The post below is a guest blog from Ellen Tucker who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner, HCW Employee Benefit Services.
This year it is crucial for employers to have a clear understanding of the timeline of each of the components in healthcare reform and a defined strategy around them. It is evident that, while there is change on the horizon, even more change will occur as employers, insurance carriers and members react to the new options and requirements at hand.
As employers are considering these issues, PricewaterhouseCoopers has released its annual list of the top 10 issues for the healthcare industry, and the topics include a few items of particular importance for employers. This is the list, followed by the implications for employers:
1) States on the frontlines of the implementation of the Affordable Care Act (ACA). State officials will decide how to run insurance exchanges, whether to expand Medicaid coverage and what type of insurance market regulation is needed. The biggest challenge facing state governments over the next year is information technology, as most must conduct significant upgrades to existing systems.
2) Caring for the nation’s most vulnerable: Dual eligible. Dual eligibles (individuals eligible for both Medicare and Medicaid coverage) are among the nation’s sickest and poorest and often fall through the cracks of two programs not designed to work together. The result is a lack of coordination that often leads to poor quality, inefficiency and avoidable costs. With the ACA set to add 16 million people to Medicaid by 2019, the number of dual eligibles is certain to increase.
3) Bigger than benefits: Employers rethink their role in healthcare. Employers have never had a better opportunity to re-examine their long-term role in providing healthcare coverage for their employees. This year will likely be the turning point for how healthcare benefits evolve over the next decade.
4) Consumer revolution in health coverage. More Americans will be shopping for their health insurance. As a result, consumers want convenience in how they purchase coverage and transparency in comparing their options. Nearly 40 percent of consumers surveyed by PricewaterhouseCoopers’ Health Research Institute (HRI) said they would purchase insurance at a private insurance company retail store. Consequently, an increase in the use of retail clinics is expected as consumers seek lower cost options for minor ailments.
5) Consumer experience hits the pocketbooks of healthcare companies. The Medicare Advantage Star Quality rating system relies on consumer input to generate penalties and bonuses for hospitals and insurers. This could mean a bonus payout of more than $3 billion for insurers and a holdback of $850 million for providers in 2013 based on the impact of the results. Hospitals and health systems are feeling the pinch, as nearly a third of the federal government’s value payment program connects to consumer experience and satisfaction. Moreover, customers support the trend.
6) Goodbye cost reduction, hello transformation. With more than 40 percent of consumers postponing care because of costs, hospitals must be competitive. Organizations are making full-scale transformations of their care delivery models, including how and by whom care is delivered. To maintain high quality while implementing sustainable cost reductions, health systems are involving clinicians, staff and patients in redesigning the delivery of care.
7) The building blocks of population health management. Population health management shows promise for better health at a lower cost by creating an integrated system of care. Expect to see more partnerships between providers as companies build their population health infrastructure to include shared responsibility for patient outcomes and satisfaction, data collection and analysis, member education and engagement, and a focus on at-risk populations.
8) Bring your own device: Convenience at a cost. Only 46 percent of hospitals have a security strategy regulating the use of mobile devices. With more hospitals permitting clinicians to access electronic health records on their personal devices, privacy and security concerns need to be addressed.
9) Meeting the new expectations of pharma value. Interest is growing among insurers to partner with pharmaceutical companies to determine unmet medical needs, and improve medication adherence and clinical outcomes. In a recent HRI insurer survey, 43 percent of insurers agreed that they would benefit from a data sharing partnership with pharma companies.
10) Medtech industry braces for excise tax impact. The 2.3 percent excise tax on medical devices effective this year could prompt consolidation in a $308 billion global industry consisting mainly of small start-ups with lean product portfolios. Federal bank accounts stand to gain $29.1 billion over the next 10 years from this tax included in the ACA.
Since employers spend a considerable amount of money on healthcare coverage for their employees, health industry issues are of key interest. With the most impactful year regarding healthcare reform implementation quickly approaching, employers are even more eager for information. The decisions facing them are significant, and mistakes could prove costly.
Employers have been watching as states decided whether to have a state run exchange, state/federal partnership or a federal run exchange, and whether to implement the Medicaid expansion. For some employers, the Medicaid expansion would provide coverage to additional employees, lowering their possible play or pay penalties effective beginning in 2014. Additionally, employers are determining who they will be required to offer coverage to, whether their benefits are rich enough and whether they meet the affordability requirement.
Employers will need to make decisions regarding if they intend to offer coverage to employees in 2014 and beyond, or send their employees to the exchange and pay the penalty. More information regarding the exchanges is emerging, and there may be hundreds of plan designs offered among the four coverage levels. While sending employees to the exchange may sound like the cheapest and easiest option, doing the math generally supports continuing to offer coverage. HCW has developed a “Play or Pay Calculator” that can assist employers in making an objective decision regarding what is otherwise a subjective, reactive one.
New delivery systems such as accountable care organizations and tiered networks can provide additional options for employers to provide appropriate, cost-effective care over the next few years. These should be part of the overall strategy regarding what actions to take in 2014 and beyond. Staying abreast of health industry issues is critical for employers as decisions are being made. Employers need a custom strategy that is updated with emerging information to allow them to successfully navigate healthcare reform.
HCW will continue to track these issues throughout 2013, as well as additional emerging information regarding healthcare reform. HCW offers one-hour meetings to walk employers headquartered in North Carolina through a Reform Readiness Plan. To take advantage of this guidance, call 919-403-1986 today and schedule a meeting with on of our experts.