Health Plan Weekly

COVID Relief Bill May Give States Incentives to Expand Medicaid

April 15, 2021

With the passage of the American Rescue Plan (ARP), states that haven’t expanded Medicaid have an extra reason to do so: the COVID-19 relief bill offers financial incentives to states that increase Medicaid eligibility under the Affordable Care Act (ACA). Some states where Medicaid expansion has historically been a nonstarter to conservative elected officials are reconsidering their status.

The ARP gives states that expand Medicaid a 5 percentage-point increase in their Federal Medical Assistance Percentage (FMAP) for the first two years of expansion. That’s in addition to the 6.2 percentage-point FMAP increase that all states are getting for the duration of COVID-19, and the 90% federal funding match rate that Medicaid expansion states receive under the ACA.

NOTE: The abstract below is a shortened version of the Health Plan Weekly article “With New Subsidies, Holdout States May Expand Medicaid.”

By Peter Johnson

With the passage of the American Rescue Plan (ARP), states that haven’t expanded Medicaid have an extra reason to do so: the COVID-19 relief bill offers financial incentives to states that increase Medicaid eligibility under the Affordable Care Act (ACA). Some states where Medicaid expansion has historically been a nonstarter to conservative elected officials are reconsidering their status.

The ARP gives states that expand Medicaid a 5 percentage-point increase in their Federal Medical Assistance Percentage (FMAP) for the first two years of expansion. That’s in addition to the 6.2 percentage-point FMAP increase that all states are getting for the duration of COVID-19, and the 90% federal funding match rate that Medicaid expansion states receive under the ACA.

Two states that recently expanded Medicaid by ballot initiative, Missouri and Oklahoma, are also eligible for the enhanced funding match as long as they implement their expansions by July.

Meanwhile, Wyoming’s Republican-controlled House of Representatives passed an expansion bill in March, though it died in the Senate. Robin Rudowitz, a vice president at the Kaiser Family Foundation, says that ARP changed the political equation in Wyoming.

“The Medicaid expansion bill clearly was tied to the incentive and the American Rescue Plan,” she says. She adds that Mississippi, South Dakota, and the Carolinas all are closer to expansion than they were before the pandemic relief law passed.

“In Georgia, Wyoming, Texas, Alabama, Florida and Tennessee, there are legislators on the Democratic side that are pushing for this,” says Jerry Vitti, founder and CEO of Healthcare Financial, Inc. “However, there is still a lot of resistance among Republicans.”

That’s especially true in Missouri. Voters there approved an August 2020 initiative that amended the state constitution to expand Medicaid, but the Republican-controlled legislature has dug in its heels during its current session, despite Republican Gov. Mike Parson’s pledge to implement expansion. According to Kaiser Health News, Republican state Rep. Justin Hill said during a recent floor debate that “even though my constituents voted for this lie, I am going to protect them from this lie.”

“Trying to go in and overturn the will of the plurality of voters is a very, very risky strategy,” says Dan Mendelson, founder of Avalere Health. “I don’t think it’s going to work in the longer term, because if people vote for something and then they see their legislators complain — it’s very cynical.”

Do Urgent Care Clinics Really Cut Payer Spending?

April 13, 2021

Although urgent care centers have long been trumpeted as a more economical care option than the emergency department (ED) for non-life-threatening conditions, a new study suggests that health insurers might want to re-evaluate that truism.

The study, published in Health Affairs, builds on past research by confirming that the presence of urgent care centers in any given area does in fact reduce lower-acuity ED visits. Yet researchers went a step further and asked whether urgent care centers reduced ED visits enough “to make up for the fact that more people are going to go to care when it’s more convenient and lower cost and closer and presumably lower wait time,” explains Ari Friedman, M.D., one of the study’s co-authors and an assistant professor at the University of Pennsylvania.

NOTE: The abstract below is a shortened version of the Health Plan Weekly article “Study Challenges Cost-Saving Potential of Urgent Care.”

By Leslie Small

Although urgent care centers have long been trumpeted as a more economical care option than the emergency department (ED) for non-life-threatening conditions, a new study suggests that health insurers might want to re-evaluate that truism.

The study, published in Health Affairs, builds on past research by confirming that the presence of urgent care centers in any given area does in fact reduce lower-acuity ED visits. Yet researchers went a step further and asked whether urgent care centers reduced ED visits enough “to make up for the fact that more people are going to go to care when it’s more convenient and lower cost and closer and presumably lower wait time,” explains Ari Friedman, M.D., one of the study’s co-authors and an assistant professor at the University of Pennsylvania.

