Over the last year we have not seen much movement in health policy from Congress but saw administrative action taken by the federal government and movement at the state level. As we start the new year, there are multiple public and private sectors forces likely to make an impact in the health care industry in 2019.
Here are the top 5 things we’ll be watching in 2019, as well as what we expect:
The Future of Health Reform
On January 3rd, 235 Democrats were seated in the House of Representatives, ending the Republican supermajority that came within an inch of ACA repeal two years ago, putting to rest any risk of serious challenge to the Affordable Care Act (for the time being), and allowing its supporters to breathe a huge collective sigh of relief. However, that doesn’t mean that 2019 won’t have consequential developments in the world of health policy.
- Individual market stability: Although a number of changes now in effect were widely predicted to undermine the ACA’s individual exchange markets, the individual marketplaces remained steady this year. Prices stayed about the same as last year, enrollment dipped a slight 4%, and carrier participation increased 12%. However, industry changes often take some time to “sink in,” and a delayed response in 2019 is not out of the question.
- Health reform proposals take shape: Presidential hopefuls whose health care reform proposals resonate well will be at a significant advantage: according to Gallup, health care was the most important issue for 2018 midterm election voters. As new proposals come out of presidential campaigns and Congressional committees hold hearings on health reform, Americans will gain a better understanding of Medicare and Medicaid buy-in programs, cost-sharing, and tax and budget projections. Just like when the repeal and replace efforts of 2017 led to greater understanding of the landmark health care law and its protections like pre-existing conditions, so too should this primary lead to better understanding of the important specifics of reform proposals.
- State battles over Medicaid Work Requirements/Conditional Enrollment: In January of 2018, the Trump administration issued a letter encouraging and providing guidance for states to submit waivers for work requirement programs. Since the letter, 16 states have submitted waiver requests to implement such programs and nearly all are either pre-implementation, pending approval, in a comment period or being challenged in the courts. 2019 will reveal how operationally, legally and politically feasible these programs are. The operational challenge is especially substantial – if a work requirement program isn’t well-publicized, with a seamless and intuitive design, many will needlessly lose their coverage. According to a recent study by the Kaiser Family Foundation, the vast majority of Medicaid beneficiaries are already working, studying, caregiving, or have an illness or disability that prevents them from doing any of the above, but are at risk of being kicked off if they don’t report their activities correctly, as is currently happening in Arkansas.
Solutions/Actions for Leaders:
- Pay attention to three key indicators to gauge the individual market’s stability in 2019 and beyond: 1) The speed at which ACA-noncompliant plans penetrate the market, and whether they siphon off enrollees from ACA-compliant plans, 2) Rates submitted to state insurance commissioners’ offices by insurers for 2020, 3) Next open enrollment and carrier participation numbers.
- Leaders should pay close attention to how well the Medicaid work requirement programs function, and how challenges such as Kentucky HEALTH fare in the courts since the success of work requirements will have important implications for payers and providers with large Medicaid populations in the affected states.
Providers and Payment Reform
The shift to value-based care will continue its steady march, leading to more provider/payer collaborations, investments in social determinants of health, and calls to simplify increasingly burdensome quality reporting.
- Increased collaboration between health plans and providers: 2018 saw a sharp uptick in payer-provider partnerships, which have historically focused on improving communication and data-sharing but are increasingly featuring co-branded or joint venture insurance products. Value-based care is at the crux of these partnerships: as these contracts align priorities of payers and providers to manage health in a cost-effective way, these historically antagonistic entities are finding common ground. And as the number of value-based contracts increase in 2019 and beyond, so too will the number of these partnerships.
- Payer blind standards and requirements at the provider level: As increasing levels of revenue are tied to performance metrics and different payers request different sets of metrics, providers face an increasing burden to perform administrative busywork. Studies from the Annals of Family Medicine, Annals of Internal Medicine and Health Affairs tracked doctors throughout their day, all finding them to spend more time in their EHR than they did caring for patients. The administrative burden placed upon them is taking time and resources away from patient care and adversely affecting staff morale, but as this issue increases in acuity so too do the efforts to cut away the red tape. CMS has taken steps through its Meaningful Measures initiative, and last September proposed a rule to reduce Medicare compliance requirements. Independent organizations are also developing “payer blind” metrics intended to streamline quality reporting into a single set of meaningful quality measures that can be used across payers. Payer-blind measures aren’t currently widely used, but hopefully 2019 will see them adopted in more settings, as hospital administrators acknowledge the burnout problem and payers recognize the importance of reducing paperwork burden.
Solutions/Actions for Leaders:
- Leaders of insurers and provider systems should analyze the potential marketing and operational synergies of payer-provider partnerships. Even if such partnerships did not make sense in the past, they may be good ideas today.
- Leaders of health care delivery organizations should pay close attention to indicators of physician burnout such as tracking early retirement rates, using validated burnout measurement tools, or by asking clinicians for input.
Employers are playing an increasingly active role in the health insurance they offer to employees, both as a way to control this ever-growing cost but also to make the experience for their employees more clear, consistent and high-quality.
- Changes in plan offering, uptake and design: High health plan prices continue to cause concern for employers’ cost structures, and a few key strategies are commonly used to mitigate their effects. A number of small employers have recently stopped offering coverage altogether. We have also seen across-the-board alterations of cost-sharing, mostly with rising deductibles (see graph below), copayments and coinsurance. Firms, especially smaller ones, are opting to eliminate hospitals and health systems from their networks or are offering narrow network plans. Employees who are asked to contribute more and more to premiums will have decreased uptake of plans due both to cost and the elimination of the individual mandate penalty: according to a Kaiser Family Foundation poll, 9% of small firms and 24% of large firms expect fewer employees and dependents to enroll in their ESI plans.
