"If I was a payer right now, security and ransomware would be keeping me up at night," says one HIPAA legal expert.
Quantum computing derives its name from quantum physics, in which particles can operate in two states at the same time. Quantum computing's potential is to "tackle certain types of problems—especially those involving a daunting number of variables and potential outcomes, like simulations or optimization questions—much faster than any classical computer." The difference is the quantum bit or qubit, the equivalent of the transistor, which has itself advanced exponentially since its creation more than 60 years ago.
Just as the number of transistors per microchip increases processing power, so theoretically does the qubit, with the added phenomenon that multiple computing realities are present at once. The question is how payers and other healthcare stakeholders can apply such technology. The potential for quantum computing in healthcare includes what it can be used for and what it may protect organizations from.
Quantum computing's healthcare applications
A commonly cited quantum computing application in the for column is drug discovery speed and effectiveness for manufacturers and process optimization for payers and providers. CB Insights writes: "Optimization problems are notoriously difficult for classical computers to solve due to the overwhelming number of variables and possible combinations involved. Quantum computers, however, are well suited to this type of task as different options can be sifted through at the same time."
To a question of when, the future appears to be soon. For the first time, IBM will install its quantum computers at an off-site private business: Cleveland Clinic. Planned applications include gene, infectious disease, and public health studies. National payer Anthem is entering the space, having joined IBM's Q Network Hub to explore how quantum computing "may help in developing more accurate and personalized treatment options and improving the prediction of health conditions."
Additional quantum computing applications for payers and providers include:
Improving diagnostic imaging quality, analysis, and processes
Advancing precision medicine
Optimizing pricing and perfecting risk analysis
All of these could be possible through quantum computing's ability to process multiple, interdependent data sources concurrently (e.g., clinical, social, economic, environmental). That same data, however, is where quantum computing poses a real threat that regulators and tech developers alike are seeking to solve.
Cybersecurity and emerging standards
To understand why, in part, we need to look at the algorithms that industry uses to collect, manage, and harness big data for business and consumer applications. IBM notes that "[q]uantum-enhanced machine learning algorithms are particularly relevant to the [healthcare] sector." But current algorithms also represent a threat, including to payers. CB Insights writes: "Cybersecurity could be upended by quantum computing. … Powerful quantum computers threaten to break cryptography techniques like RSA encryption that are commonly used today to keep sensitive data and electronic communications secure."
The potential threat has prompted the National Institute of Standards and Technology (NIST) to draft new guidelines. Congress established NIST at the turn of the 20th century to help build the national infrastructure needed for global competition. Two decades into the 21st century, NIST is developing new cryptographic standards with finalization expected in 2022. In an August 2021 white paper titled Migration to Post-Quantum Cryptography, NIST states that this requires identifying, prioritizing, and migrating the "vulnerable algorithms" that underpin current cryptography to "quantum-resistant" ones via five planned discovery scenarios. One of these scenarios will address healthcare algorithms in both "enterprise data center environments … [including] on-premises data center and hybrid cloud deployment hosted by a third-party data center or a public cloud provider."
The National Cybersecurity Center of Excellence (NCCoE) will also be "developing white papers, playbooks, and proof-of-concept implementations … [and] forming a Cryptographic Applications community of interest ... [to] provide recommended practices to prepare for a smooth cryptographic migration" from quantum-vulnerable to quantum-resistant encryption algorithms. Quantum key distribution (QKD), another strategy, will help transfer encryption keys and detect their interception. "Done right," CB Insights writes, "this means that even quantum computer-equipped hackers would have a hard time stealing information."
HIPAA is not enough
These efforts are right on time as current standards alone will not fully protect health plans and other HIPAA-covered entities as an increasing number of corporate ransomware attacks make headlines. National HIPAA expert Roy Wyman, a partner with the legal firm Nelson Mullins and chair of the its Privacy & Security Industry Group, notes: "If I was a payer right now, security and ransomware would be keeping me up at night. Simply complying with HIPAA is not enough. New technology like quantum computing will make it more difficult to stop hackers, especially state actors."
In a 2020 paper, Wyman notes that HIPAA "has mostly been locked in amber since 2009,” despite regulatory updates. Even a "second wave" of privacy and security requirements marked by the EU's 2018 General Data Protection Regulation (GDPR) guidance and stateside via legislation in California, Colorado, and Virginia have not fundamentally altered HIPAA. Noting that none of these state statutes goes beyond simply requiring "reasonable" security measures, Wyman adds: "There must be a much more nuanced approach than just complying with HIPAA."
