings. On one hand, they cannot deny patients the extra time; while on the other hand, the inability of patients to pay premiums is completely out of their control.
Other than the major ones briefly discussed here; operational expenses, tough decision making between independent practice and being employed by another, keeping consistency between staff members and rising costs, and the reins of control being handed over to the patients gradually are some of the other challenges that healthcare providers perpetually face.
Guest post by Abhinav Shashank, CEO & co-founder, Innovaccer.
Abhinav Shashank
On Nov. 9, 2016 the United States of America witnessed a major turnaround in the administration. Republican candidate Donald Trump is the 45th president-elect of the United States. Donald Trump plans to bring about numerous changes to “Make America Great Again,” and true to his Republican roots, Trump’s plans for the healthcare focus on some key facets which have always been a concern for the GOP.
Trump has outlined his healthcare plan for America that is centered around mainly the following key facets. A study conducted by the Commonwealth Fund with RAND Corporation using simulation analyzed his plans and came up with probable impacts.
1.) Repeal Affordable Care Act
Donald Trump and the GOP want to fully repeal the ACA and replace it with something new, dubbed “Healthcare Reform to Make America Great Again.” However, the intention is to achieve a better law with some parts of ACA.
Planned changes: Pre-existing condition clause will remain. As the Republican plan “the better way” dated June 22, 2016, Trump plans to continue with it as no American should be denied on the basis of pre-existing medical conditions or demographics. Remove the individual and employer mandate, as no one should be forced to buy health insurance. Reduce the growth rate of Medicare spending and implementation of new taxes and fees.
2.) Use of Health Savings Accounts (HSA)
A Health savings account is a tax-advantaged medical saving account available to the people of US, which allows people to contribute or draw money from for paying off medical expenses, tax-free.
Planned changes: Under Obamacare, HSAs were available to only individuals who were enrolled in “High Deductible Health Plans.” Keeping the basics same, Trump proposes to expand HSAs, allowing all individuals to use HSAs where the contributions would not only be tax-free but will also accumulate over time. Moreover, he would allow HSAs to become a part of a person’s estate and would be passed on to heirs without any penalty.
3.) Making premiums tax deductible
Before ACA came along, there were substantial tax advantages available to people who had their employer cover for them, but that privilege did not extend to people who took up private, individual-market policies not provided by the employer. To solve this disparity, ACA had the provision of means-tested advance premium tax credits, known as APTCs – where the government reduces the cost of insurance by providing APTCs to bridge the gap between the cost of premium and payment limit.
Planned changes: Trump’s plan will allow individuals to fully deduct their premiums from their tax returns under the current tax system, facilitating a free market to provide insurance coverage to companies and individuals. The scheme Trump has will abolish APTCs and let individuals use pre-tax money to purchase individual market insurance.
The aim is to provide people with an incentive to pay for coverage when they are healthy, and not make it mandatory.
4.) Funding Medicaid through block-grants
Under the current law, Medicaid gets join funds by the federal and state government and the federal government contributes 50 percent to 75 percent of the total costs and the rest is borne by the states.
Planned changes: Trump proposes to fund Medicaid all over the country through block grants. Under this, the federal government would give a fixed amount of money to states and let them fund their programs.
The rationale behind this is that state governments know best about their population and should have the sole authority on how the money should be spent and will fare better without federal administration overhead.
Guest post by Steve Tutewohl, strategic accounts officer, Valence Health.
Steve Tutewohl
Payers and providers have always had inherent tension. Their business models never provided a true incentive to work together.
However, as the industry moves toward value-based care, providers and payers are now incentivized to focus on improving quality while lowering costs.
When I got into the healthcare business 20 years ago, as an actuary working on the provider side, my clients were taking bold risks with limited information, little analytical support and hardly any data. Today, providers often have more access to data than payers.
Healthcare is at a critical juncture, which creates a great opportunity for different types of professionals, including actuaries. We will continue to find new purposes, new roles and new responsibilities in healthcare, because the need for sophisticated analytics is growing exponentially every year.