The answer to that question appears to be a resounding “no.” In their analysis of insurance claims and enrollment data from a national managed care plan that spanned from 2008 to 2019, Friedman and his team estimated that 37 additional urgent care center visits were associated with a reduction of a single lower-acuity ED visit. In dollar amounts, they estimated that each $1,646 lower-acuity ED visit prevented was offset by a $6,327 increase in urgent care center costs.

Friedman says that the bulk of that “substitution ratio” is likely attributable to people visiting urgent care centers when they otherwise might have not accessed care at all. “There’s a lot of what we call the woodwork effect, which is the idea that people kind of just come out of the woodwork,” he says. “Visits happen that would never have happened before.”

That isn’t a surprising consumer behavior, since copays for urgent care center visits are often much cheaper than ED visits, Friedman points out.

Ultimately, “our results argue that using urgent care centers in isolation to reduce ED visits may be ineffectual from a spending perspective,” the study said.

When asked what health insurers should do instead, Friedman offered a variety of suggestions. “If I were a health plan I would say, ‘Maybe…we should be focusing on supporting patients and helping them choose a site of care,’” he says.

Health plans might also consider helping facilitate non-emergency medical transportation options including Uber and Lyft, Friedman says. “Another thought is to think about how utilization management and copays are applied across settings,” he adds.

Interoperability Mandate Could Be an Opportunity for Payers

April 8, 2021

Payers should look at the looming interoperability mandate as a chance to gain a lasting advantage over their competitors, according to two health care information technology (IT) experts.

In a March 26 webinar hosted by America’s Health Insurance Plans (AHIP), IBM Vice President Michael Curry of Watson Health and Jeff Rivkin, research director for payer IT strategies at IDC Insights, said payers should do more than meet the minimum interoperability standards.

NOTE: The abstract below is a shortened version of the Health Plan Weekly article “Tech Experts: Interoperability Rule Is Opportunity for Insurers.”

By Peter Johnson

Payers should look at the looming interoperability mandate as a chance to gain a lasting advantage over their competitors, according to two health care information technology (IT) experts.

In a March 26 webinar hosted by America’s Health Insurance Plans (AHIP), IBM Vice President Michael Curry of Watson Health and Jeff Rivkin, research director for payer IT strategies at IDC Insights, said payers should do more than meet the minimum interoperability standards.

“It’s just the tip of the iceberg. We’re going to see a lot of data exchanged. And if you don’t have a fairly robust platform to be able to do that, you’re going to hurt next year, too,” Rivkin said.

Starting July 2021, HHS will require insurers that sell Medicare Advantage, Medicaid and CHIP managed care, and Affordable Care Act exchange plans to launch an application programming interface (API) that will allow patients to access their complete medical and claims history on demand along with a continually updated provider directory. Payers must also make all of their patient and claims data available to other insurers on a payer-to-payer data exchange, which must be in place by January 2022.

Rivkin said insurers should think about the interoperability mandate and the mandate to release pricing information as the same project. Starting on Jan. 1, 2023, health plans must offer members online shopping tools that allow them to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services.

“We’re all in the middle of those implementations, but there’s a huge downstream potential for that data,” Curry explained. He says the pandemic-spurred telehealth boom has accelerated changes in consumer expectations.

“The consumer side…has changed a lot in how payers have to think about their relationships with clients,” Curry added. Consumers, he said, now expect accessing health care to be more similar to “buying something on Amazon.”

“Amazon and those like it have raised the bar from the consumerism perspective,” Rivkin said. “Now, you’ve got a significant number of people in the individual market switching because they shop for price. The idea that retail companies have had for years of loyalty and stickiness…is now relevant to health insurance.”

Health Insurers Rethink Workplaces in Post-COVID Future

April 6, 2021

With COVID-19 vaccination becoming increasingly widespread, businesses of all types are starting to plan for what their workplaces — both remote and office-based — will look like in the “new normal” created in the pandemic’s aftermath. Health insurers are no exception.

CareFirst BlueCross BlueShield, for example, recently unveiled “the next phase of a reimagined employee and workplace experience strategy.” The nonprofit insurer explained in a March 24 news release that it is “working collaboratively with technology partners to design a new multi-faceted platform for employees that will be interactive and help foster a fully integrated work experience” wherever workers are located.