Solutions through payer collaboration
From a tactical perspective, Wyman offered one solution for health plans: banding together to create security cooperatives to share resources, group data where appropriate, and segment it where critical firewalls are needed. This could be accomplished via joint venture, one of healthcare's favorite ways to turn competitors into collaborators, that is funded by participating payers. "Quantum computing is becoming more common but very expensive. Individual players may not be able to afford their own individually but collectively could fund a quantum shell for protection," he says.
CB Insights notes that while quantum computing "faces a number of hurdles, … the payoff may still be worth it. Some think that quantum computing represents the next big paradigm shift for computing—akin to the emergence of the internet or the PC. Businesses would be right to be concerned about missing out."
Wyman cautions, however, against technology's ability to solve everything that ails healthcare data privacy and security. "There is a perspective with tech that it's always the answer. There are places where it doesn't help. We're not systematically weighting benefits and costs." He recommends a similar systematic approach to revising the regulations that go hand in hand with tech development. "We either need to revise HIPAA to put more resources behind it or, even better, take a step back to reassess privacy and security, and how we deal with them."
"Some of the findings may sound crazy, but in 2021, it's not far from reality in the insurance industry," says one insurtech source.
As we navigate year two of the coronavirus, privacy in the time of COVID-19 continues to shine a light on the permanence and proliferation of personal data and preferences regarding it. Some of the statistics, including those from a recent Breeze survey, may surprise you but the implications likely won't—nor the seriousness given that the first major company in the U.S. has announced it will raise individual premiums based on employee vaccination status data.
Employers and payers alike are increasingly using big data and from a variety of sources to design predictive analytics and assess insured risk. Breeze is one of those companies, an insurtech startup that offers health coverage related to disability, critical illness, and other wraparound benefits. In its August 2021 survey of 1,000 U.S. adults, 56% overall replied that insurance companies should not be allowed to price policies based on big data. Notably, that figure jumped to 83% for those 55 and older. Following this first question, however, the results changed radically when payer use of that data impacted consumer pocketbooks. In exchange for more affordable premiums:
55% would wear a health-plan-mandated biometric tracker (e.g., Fitbit)
51% would be comfortable with payer prescription drug use monitoring
42% would also agree to a health plan tracking their consumer activity and purchases
"The story here is not only the groundbreaking technology that's changing the industry, but also the privacy concerns and public sentiment on big data in insurance," says Breeze's Director of Communications Mike Brown.
Other noteworthy results included consumer response on insurance companies analyzing their DNA, installing home cameras to monitor daily habits, and tracking online/social media activity. These were at far lower approval rates, however.
Noting that in the past seven to 10 years, Big Data has altered insurance underwriting forever, Breeze CEO Colin Nabity adds, "Insurtechs are trying to figure out how do we get more creative with all of this data that has not been traditionally used. The more data available from more sources, the greater the predictive analytics and the better the opportunity to assess risk and drive down costs."
As the survey results indicate, incentives help. But for health plan members, do carrots or sticks work best? And how are stakeholders proceeding? We know the answer when it comes to Delta Airlines. Following the FDA's full approval of the Pfizer vaccine, the company announced in late August that "unvaccinated employees enrolled in Delta's account-based healthcare plan will be subject to a $200 monthly surcharge." Delta is self-insured with UnitedHealthcare acting as its third-party administrator. The airline declined a HealthLeaders interview request regarding the legal and compliance complexities of their decision-making process but did indicate that more than 60,000 employees (75% of their workforce) have been vaccinated.
As to the decision, one health law expert speculates that Delta will levy the surcharge as part of a wellness program, allowable under the Health Insurance Portability and Accountability Act (HIPAA) and that will not change under now-frozen wellness program rules. This perspective comes from Lindsay Wiley with the American University Washington College of Law. Wiley notes that a HIPAA exception "allows group health plans (employment-based plans) to establish premium discounts or rebates or modify copayments or deductibles as an incentive for employees who adhere to 'programs of health promotion and disease prevention'— better known as 'wellness programs' ".
This is an effective strategy for employers and payers alike as more consider vaccine mandates tied to financial consequences and data monitoring. Another August 2021 survey, this one from Willis Towers Watson, finds that 59% of the responding 961 employers track employee vaccination status with 19% more planning to do so. Seventeen percent offer vaccine incentives and 14% are planning or considering to do so. Another 18% are considering incentives, penalties, or both—with only 2% of respondents currently imposing surcharges.