- Employers move to value-based care: Employers are increasingly looking to value-based contracting to allay their cost woes. While 21% of respondents to the National Business Group on Health’s 2018 Health Care Strategy and Plan Design Survey indicated that they promoted Accountable Care Organizations in 2018, an additional 26% said they are considering offering them by 2020. 88% are planning to contract with Centers of Excellence (COEs), which frequently utilize a common form of value-based reimbursement called bundled payments. Walmart has had its COE program in place for years and in 2019 intends to entice more of their employees to travel to specialized, high-volume centers where they fly, stay in a hotel and receive their procedure all free of charge.
- Employers try new innovations: All over the country but especially in Silicon Valley, venture capital investors and forward-thinking employers are trying to come up with the next big innovation that will solve the employer-health care puzzle. The JP Morgan/Berkshire Hathaway/Amazon team, formed last year with health care expert Atul Gawande at the helm, will be tasked with improving quality outcomes of its million employees while simultaneously lowering cost. Employers will also increasingly look to partner with providers, copying successful models like Intel’s, who leveraged their operational talents to work with local providers and improve workflows. And the tech industry will continue to develop solutions like platforms which enable employers to better manage employee health, tools to improve cost transparency for consumers, and “decision support” features which improve consumer plan choice after they input their prescriptions, conditions and expected utilization.
Solutions/Actions for Leaders:
- As premiums increase, employers should continuously reevaluate their plan offerings but carefully consider employee backlash to changes.
- Explore value-based care options like Centers of Excellence, provider partnerships and ACOs, taking into careful consideration your organization’s situation and scale. Other organizations have enjoyed success, so check out successful models to decide which might be right for your organization. A number of organizations, including nonprofits, will implement these programs for employers.
- Employers should join coalitions to address rising health care costs.
Pharmaceutical spending and price growth have drawn the ire of consumers and lawmakers for a number of years. While the Trump administration has been talking about tackling prescription drug costs since coming into office, little progress has been made yet on the issue from either the executive or legislative branch. With a renewed focus on the prescription drug policy from the midterm elections, 2019 will likely bring more policy and administrative action proposals with a possibility of bipartisan movement on this issue.
- Legislative Action and Federal Administrative Actions: There will be increased pressure for the Trump administration to implement some of their proposals to address drug prices ahead of the 2020 election. On the Congressional side, 2019 will likely see a renewed focus on prescription drug policy. This area is a focus for the Democrats and a possible area for a bipartisan win. Many have already come forward with various bills (e.g., bills from Senator Grassley, and Representative Doggett). These bills address tighter control of industry misconduct, limiting out of pocket costs for patients, and direct tactics to lower pharmaceutical costs.
- Clarification of State Action Possibilities: States which tried to address prescription drug costs in 2018 ran into legal barriers and resistance from the federal government, as with CMS’s denial of Massachusetts’ 1115 waiver request to close its Medicaid formulary. In 2019 the federal government will have to make some decisions about how they will or will not support states’ efforts to control pharmaceutical pricing. Two decisions to watch are if the federal government will support Louisiana’s proposal for a subscription model for its Medicaid program to purchase Hepatitis C drugs, and Vermont’s request for the federal government to permit them to import prescription drugs wholesale from Canada.
- High Price Tag Drugs Will Complicate Pricing Issues: In 2019 we expect the emergence of more cutting-edge treatments with shocking price tags. Despite their high cost, some of these treatments will save money compared to the cost of managing a disease over many years. The challenge is that payers will have to incur the cost of treatment all at once, which conflicts with how our current payment system is set up to absorb costs over time.
Solutions/Actions for Leaders:
- Leaders should advocate for the federal administration and state governments to improve price transparency and take action to lower pharmaceutical costs.
- Insurers and providers should actively pursue value-based purchasing arrangements with pharmaceutical companies.
- Bolder Action Needed to Combat Substance Abuse Crisis: Bolder action is required in 2019 from health systems to combat the opioid crisis which is largely responsible for average life expectancy in the US dropping recently. Health systems responsible for the health of their population now find their scope of responsibility shifting into the traditionally public health territory of prevention. For example, health systems will increasingly need to support prescribers to use evidence-based decision-making in opioid prescribing.
- Increased Investments in Social Determinants of Health: Health systems will pivot from discussing the importance of social determinants of health (SDOH) to actually investing in interventions to impact SDOH in 2019, leveraging the flexibility provided by value-based contracts to provide services traditionally not reimbursed. Think nutrition programs, housing initiatives, transportation partnerships, and patient education. Such wraparound services have been shown to reduce hospitalizations and emergency department visits. The challenge for health systems will be to measure and understand the return on investment for these interventions.
Although pharmaceutical spending constitutes only about 10% of total health care spending, the significant year-by-year growth makes them a major cost concern for employers and insurers.
Health systems will see more of their portfolio move into managed, value-based contracts – and at a faster pace than in previous years. To succeed in this risk-based environment, health systems will need to be action-oriented in addressing public health issues that impact their populations, especially those related to behavioral health, including:
Solution/Action for Leaders:
Behavioral health networks are thin, so health systems will need to innovate to improve access to behavioral health care for their population in need. Leaders can consider short-term solutions like partnering with outcomes-driven outpatient addiction treatment clinics and invest in longer-term solutions like investing in the establishment of quality rating systems for substance use disorder treatment providers.