The past year has been an eventful one for payers, from the tumultuous Affordable Care Act (ACA) exchange markets to potential mega-mergers. Insurers continue, however, to keep their efforts focused on lowering healthcare costs where possible, with the intention that quality of care is not sacrificed.
Those payer efforts are working. Healthcare spending growthdropped to the lowest level in nearly two years, and hospital spending growth lags behind all other healthcare sectors. Hospital spending increased by only 0.8% year-over-year in June, which was the slowest growth rate since January 1989.
Payers have ratcheted down hospital payments by creating policies with an eye toward providing care at less-costly locations, designing health plans that put more healthcare utilization costs on members and by replacing fee-for-service payments with value-based contracts. Providers have also teamed up with insurers in partnerships that look to offer better outcomes.
Looking ahead to next year, you can expect payers to implement more cost-saving measures and push for value-based contracting. Here’s a look at five payer trends to watch for in 2018, and some tips for preparing to deal with them.
1. Payers will continue to ramp up ways to cut costs
Insurance companies have created policies, designed plans and narrowed provider networks to bring down healthcare costs. They’ve shown success. Expect payers to accelerate those programs and policies and search for more cost-saving levers in 2018.
The most public example of health insurers cutting costs over the past year was Anthem’s policies to not pay for unnecessary emergency department visits or imaging services at hospitals. Anthem’s policies looked to nudge patients to less costly outpatient facilities, including urgent care centers and freestanding imaging centers.
Michael Abrams, co-founder and managing partner at Numerof & Associates, told Healthcare Dive that Anthem’s decision to not reimburse hospital outpatient MRI and CT scans without precertification is “an important message to the provider community.” Anthem’s policy is in response to “ballooning growth in outpatient imaging — both in volume and in unit cost.”
For hospitals searching for ways to improve their bottom lines, many health systems viewed imaging as a way to make up for lost reimbursements and less utilization elsewhere. However, Abrams said the payer’s message was that medical necessity is the stronger consideration and that unit pricing needs to reflect broader market pricing.
“Many provider institutions had turned this under-regulated service line into a profit center,” Abrams said. “Anthem’s action made it clear that such actions would not be acceptable.”
Aneesh Krishna, partner in McKinsey & Company’s Silicon Valley office, told Healthcare Dive payers will likely roll out similar policies for imaging, lab, diagnostic testing and low-risk surgeries. “We see a trend toward rationalizing the levels of payments across various sites of service,” he said. “Imaging-related initiatives are the first steps in that direction.”
In addition to pushing for more services outside of hospitals, Fred Bentley, vice president at Avalere, told Healthcare Dive that he expects payers to focus on readmissions. Providers will need to manage patients post-discharge and keep them healthy in their homes rather than in hospitals.
Though not as high profile as Anthem’s policies, payers have been narrowing provider networks to bring down costs. This has been especially true in ACA exchange plans and Medicare Advantage (MA). In fact, a recent Kaiser Family Foundation study found that 35% of MA enrollees were in narrow-network plans in 2015, while only 22% were in broad-network plans.
Bentley said narrow provider networks haven’t had a huge impact yet. However, the “significant value” associated with narrow and tiered provider networks will ultimately cause more payers to expand narrow provider networks in the employer-based market.