These results come as requiring vaccination status is cited, incorrectly, as a HIPAA violation. While the HIPAA Privacy Rule may see a change in 2021, the proposed changes did not pertain to COVID-19. The U.S. Department of Health and Human Services Office of Civil Rights (OCR) has issued the most recent federal COVID guidance on topics ranging from online vaccine scheduling to PHI public health disclosures tied to health information exchanges.
In addition, President Biden signed an executive order requiring that all federal employee and government contracts get the COVID-19 vaccine. The Administration also announced its six-point plan for containing coronavirus spread, including in schools and at work.
Slow or fast, Big Data keeps up as the Delta variant continues to surge and payers, employers, and other stakeholders seek tools that balance privacy and legality, economic concerns, and public safety.
"The consumer behavior aspect is a bit unrealized," says one group executive.
There aren't too many holy grails in healthcare, probably none. But there are many hopefuls and consumer-directed health plans (CDHP) are one.
CDHPs were created to bend the cost curve and they remain popular with fully and self-insured employers alike (FI and SI). But results from the 2022 Business Group on Health employer survey indicate that CDHP dynamics are changing. This article explores the reasons for this shift in the second of two articles on the Business Group's annual findings.
CDHP relevance among business group members
CDHPs remain the plan design of choice among large, SI employers. The Business Group reports that median CDHP enrollment was 50% in 2021 and that CDHPs "continue to be the highest enrolled plan for a majority of employers” at 53%.
But paired with this popularity is a decline in CDHPs as the sole coverage option. The Business Group findings show that "the last several years have seen a move away from full replacement." The primary reason for this is the 2019 repeal of the Affordable Care Act (ACA) excise tax, designed to discourage employers from offering high-cost Cadillac plans. CDHPs offered employers an alternative and their uptake predictably grew. Among the Business Group employers, CDHP full replacement increased from 17% in 2012 to a high of 39% in 2018. A steady decline with the tax repeal will result in only 14% of the Business Group members expecting to offer CDHP as their only option in 2022.
"Employees who might have swung the pendulum further toward CDHP now have more choice," says Ellen Kelsay, Business Group on Health's President and CEO. PPOs now rank a relatively close second in plan design, representing 41% of large, SI employer enrollment.
The broader landscape is comparable but not equal
In 2020, 64% the Business Group's large, SI employers offered only CDHPs. This year is called out to compare those survey results to the most recent findings from the Kaiser Family Foundation (KFF). In that survey, which includes all employer types (small, large, SI and FI), 68% offered CDHPs as their sole option.
The comparison is important to gauge benefit design popularity across the landscape, how SI trends influence other employers and payers, and vice versa. Kelsay notes, "When you are a large innovative employer that makes some change, other employers are keen to learn from that—especially smaller employers. Health plans watch, too," she adds. "There seems to be an interest in not only plan design, but vendor choice. Plans pay attention for when it makes sense for them to pivot."
HSA a vital part of the strategy
Health Savings Accounts (HSA) are an important part of CDHP plan design, with these related findings from the Business Group survey.
HSA dominates HRA in CDHP pairings. Among responding employers, 97% offered HSAs in 2021, compared to 22% for HRAs. HSAs dominate in the KFF 2020 survey as well (20% versus 8%) but overall employers that offer either option is lower (26%).
Employer HSA contribution. The median 2021 contribution was $600 for employees, $500 for spouses/partners among the Business Group respondents. KFF 2020 results, again across all employer types, averaged $550 and $1,018.
Contribution strategy. Some 57% of the Business Group 2021 respondents make predefined HSA contributions that may be wage-based, matched, or seeded. Of those contributions, 26% were based on employee health improvement program participation. The 2020 KFF survey did not contain this information.
The latter is important, as consumer engagement is a critical aspect of overall CDHP success—and one that has been mixed.
If you build it they will come, sort of
Consumers play a vital role in CDHP actual outcomes versus plan design potential. In 2008 and pre-ACA, The Innovator's Prescription identified the combination of HSAs with high-deductible health plans as "one of the most important reforms to be made in health care . . . a necessary element of the new disruptive value network that major employers will need to orchestrate." The authors predicted 90% CDHP substitution by 2016, which has not clearly come to pass. Consumer behavior is a significant component.