NOTE: The abstract below is a shortened version of the Health Plan Weekly article “With Pandemic’s End in View, Insurers Rethink Workplaces.”

By Leslie Small

With COVID-19 vaccination becoming increasingly widespread, businesses of all types are starting to plan for what their workplaces — both remote and office-based — will look like in the “new normal” created in the pandemic’s aftermath. Health insurers are no exception.

CareFirst BlueCross BlueShield, for example, recently unveiled “the next phase of a reimagined employee and workplace experience strategy.” The nonprofit insurer explained in a March 24 news release that it is “working collaboratively with technology partners to design a new multi-faceted platform for employees that will be interactive and help foster a fully integrated work experience” wherever workers are located.

CareFirst just passed the one-year anniversary of having 95% of its associates working fully remote, the insurer noted, but it doesn’t plan to have that be the case forever. “In the future we plan to implement a hybrid strategy,” the insurer tells AIS Health. “Approximately 55% [of workers] will be enabled to work in a full-time remote capacity spending one day or less a week in an office setting; 30% will divide their time in an office 2-3 days a week and [be] remote the remainder of the time; and close to 15% will be full-time in a CareFirst office location 4-5 days a week.”

Similar to CareFirst, Highmark Inc. has kept most of its associates out of the office since the start of the pandemic. “And we have told employees it is unlikely that any employees will return to an office environment before July of this year,” the company said.

Those two insurers’ strategies are not out of step with what Willis Towers Watson has been observing through its polling and conversations with employers, says Rachael McCann, senior director of health and benefits at the benefits consulting firm.

“For the most part…we are seeing more companies across all industries, [in] the U.S. and global in nature, pushing pause because they’re looking at their real estate,” she says.

In Willis Towers Watson’s “2021 Emerging From the Pandemic Survey,” released in February, companies in the health care industry reported that an average of 44% of their employees worked remotely as of the first quarter of 2021, and they expect the share to be 30% by the end of the year.

Study Highlights Promise of Bundled Payments in Employer Plans

April 1, 2021

A bundled payment program run by San Francisco-based digital health company Carrum Health resulted in an average per-episode savings of more than $16,000 per orthopedic or surgical procedure, a recent RAND Corp. analysis found.

Counting both procedures reimbursed under the bundled payment program and procedures reimbursed outside the program, per-episode costs for the three procedures studied — spinal fusion, major joint replacement and bariatric surgery — were 10.7% lower overall, on average, than costs for comparable procedures prior to implementation of the program. That added up to a total savings of $4,229 per episode, the study found.

NOTE: The abstract below is a shortened version of the Health Plan Weekly article “Bundled Payment Program for Employer Plans Reduces Costs.”

By Jane Anderson

A bundled payment program run by San Francisco-based digital health company Carrum Health resulted in an average per-episode savings of more than $16,000 per orthopedic or surgical procedure, a recent RAND Corp. analysis found.

Counting both procedures reimbursed under the bundled payment program and procedures reimbursed outside the program, per-episode costs for the three procedures studied — spinal fusion, major joint replacement and bariatric surgery — were 10.7% lower overall, on average, than costs for comparable procedures prior to implementation of the program. That added up to a total savings of $4,229 per episode, the study found.

The analysis, published in the March issue of Health Affairs, determined that employer-sponsored health plans captured approximately 85% of the total savings, or $3,582 per episode. Patient cost-sharing payments decreased by $498 per episode, a 27.7% relative decrease.

“What we studied is a program that uses provider-focused financial incentives to give providers plans to operate more efficiently, and then also pairs it with incentives to patients to use high-value providers,” says study author Christopher Whaley, a policy researcher in health care at the RAND Corp. in Santa Monica, Calif. “What we found is that, following the introduction of this program, overall episode costs fell by quite a bit, and patient cost-sharing actually went to zero for patients who went through the program.”

“[The] bundled prices tend to be quite a bit lower than if we just go through the normal insurance system,” Whaley says, noting that the providers give up higher prices for a guaranteed payment with no insurance road blocks or red tape. Implementation of the direct payments program also was associated with reductions in price variation, the study found.

Although researchers didn’t look at outcomes as thoroughly as they did costs, they did find that some outcomes appeared to be better in patients participating in the bundled payment program, Whaley says: “For example, for bariatric surgery, the national commercial patient readmission rate is, I think, around 4%, and for the patients who went through the program, it was 0.5%. So it looks like readmissions are about 75% lower, which is a huge quality difference.”