Uncertainty is nothing new for payers — whether around policy changes and their impact, member utilization patterns or which new programs and initiatives to institute. And while payers are good at adapting, the spread of COVID-19 presents a new unknown regarding what the future holds for health plans.
While subsequent posts will be more elaborate, here are my initial thoughts on how the rapidly-changing employment, healthcare and societal landscapes may impact payers.
Several weeks of record-breaking unemployment claims could present a massive disruption for payers across lines of business.
In the three weeks leading up to April 9, 16.8 million Americans (or 10% of the US workforce) filed for unemployment aid. Estimates for May suggest the national unemployment rate could be as high as 15%. By comparison, it took 44 weeks for the Great Recession of the previous decade to produce similar unemployment numbers.1 If accurate, we could see a significant rise in safety-net program beneficiaries across the country.
A study conducted by Health Affairs suggests that every percent increase in the unemployment rate results in 700,000 new Medicaid beneficiaries. Extrapolate that across 15% and states could be bringing on an additional 10.5 million Medicaid beneficiaries onto their budgets.
That said, more information is needed to understand how payer membership will be disrupted across different lines of business. Below are some questions to take into account:
Who is representing this rise in unemployment?
What are their average annual incomes and household sizes?
Where are they located?
How were recently unemployed members previously insured? Through their employer, the exchange, Medicaid, or were they previously uninsured?
How long will the high rate of unemployment last?
Knowing the mean income and states in which these individuals live will be crucial to whether they’re eligible for safety-net programs or subsidies for bronze plans on health insurance exchanges, or if they were already Medicaid beneficiaries or had no coverage at all.
“Shelter in place” may have led us to a broad adoption of telemedicine, permanently shifting the care delivery landscape.
Part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March stipulates that $200 million of federal aid be earmarked specifically to help providers bolster connected health programs. With this funding, providers receive support for telemedicine equipment, upgraded internet connections and other necessary resources. The FCC is also running a three-year, $100 million telehealth program aimed at providing more health services to underserved and veteran populations.2
For payers, telehealth is likely to be a topic of conversation during contract negotiations with providers. Many may already be considering:
Decreases in costs given less overhead required for a telehealth visit
Changes to set rates in a fee-for-service setting
Maintaining credentialing practices when the traditional facility is removed
Lowering premiums, a change in the medical loss ratio, or more dividends paid back to members if rates for telehealth codes are less
Even prior to the COVID-19 outbreak, utilization of telehealth services was increasing. Telehealth claims grew by 53% from 2016 to 2017 alone.3 AmWell, a telehealth company, noted an 11% increase in traffic during the early days of this pandemic.4 Some payers have already expanded telehealth coverage for members, signaling a willingness to reimburse providers for using this convenient technology.
Another area many payers are currently focused on — and where this pandemic may provide the impetus for faster adoption — is Social Determinants of Health. The CARES act provides a funding source for states to improve key socioeconomic factors5, including:
Housing: Over $20 billion in funding specific to improving housing security for the United States’ most vulnerable populations.
Education: $30.75 billion in grants to school systems and higher education institutions. Some states are already using these funds to distribute laptops to students to ensure continuity of education.
Food Insecurity: $40 billion for providing health foods to at-risk individuals. States have been utilizing funds to provide meal-delivery services, receiving waivers in some cases from the US Department of Agriculture allowing for school meal distribution.
Transportation: Funding to support public transit while many shelter-in-place orders are still in effect. Several states have relaxed telehealth requirements, allowing more people to address their health without leaving their homes.
In my opinion, these efforts will help force the convergence of cost and quality curves. The above initiatives focus on social determinants of health which are immediately specific to the COVID-19 response — but ultimately support the overall wellness of members in the long term.
What does all of this mean?
Shifts and disruptions between payers and lines of business, adoption of connected health technology, rapid funding of housing, educational tools and food, and improved healthcare access are inextricably linked. This opens a potential shift to more managed care for payers and the wholesale adoption of the tools and community programs necessary to bend cost and quality curves.
I look forward to digging into each of these areas in the very near future. For more information on how payers are using data to drive improvements, download our best practice guide. For specific questions on how TransUnion Healthcare can assist with your efforts, please reach out to me directly via the form below.