"The consumer behavior aspect is a bit unrealized," observes Kelsay. "There was a lot of optimism about CDHP. The hope was that it would create more informed healthcare consumers who, because of the high deductible, would think twice about using the ER, getting a scan, or choosing brand over generic. But there are the practicalities of how we use services, the urgency of choice. In these scenarios, lining up the information to make good decisions isn't necessarily the answer. This plus the impact of high-deductible plans on people who live paycheck to paycheck and the unintended consequences of delayed care has made things hard."
But it's more than consumer behavior. It's system behavior. Jason Hwang, MD, one of The Innovator's Prescription's authors, commented in 2019:
“While HSA adoption has increased a lot, it hasn’t quite been exponential. . . the reluctance of the system to move beyond a volume-based fee for service model (the tyranny of the visit!) has precluded value and outcomes-based offerings that are ideal for HSAs and informed consumers."
Health Affairs had a similar prognosis in 2020, noting that today's innovators, "Walmart, Amazon, and Google, are hardly the streamlined outsiders evoked in the Innovators Prescription. If their services and products appear cheap, it’s because customers are paying with their data as well as with their dollars". Amazon, along with Berkshire Hathaway and JPMorgan Chase, was one of the employer behemoths that formed Haven to deliver better, more affordable care to employees. Three years after it launched, Haven is no more with Harvard Business Review author John S. Toussaint citing "insufficient market power…[the healthcare system's] perverse incentives, [and] poor timing [COVID]" as the primary factors.
Toussaint advocates a public option and notes, "If large corporations want to self-insure, they would still be able to do so but at a substantially higher cost." Like so many healthcare reform discussions, the role of self-insured employers, CDHP, and the broader implications of benefit design ends where it began—with concerns over cost, quality, and access.
More than 90% of employers are concerned about COVID's long-term impact on deferred care and employee mental health.
In the era of COVID, the term site of care has multiple implications. This includes not only where care is delivered but the physiological conditions that are now within telehealth's reach and employers' ability to impact. HealthLeaders has identified this site of care takeaway from the 2022 Business Group on Health employer survey and recent online press conference. Site of care's influence can be seen among the top five large employer concerns from this year's Business Group on Health survey, including:
COVID's impact horizon
Expanded social determinants of health (SDOH) benefit design, including financial programs
Mental health care, access, cost, and quality as well as stigma awareness.
Reimagined roles for, and the future of, worksite clinics
Anticipated cost upticks after a mixed spending year
Key highlights from each area are outlined below. The survey reflects responses from the Business Group's members, including 136 employers—mostly large and self-insured from diverse industries—that cover more than 8 million people.
COVID'S LONG REACH
More than 90% of employers are concerned about COVID's long-term impact on deferred care (particularly related to cancer diagnosis and treatment) and employee mental health. While health and well-being are either integral to or a consideration in workforce strategy for 87% of employers, this represents a surprising decrease from 2020 (94%).
And while the key reason is not surprising (e.g., COVID response overtook existing strategies), how employers dialed back is. The Business Group reports that 15% of respondents reduced value-based health and well-being efforts, such as participation in accountable care organizations (ACO), high-performance provider networks, and provider centers of excellence. Given that COVID is the equivalent of a dumpster fire for healthcare data trending and business intelligence decisions, however, these value-based program shifts may prove well-advised for the short term.
WHY SDOH MATTER EVEN MORE
With the U.S. workforce still largely remote and the Delta variant curbing activity, site of care continues to align with site of live, work, and play. This makes SDOH's impact on health and well-being even more important and for more people, with self-insured employers challenged to address these intersections.
Emerging SDOH concerns include employee finances/income and racism, with 60% and 55% of employers respectively implementing benefits and programs to address them. Health inequities related to fertility/material care are another key focus, with 82% of employers creating solutions to target high-risk pregnancies, post-partum depression, fertility, prenatal care, C-section rates, and doula services by 2022. Transgender health needs and neurodiversity (e.g., spectrum disorders, ADHD) are two additional areas with 75% or more of employers reporting that they are addressing.
MENTAL HEALTH: A NEW FOCUS ON STIGMA
COVID has amplified another U.S. epidemic: mental health. Now, more employers are targeting a significant reason why many people do not seek care: stigma. "The year 2022 will mark the first time that a majority of employers will have an anti-stigma campaign, according to the survey," says Ellen Kelsay, Business Group on Health's President and CEO, who spoke at the organization's August 25 press conference. While mental health service access is still the prevailing focus for 76% of employers, 57% named stigma as one of their top three areas of concern for employee well-being.
