23 Predictions for American Healthcare Reform in 2019

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  • Expect commercial payers, rather than government payers to lead adoption and innovation of value-based care models and strategies. Just don’t expect any uniformity.
  • Original fee-for-service is disappearing quickly. Currently only 37% of reimbursement is paid under pure fee-for-service with no strings attached. This will continue to decrease below 26% in the coming two years. That means lots of contract negotiations will be initiated for new paper.
  • Health plans are not ready for episodic, bundled case rate adjudication. Currently only 21% of payers can roll out a new episode-of-care program in under six months.
  • Providers are nonplussed about episode-of-care programs. The reason is that they are fearful about risk and how bundles should be constructed.
  • Payers are hiring more staff to support what they believe is the future growth of episode-of-care programs. But training so that the new hires can educate and negotiate the providers hasn’t been developed for them. That will be their Achilles’ heel. It takes both clinical and contracting knowledge to properly negotiate and construct bundled case rates. There’s a fair amount of anatomy, physiology, pharmacology, and medical terminology knowledge involved, not just CPT codes and price sheets. Contracting reps from health plans who attempt this unprepared will be rebuked and sent away by providers who decide that meeting with them or attempting to negotiate with them is an exercise in futility.
  • Without the necessary training, provider contracting representatives from health plans will not be capable of discussing why variations exists in cost and quality or how to talk about ways to eliminate or constrain unwarranted variations and deviations from published guidelines.
  • Software development for value-based analytics, automated hands-free adjudication of bundled claims and reporting capabilities will need to improve.
  • Episode models will be targeted on higher-savings cases that can deliver more than the current average of 5% to 6%. Providers may attempt to bundled cases that are too rare or that don’t deliver enough savings to be appealing to payers.
  • Reference based prices tied to value-based episodes of care
  • Preferential, top tier listings of providers that accept reference price. Providers will be ranked as “green,” “yellow,” and “red” to clearly identify where employees may be at risk for out-of-pocket expenses. This could damage or besmirch brands if unclearly defined or apples to orange comparisons occur.
  • Transparency; reference price of targeted services will be posted, but who will be accountable for verification and testing that you can really purchase goods and services at the published prices. Reference price of all-inclusive episodes of care (bundles) for selected procedures, conditions and other medical events. The all-inclusive bundles will have to be painstakingly normalized for true comparison to occur. Who will be responsible for reality testing and verification?
  • Expect to see fee maximums at about 125% of local Medicare rates. For many specialists who had previously negotiated 140-160% of Medicare (and higher) pay cuts may be drastic causing some to reconsider participation in health plan programs. Many may abandon ship and move to a concierge medicine model for both specialty and primary care. Those who already transitioned to concierge hybrid models (where some insurance is still accepted) may cancel all contracts rather than endure the pay cuts. This will be cleaner and will cause the health plans to rethink their negotiation strategies if they are constrained in continuing to sell or be active in a county where they have inadequate network presence. Providers who abandon the plans will bill out of network and expect reimbursement at undiscounted rates and balance bill the patient for the difference.

  • Plans that experience network attrition and patients jettisoned from concierge and direct pay practices will must either leave the market or somehow squeeze patients into smaller networks.
  • Those patients who cannot find a provider to take care of them will be forced to urgent care centers, retail nurse practitioner shops, emergency departments, or delay or forego care or travel to accelerate access to care if they can afford to do so. Health plans will not be forced to allow out of area coverage until adequate complaints are registered to the state insurance commissioners on insured products and to the IRS for self-funded programs sponsored by employers and unions under ERISA and Taft Hartley Acts.
  • Some payers will publish sample procedural episode pricing, with specific listing of inclusions (i.e. all other services are excluded) and a limited warranty that if you don’t get that price you’ll be protected (held harmless) from balance billing. The only way to implement this will be to assume that providers will agree to contract terms that require the hold harmless agreement on balance billing to patients. If there’s no contract, it will be difficult to enforce unless the state steps in with anti-surprise legislation mandated on out of network providers. Perhaps the doctor or hospital who engages or refers to the out of network provider will suffer the differential as was the case back in the 1990s. If you didn’t refer to in-network providers and the patient was billed more than the network standard rate, the referring physician paid the difference through an automatic deduction from their own reimbursement. That was short-lived but many payers tried it and most physicians and emergency departments overlooked the requirement in the contract language during negotiations.
  • Bundles for episodes of care will feature pricing with upside and downside risk for high volume or high cost inpatient and outpatient procedures. Carve outs for implants, high cost drugs, and untoward events will be detailed in each case rate definition. Requirements to submit invoices for implants and high cost drugs will be replaced by an attestation system that the amount charged represents no more than X% markup, and that claims can be spot-checked to verify the assertion on a limited number of spot-checked cases per year.
  • The episodic case rates for each episode of care may have an event horizon that covers up to 90 days (and in some cases more or fewer days post procedure); all relevant services included in the bundle will be detailed in the case rate definition or documentation. Extra services required by medical necessity will be paid at either a discount from billed charges or a fee maximum of 125% (or some other negotiated multiple) of Medicare local market rate.
  • With better predictability of financial risk and pre-determined pricing, payers should be able to pay claims faster and accelerate cash to providers or reimbursement to plan participants who pay out of pocket.
  • Medical travel (domestic or international) will gain in popularity for plan participants who agree to travel to take advantage of price arbitrage in other treatment destinations or Centers of Excellence. Travel costs and per diem allowances for food and lodging for the patient and one companion may be offered as an incentive to travel.
  • For medical travel to work, sophisticated infrastructure and telehealth capabilities will be required. Medical travel is more than the total of an appointment, a hotel and an airline ticket.
  • Plan members who agree to use “green” coded providers may enjoy benefits with low or no out-of-pocket costs. They may be assigned fixed and pre-defined financial risk when seeking care from “yellow” providers of their own volition. Plan participants may be held responsible for all costs above the reference price when going to “red” providers such as concierge or direct pay cash providers, out of network providers or out of area providers. This assumes that the network has adequate numbers of participating green providers to satisfy the needs of the community and that access in a reasonable time frame is possible and consistent. If not, the plan participant will have to fight to preserve their rights when the network is inadequate and know how to fight, what to report and to whom. Policy-holder advocates working at regulator offices such as the Departments of Insurance, Self-funded Plan Administrators with fiduciary liability who give marching orders to TPAs and ASOs on what to pay on problem claims will need to ramp up trained staffers, and the IRS will need additional trained staffers to manage complaints when plan participants seek to escalate the matter above the Plan Administrator level at self-funded employer- and union-sponsored health benefit plan call centers.
  • Plan members may be able to share in savings with health plans if they negotiate prices that are lower than the reference price with providers. These may come in the form of cash rebates or some other incentive award (e.g. gift cards from retail outlets of their choosing).
  • The roles of patient navigators or advocates will become even more ambiguous as titles mean different things when used by payers, providers, health systems and others.


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