One of the first Affordable Care Act challenges actuaries were uniquely prepared to address was the financial impact of risk adjustment transfers when the healthcare exchange opened.
The insurance industry had never seen anything of this magnitude before. It could either be catastrophic or a huge boon for healthcare insurers depending on how it paid out. Insurers are used to dealing with a certain level of uncertainty, but no company is comfortable operating blindly indefinitely. Based on our understanding of the business and our technical know-how, actuaries were able to offer providers and payers:
Risk score projections to estimate year-end metrics
Risk score opportunity models that identify likely missing HCC coding
Risk transfer year-end projections based upon a series of complex assumptions
Allocations of risk transfers back to individual members to see which segments of the block of business are profitable and which are loss leaders
Effective payer-provider partnerships are formed when both align on a value proposition. They have to see and understand what value the other one brings to the equation.
On the provider side, it’s pretty simple: They are looking to secure their patient base and increase their market share. On the payer side, there are slightly different objectives. If they are going to move towards assigning risk to providers, they need assurances the provider network can bend the cost curve so they, as payers, can focus on selling product.
Guest post Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
A recent poll conducted by Monmouth University concluded that “fully 70 percent of American voters say that this year’s presidential campaign has brought out the worst in people.”
Undoubtedly and sadly, in this era in which fact-checking of candidate statements is essential, a majority of Americans believe that all politicians lie or at least that they lie often.
That prevailing sentiment is what made former President Bill Clinton’s candid riff about the Affordable Care Act at an Oct. 3 Democratic rally in Flint, Mich. so extraordinary. He stated, “…the current system works fine if you’re eligible for Medicaid, if you’re a lower-income working person, if you’re already on Medicare, or if you get enough subsidies on a modest income that you can afford your healthcare. But the people who are getting killed in this deal are small business people and who make just a little bit too much to get any of these subsidies. Why? Because they’re not organized. They don’t have any bargaining power with insurance companies. And they’re getting whacked. So you’ve got this crazy system where all of a sudden 25 million more people have healthcare, and then the people out there bustin’ it sometimes 60 hours a week end up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.”
Unlike the ACA’s expansion of Medicaid, which has been blocked by 19 states that have declined to go along with the law, the health insurance exchanges have been operational for a number of years in all fifty states and the District of Columbia.
So how are the health insurance exchanges of this “crazy system” really doing and, to Clinton’s point, what’s happening to people who don’t qualify for subsidies?
Clinton was generous in saying that the “system works fine” for those who get subsidies. State regulators have used terms such as “near collapse,” “emergency situation,” “meltdown,” and “financial death spiral” to describe the condition of their exchanges. In total, the health insurance exchanges are way over budget, serve fewer people, and show signs of being unsustainable, which pushes health plans to cost shift by raising premiums for non-exchange insurance policies, especially employer-sponsored health insurance. The population paying for those policies include the people Clinton described as “bustin’ it sometimes 60 hours a week.”
Originally, the federal government was supposed to spend $136 billion from 2015-2019 on health insurance exchange subsidies. However, as more states than expected opted to have the federal government run their exchanges and because of the higher-risk pool of individuals participating in the exchanges—which led to premium hikes—the Congressional Budget Office (CBO) in August projected $278 billion in federal outlays for health insurance exchange subsidies for that period, leading to an overspending or budget deficit just for the subsidies of $142 billion for 2015-2019, a staggering amount, considering that it would basically cancel out the projected 10-year budget surplus for the entire health reform law. With even greater average premium hikes expected for 2017—24 percent for the non-group market—the CBO’s projection is clearly conservative and will certainly be revised upward.
Many states are reporting individual market rate hikes in 2017 well above the aforementioned national average. Minnesota’s approved increases range from 50 to 67 percent. Blue Cross Blue Shield of Tennessee will raise its rates by 62 percent. Golden Rule Insurance Co. in Kentucky received approval for a 47.2 percent rate increase, while Wellmark in Iowa will raise its rates by 42.6 percent. In Delaware, Highmark Blue Cross Blue Shield received approval for a 32.5 percent average rate increase, and Utah’s individual exchange health plans will rise on average 30 percent.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell, Inc.