A growing number of mental health tech solutions are also helping, moving site of care as close as a smartphone app or wearable and expanding the reach of companies' Employee Assistance Programs (EAP). "Health tech is a major way employers are increasing employee access to mental health," says Business Group on Health Vice President Brenna Shebel, another conference speaker. For more traditional mental health services like counseling, 75% of employers intend to offer no- or low-cost telehealth options in 2022—a significant increase compared to the 54% that currently do.
ON-SITE OR ONLINE?
Workplace clinics aren't going anywhere anytime soon. Yes, employers report that the number of on- or near-site clinics declined in 2020 and 2021—with a return to pre-pandemic numbers not expected until 2024. But those sites have and may continue to play a role with COVID testing and vaccination, particularly if more employees are required to return to the office fully inoculated and face fees if they don't. "Employers are exploring surcharges for non-vaccinated employees. This is a hot employer topic. There are compliance and legal concerns, as well as bad PR," notes Shebel. The day after the Business Group's press conference, Delta Airlines announced that it would charge unvaccinated staff a $200 monthly insurance fee effective November 1, 2021.
Still, on-site may be the better place for the urgent and chronic, with virtual visits an ideal solution for acute and maintenance care. The Business Group reports that 76% of employers plan to maintain their telehealth expansion efforts in areas ranging from the traditional to the surprising. Among this latter group, fertility, musculoskeletal, cardiac, and kidney care are expected to see a minimum 20% increase in the number of employers planning telehealth offerings by 2023/2024.
THE FUTURE OF HEALTHCARE SPENDING
In 2020, the coronavirus accomplished what the healthcare industry has not: bending the cost curve. Reduced spending from deferred care appears to have offset the costs associated with COVID-related care for large, self-insured employers. The Business Group reports that a spend trend ranging from -12% to +10% resulted in a net-zero overall increase.
No one expects that to continue. A 6% increase is expected in 2021, with some mitigation through benefit design in 2021. Consumer-directed health plans (CDHP), however, may not be part of that strategy. In a follow-up article, HealthLeaders will explore the Business Group's findings specific to CDHPs, which fewer employers are offering as a full replacement in lieu of other coverage options—one of many areas in which the group offers rich data.
"The Business Group's annual survey is a unique window into how large employers plan to evolve their benefit strategies and offerings in the coming year," said Kelsay. “Employers seek information about their peers' strategies, and survey findings offer collective guidance for companies to best support their workforces."
Editor's note: This story was updated on August 30, 2021, at 5:01 p.m.
One insurtech startup CEO says that single-point startups are "contributing to fragmentation. The key is to solve problems in the marketplace for customers and carriers alike."
If you prefer industry terms, healthcare is generally seen as fragmented, failing to deliver appropriate, accessible, quality care at a reasonable cost in an equal way for all people. This is despite the fact that the healthcare sector represents the largest sector of U.S. GDP at 17%, or $3.5 trillion.
It’s not like healthcare isn’t trying to transform. The Affordable Care Act, in addition to expanding coverage for millions, has created a "gazillion-dollar startup machine" as a continuing wave of entrepreneurs seek to help solve these challenges. But have the growing number of startups become indispensable or are they inadvertently adding to the problem?
To help answer these questions, let’s begin with how insurtech startups have been working to innovate in three key areas:
Plan comparison. Technologies to help shoppers compare and choose exchange plans include those from startup Stride Health.
Online enrollment technology. Exchange platforms and the adjacent technologies that support them have grown.
New health insurers. First-time carriers like Oscar compete and sometimes partner with large payers.
Early entrants like Oscar and Stride were just the beginning. In a 2016 Inc. article, Bob Kocher—a physician, venture capitalist, and leading healthcare policy advisor during the Obama Administration—puts it this way: "Anytime you take a sector and apply a whole bunch of regulatory changes and economic incentives to it, it creates enormous opportunities for new entrants to come and take advantage."
Startup growth beyond the exchanges
This has come to fruition. PitchBook reports that as of June 2021, there were nearly 130 startups operating in the health tech startup space with a focus on health plan operations support (e.g., claims, billing, marketing) in addition to the coverage, comparison, and enrollment spaces. In the coverage arena and in addition to Oscar, this includes names like Bright HealthCare and Clover Health. Supporting operations are wefox, Cityblock Health, and League while GoHealth, eHealth, and Medbanks are among those contributing to marketplace and benefit platform innovation.
