On May 6, 2020, a webinar titled “How Health Plans Should Prepare for a Post-Covid World” was presented by Rachel Sokol, BS, Practice Manager at the Health Plan Advisory Council, Washington, DC, a healthcare consulting company that uses research and technology to improve the performance of healthcare organizations and educational institutions.
The webinar focused on how health plans are currently navigating the pandemic, and how they should prepare for a transformed landscape as a result of the COVID-19 crisis.
Financial Needs of Providers
With more than 1 million cases of COVID-19 responsible for more than 60,000 deaths in the United States by the time of the webinar, and nearing 100,000 deaths by the time of publication of this article, the US payer world is changing dramatically, Ms Sokol said.
The first change is the threat to provider financial sustainability. “Right now, providers are focused on collapsing revenue, and that may make a number of them, particularly physicians, seek out new partnerships in the coming months,” she said.
The near-term challenge for providers is an onslaught of COVID-19 cases. Modeling predicts that new revenues from such cases will not backfill the loss of revenue from the cancellation of elective procedures and reduced demand for care. If elective shutdowns and reduced healthcare demand precede significant COVID-19 caseload, even by a few weeks, the cash-flow challenge will be immense and immediate. Unknown factors regarding this model include payment rates for patients with COVID-19.
The Centers for Medicare & Medicaid Services (CMS), under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, stepped in to shore up funding, Ms Sokol said, and private payers are following in the footsteps of CMS, by offering financial support to provider organizations.
“There are a number of techniques that payers are using to try to mitigate the financial risk to the plan when offering these payments [to provider organizations],” she pointed out. For example, Blue Cross Blue Shield of Michigan is using funds from previously budgeted value-based programs to pay providers. This plan is also advancing funds that it would have been spent later in 2020.
Blue Cross of Idaho is advancing payments to priority providers over a 3-month period, with payment based on patient volume from the previous year. Premera Blue Cross is also paying providers based on historical performance, with recoupment to begin in January 2021 over 9 months, as a percentage of claims. Centene is launching a loan procurement program to match providers with financial institutions to secure loans that fit their means.
“Physician group practices are struggling with a range of needs from immediate cash flow, to securing future volumes, to managing their staff capacity,” said Ms Sokol. “Some of them are thinking that making an acquisition or strategic alliance is a way that they could survive the fallout.”
Potential strategic partners for physician practices are other physician practices, enablement partners, plan owners, private equity investors, and hospital system owners. Outright acquisitions of practices are another possibility.
“We do think that there will be a wave of appetite for acquisition and aggregation from both potential investors and practices. And that will likely happen in a pretty limited time window,” she stated. “Blue Shield of California for example, recently made a play to acquire a large physician group in one of their core markets.”
Strategic questions for health plans that are evaluating practice acquisition include:
- Does the practice meet the health plan’s strategic needs and performance criteria?
- How feasible is the business model transformation needed for success in a potential partnership?
- Will the health plan be able to meet the practice’s specific business needs on their timeline?
- How will a practice’s alternate options for partnership affect plan strategy?
Impact on Value-Based Contracts
“Since early March, CMS has announced a number of changes to value-based care contracts, mostly around reducing the reporting burden to report quality metrics and revise benchmarks around quality and total cost-of-care measures,” said Ms Sokol. “Private payers are likely going to copy much of what CMS is doing and try to reduce the reporting burden on providers with regards to a lot of these contracts.”
What these changes may mean for the future of value-based care runs the gamut, from threatening the adoption of value-based care and alternate payment models to accelerating the transition to value-based care, according to industry experts.
“Both of these perspectives are valid,” she noted. “They represent a legitimate viewpoint on the potential future of value-based care, and I think it shows us where providers are. They’re stretched from a revenue perspective, and it’s making them rethink their value-based care and partnership strategy.”
Telemedicine to Support Consumers
From a consumer perspective, virtual health visits and broader telehealth, or telemedicine, serve as the safest options for delivering and receiving care in the pandemic era. Plans are supporting this shift in several ways, from temporarily eliminating member cost-sharing to creating new self-assessment tools to supplement virtual care, such as locating COVID-19 testing centers.
“Most plans are paying the same amount for telehealth visits as they would for an in-person visit,” Ms Sokol said. “Many payers are waiving the requirement that telehealth visits have a visual component, so they’re letting phone visits in addition to web or app visits be reimbursed.”
Health plans are also rapidly standing up virtual triage and care centers, which allow providers to offer diagnostic and prescription services over the phone for coronavirus.
“The big question for payers and the industry in the coming months is how much of the new surge of telehealth will remain in the coming years,” she said. “On the consumer side, the surge has meant more exposure to virtual visits. That might become a new preference for many consumers.” Parity for in-person and virtual visits from payers is fundamental to continued utilization and broader adoption of telemedicine, Ms Sokol stated.
Telehealth has been particularly effective in the mental health setting, especially in the context of depression, anxiety, and posttraumatic stress disorder. The field has been slow to embrace telemedicine. A main reason for this is that many behavioral health clinicians believe that a webcam is not a perfect substitute for personal connection and reading body language.
Cost-Shifting: Employees’ Marketplace Coverage?
Because of the high rate of newly unemployed people in the wake of the COVID-19 crisis, a mass shift from employer-sponsored insurance to Medicaid and the individual market is expected. Employers are facing decreased revenues in the fallout from COVID-19 and increased healthcare costs. In the most recent recession, employers responded by shifting healthcare costs onto employees, but high-deductible health plans lead to delays and reductions in all care that is above the cost of the deductible, including preventive care, warned Ms Sokol.
Instituting more cost-shifting during and after the COVID-19 pandemic risks a public opinion backlash in a health-driven crisis compared with a purely economic-driven crisis, she added.
“Instead, employers will need new approaches to reducing costs,” Ms Sokol recommended. “Some of this may come from areas other than healthcare benefits. So, you may see reductions in retirement packages or vacation benefits. Some employers may choose to fund their employees’ marketplace coverage using new options, such as an individual-choice HRA [health reimbursement account] or individual-coverage HRA.”