Ken Perez
The Patient Protection and Affordable Care Act (ACA) mandated five major healthcare delivery reforms that collectively aim to improve care quality and slow the growth of healthcare spending. In the five years since passage of the ACA, each of these delivery reforms has been implemented, revised and broadened.
What is the outlook for these changes? Clearly, the long-term strategic intent of the Obama administration is to shift Medicare payments from fee for service to fee for value. On Jan. 26, 2015, Health and Human Services Secretary Sylvia Burwell set forth quantified goals and an aggressive timeline for directing an increasing share of Medicare payments through alternative payment models (APMs) such as accountable care organizations (ACOs) and bundled payments, from 20 percent in 2014 to 50 percent in 2018. Let’s consider each of the major healthcare delivery reforms.
Accountable Care Organizations
On January 11, the Centers for Medicare & Medicaid Services (CMS) announced that 477 organizations are participating in one of Medicare’s four accountable care programs.
With 434 current participants, the Medicare Shared Savings Program (MSSP) accounts for the vast majority (91 percent) of the total. Although the total number of MSSP ACOs has grown steadily each year since the program’s inception in 2012, cumulatively about 100 ACOs (19 percent) have dropped out of the program.
Medicare’s first ACO program, the higher-risk, higher-reward Pioneer ACO Model, suffered numerous departures during the second half of 2015, as the number of Pioneers has dropped from 32 original participants announced in December 2011 to a current total of nine, a 72 percent decline. However, some of the departing Pioneers have transferred to the MSSP or the even higher-risk, higher-reward Next Generation ACO Model, which was launched in March 2015.
CMS also disclosed that 21 organizations are participating in the Next Generation ACO Model, including five former Pioneers. The remaining 13 of the 477 ACOs are the initial participants in the first disease-specific Medicare ACO program, the Comprehensive ESRD Care Model, which was announced in October 2015.
Despite these seemingly impressive numbers, to achieve the aforementioned goal of flowing half of Medicare payments through APMs by 2018, CMS needs even more growth in the number of Medicare ACOs coming onboard in the next couple of years, perhaps 150-200 net new ACOs per year in 2017 and 2018.
Bundled Payments
In 2013, CMS launched the Bundled Payments for Care Improvement Initiative (BPCI), a voluntary program which offers providers four episode-based payment models. In three of the models, implementation is divided into two phases. During Phase 1, “the preparation period,” CMS shares data and helps the participating providers learn in preparation for Phase 2, “risk-bearing implementation,” in which the providers begin bearing financial risk with CMS for some or all of their episodes. CMS required all participants to transition at least one episode (e.g., Acute Myocardial Infarction) into Phase 2 by July 1, 2015, to continue participating in the BPCI.
QuantiaMD, the largest social learning network for physicians, developed by Quantia, Inc., conducted a recent poll of its members to understand physician perspectives regarding the implementation of the Affordable Care Act. Despite millions of enrollees, individuals and doctors remain confused about the law – a troubling fact as many patients look to their physicians as a primary resource on health care policy.
The poll garnered responses from 1,265 physicians from around the country and opened up a dialog about the ACA. Results of the study included:
84 percent of physicians said they did not feel like they had enough information on the ACA to serve as a reliable resource to their patients.
81 percent of physicians don’t feel they have enough information on the ACA to understand its impact on their practice and comply with its requirements.
When asked where they get the most reliable information about the ACA, the majority (35 percent) of physicians responded saying there aren’t any reliable sources of information.
79 percent said they would use an HHS-produced FAQ with their patients if such a resource were available.
“This poll proves how physicians have been left out of the health care reform process,” said Mike Paskavitz, Editor-in-Chief, Quantia, Inc. “As the patient’s most trusted point of access to the healthcare system, physicians can be a tremendous communication channel for the ACA, and this poll demonstrates that there hasn’t been much, if any, communication directed at them. This poll was a huge eye opener for Quantia and validates the importance of the Affordable Care Act curriculum we have been developing for our members.”