With the collective name "insurtech," these are certainly not the only startup areas. Technology is embedded in nearly every aspect of healthcare and is generating massive growth and investment for startups and corporations alike. Deloitte Insights reports that in 2020, health innovators received some $14 billion for solutions focused on well-being and care delivery, data and platforms, and care enablement.
Medicare Advantage (MA)–focused startups are increasingly joining the mix and for good reason: it’s a booming Boomer market. McKinsey & Co., citing CMS data, reports that MA "is the fastest-growing line of business for many health plans, with enrollment growth of around 8% per year." Growth is expected to be 11% annually through 2023 when a projected 34 million will be enrolled.
How to improve cost, quality, and access is just as much an issue for Medicare Advantage as healthcare’s other markets. Dave Francis, CEO of up-and-coming insurtech startup Healthpilot, notes: "There are a lot of single-point startup solutions out there that are contributing to fragmentation. The key is to solve problems in the marketplace for customers and carriers alike."
Potential downsides
Francis highlights a critical point: that there is a risk that a proliferation of startup solutions will increase silos and make healthcare even more fragmented as costs continue to grow. Consider two propositions:
Technology is helping to deliver more affordable, higher-quality, accessible healthcare, and the costs of innovation, where high, justify the means.
Technological innovation has done little to truly improve healthcare, and the costs to develop, implement, and maintain solutions—particularly novel ones—far outweigh the advantages.
Neither statement is wholly true or false. A June 2020 Health Affairs blog that asks why innovation isn’t playing a stronger role in healthcare cost reduction presents three conclusions:
Patchwork solutions perpetuate root problems.
Innovation may support current markets more than future [ones], which grows revenue rather than reducing costs.
The only truly cost-effective innovations are those that focus on process improvement and target "high productivity."
And what of the risks associated with venture capital and private equity’s (PE) growing role in health tech startups. In his recent article for HealthLeaders, Jack O’Brien asks: "When private equity firms invest in healthcare who benefits?" One of the article’s takeaways is that "[t]he alignment between healthcare's mission and economics is key. PE firms must find a way to build economic models that do not simply lead to near-term profits and cause damage to the healthcare ecosystem."
That ecosystem is increasingly driven on value, which is central not only to healthcare’s long-term financial sustainability but the startup ecosystem that strives to create useful products that customers want and will pay for. This dual-value focus helps ensure that insurtech and other entrepreneurial healthcare solutions are created efficiently—that human ingenuity is not wasted, and that the consumer continues to gain traction as the focal point of all industry innovation.
One payer hopes to make healthcare more equitable by using alternative data.
The film Minority Report imagines a world where someone’s destiny can be viewed before it occurs. Holographic, 3D maps illuminate people in bad situations—sometimes due to choice, others trapped in circumstance, often a combination.
That was a movie. But the truth is, there is a real map of probable, negative outcomes that already exists. It’s often defined by a person’s ZIP code and what it’s like to live there, marked by social determinants. If that reality was a heat map, florid-red hotspots would mark a complex interplay of too much and not enough—too much crime, poverty, and crumbling infrastructure and not enough jobs, community centers, and grocery stores.
It has been said that ZIP code is a better predictor of health than your genetic code, an early and novel way of describing the social determinants of health (SDOH) and their effect. But why do SDOH matter now more than ever before, and how are payers using them to create solutions?
The role of alternative data in SDOH
Enter alternative data, or any data external to what a company (such as a payer), collects on its own. Alternative data offers broader source, scope, and value. The financial services industry was the first to use alternative data in a significant way, with venture capital firms looking beyond traditional sources (e.g., from personal and professional networks, SEC filings, and financial statements) to make better investment decisions.
Today, alternative data usage is growing rapidly by usage and type, with a revenue forecast of $17.35 billion by 2027. Alternative data now includes nearly every sector of the global economy—from insurance, manufacturing, transportation, and retail to IT, telecommunications, media, and entertainment. And there are literally thousands of data sources and collection portals. Websites, mobile apps, sensors, and wearables collect data through direct input while cameras, drones, and satellites collect valuable data from afar. Add to this the data collection software, platforms, and equipment that record human interactions with society and its institutions: education, retail, finance, government, criminal justice, and more.
One payer's approach
Healthcare is one of those institutions, and CareFirst BlueCross BlueShield is one of a growing number of payers investing in alternative data as part of a broader investment in better health outcomes for individuals and communities. CareFirst offers medical, dental, vision, and prescription drug coverage, including Medicare Advantage and Medicaid plans, for residents of Maryland, Washington, D.C., and Northern Virginia. CareFirst hopes to make healthcare more equitable by using alternative data to design interventions that incorporate SDOH.
For CareFirst, alternative data moves the goalpost forward despite the industry’s abiding patient data, electronic health record, and analytics challenges. The plan has made a $10.5-million, multi-year commitment to "addressing the root causes of diabetes" by incorporating SDOH and multiple alternative data sources. The objective is to use SDOH data to design more tailored diabetes prevention and intervention programs that achieve better outcomes for members and inform broader community initiatives.
In an interview with the Baltimore Business Journal, President and CEO Brian D. Pieninck notes the broad implications of this approach: “CareFirst is engineering a shift in the healthcare landscape, placing greater emphasis on population health outcomes, value-based care, and addressing social determinants of health to achieve health equity by leveraging analytics that drive impact." To achieve this, the health plan is focusing on "economic climate, food insecurity, health literacy, violence exposure, housing instability, transportation barriers, and coronavirus (COVID-19) vulnerability" and well as other SDOH data.
In addition to expanding data’s role in its initiatives, CareFirst seeks to expand who participates beyond its members. The plan will partner with community organizations, local businesses, and its providers—first in Baltimore City, two wards in Washington, D.C., and Prince George’s County, Maryland with expansion planned in 2022. Outcomes will be forthcoming.
Given that ZIP codes influence health destiny, it’s fitting that another Destiny is helping to create change. Destiny-Simone Ramjohn, PhD, became CareFirst’s vice president of community health and social impact in January 2020. Dr. Ramjohn is leading the organization’s vital linkage between community engagement and philanthropic investment for measurable health improvement at the broadest possible level.
"It’s insufficient to look at social determinants of health through only an individual lens," says Ramjohn. "They touch public and population health. This understanding is part of our DNA at CareFirst. Our investments are further upstream now with dedicated staff and resources. The data is accelerated, including our partnerships around it."
The importance of partnership
Washington, D.C.–based Socially Determined is one of those partners. Founded by physician and public health advocate Dr. Trenor Williams, Socially Determined is using the following strengths to help CareFirst and other customers:
Three robust and diverse datasets, including multiple public, commercial, and consumer sources.
A four-pronged approach to initiative effectiveness.
Extensive integration and workflow services to link alternative and client data (e.g., clinical and claims for payers).
HITRUST certification for data privacy and security, permeating technical specifications and operations.
Socially Determined provides clients with federal and state data; granular business data ranging from restaurants to retail; and financial data from TransUnion that spans credit ratings, buying behaviors, asset/resource information including home, car, and property ownership. Individually and collectively, this data paints a comprehensive picture of individuals and community health in every facet of life. Socially Determined uses this data to 1) identify risk, 2) quantify opportunity, 3) prioritize geographies and interventions for best results, and 4) measure intervention return on investment (ROI).
Socially Determined does the "heavy lift" for clients to manage the needed data integration and extractable intervention intelligence. "It’s harder than you would think to leverage data in a nimble, fluid way and get all the value you can," explains Williams. "Payers have to get the day to day done, often with limited resources. We bring this kind of domain focus to be a thoughtful partner." As part of this, Socially Determined allows clients like CareFirst to use the data for multiple objectives and helps their analytics teams deploy it strategically.
Williams notes that technical integration is not as challenging as it was five years ago when he founded Socially Determined. Neither are the conversations about the necessity of SDOH data for truly better outcomes. "The turning point was COVID, its disproportionate effect on people of color, and the social protests that started with George Floyd. It made so much visible in a new way." It all helps shape what Williams calls "multifactorial" interventions, those that incorporate multiple social determinants (rather than being "single domain") and do so in a sustainable, scalable way.
Trust, providers, and healthcare's highest aim
Socially Determined and CareFirst have high praise for one another. "One of our big questions was how do we accelerate systematic data collection around SDOH," says Ramjohn. "Our partnership with Socially Determined leverage analytics that drive impact."
Williams adds, "There is a real organizational commitment from CareFirst. They are thoughtful about the process and its value for the community as a whole, not just their members. Their goal is to do this work with the community, not to the community."
It’s a matter of trust. The factors that contribute to poor SDOH are linked to the reasons why vulnerable populations don’t necessarily rush to institutions like healthcare and their representatives. CareFirst focuses on the vital role that providers play in changing the landscape.
"Providers—as well as payers and nontraditional actors like financial services, philanthropic organizations, and the government—have begun to understand how SDOH factors really do impact," notes Ramjohn.
Her CareFirst colleague Tich Changamire, MD, PhD, MBA, vice president and chief medical officer, adds: "Working with providers on cultural competency, recruiting and retaining staff who look like the community—it all contributes to health equity. It’s important to help practices incorporate screening tools and to engage our practice consultants to see what’s happening beyond the office visit. It’s a 360-degree approach."
That 360 degrees calls to mind the 3D map that opened this feature, the one where ZIP code determines outcomes. It doesn’t have to. With understanding, collaboration, and a lot of alternative data, ZIP codes can help redraw patient-first solutions—whether that patient is healthy or has cardiac disease. SDOH recognize that part of what might be wrong with a person’s heart are the things breaking it, things healthcare can help solve when it is achieving not only the Triple Aim but its highest one: respecting that patients are people first.
Paying for high-cost, breakthrough drugs is one of healthcare's abiding challenges—and tied to so many of the "pre-existing" conditions that plague the industry as it tries to innovate.
If a drugmaker developing novel therapies created an online dating profile, it might read something like this:
Caught-in-the-headlines innovator desperately seeks reimbursement strategy for a wide variety of relationships: one-time, short-term, or ongoing. Must be comfortable with controversy and difficult conversations around money. Problem-solvers desired, skeptics need not apply.
Matches and responses to such a profile might be slow to roll in. Why? Because paying for high-cost, breakthrough drugs is one of healthcare’s abiding challenges—and tied to so many of the "pre-existing" conditions that plague the industry (cost, quality, and access) as it seeks to innovate. These challenges are amplified for novel therapies, especially one-and-done curative treatments. A growing number of solutions are emerging, however.
The state of novel therapies
First things first. "Novel therapies" refer to the growing number of cellular, genetic, and other biological treatments that, per the Food & Drug Administration (FDA) "serve previously unmet medical needs … [and] have chemical structures that have never been approved before." Think stem cell treatments, most of which target cancer and rare, inherited diseases. The Alliance for Regenerative Medicine (ARM) reports that only 60 products, roughly, have been approved for use—only a fraction by the FDA and many not available in the United States.
Novel therapies often address so-called "orphan diseases," defined by the U.S. Orphan Drug Act as affecting less than 200,000 people. MedicineNet frames the issue more bluntly, commenting that an orphan disease is one that has "not been adopted by the pharmaceutical industry because it provides little financial incentive for the private sector to make and market new medications to treat or prevent it." There are manufacturers that do, with the FDA offering distinct approval pathways for orphan and other breakthrough therapies for rare diseases.
Controversy continues
These therapies are not without controversy. The FDA's recent approval of Biogen to treat Alzheimer's disease set off a firestorm, not only for its cost but the questionable clinical benefit that did not stop FDA approval. High drug costs are hardly a new headline in healthcare. But Biogen’s bad press—and historical bad actors such as 2015’s price-hiking "pharm bro" Martin Shkreli—make it more difficult to separate pricing from other issues, including solutions.
Biogen’s $56,000 annual cost, for example, is small compared to limited and even single use ("one-and-done") therapies. Many of these are the aforementioned cell- and gene-based treatments with a cure versus maintenance focus. Zolgensma, a one-time therapy for spinal muscular atrophy, costs $2.1 million. Despite this price tag, The American Journal of Managed Care (AJMC)reports that it has "set the pricing precedent for gene therapies."
The current landscape
A $2 million precedent doesn’t make payers’ jobs any easier. Some aspects of the current stem cell and genetic reimbursement landscape may help. Today, stem cell implants can be reimbursed one of four ways for private insurance: case rates, per diem rates, a percentage of billed charges, or a percentage of Medicare diagnostic-related group (DRG) charges which (along with current procedural terminology (CPT) codes) are the basis of Medicare payment as well.
The real challenge is one-and-done, curative therapies. The Alliance for Regenerative Medicine (ARM) has identified the crux of the problem. "While these therapies can provide significant direct and indirect savings in medical costs over time, their potentially high upfront cost can create a significant burden on existing reimbursement systems … If paid for as drugs are today, the cost of regenerative [curative] medicines … would be incurred up front and could present a financing challenge for some insurers."
As the AJMC notes, what payers are lacking are cost-effectiveness thresholds (CETs): "the maximum cost at which the treatment is deemed to be cost-effective and the cost is justified"—for future gene therapies (2020). The value proposition depends upon efficacy (short- and long-term) and lifetime savings, none of which are guaranteed nor easy to prove.
Getting it done
Noting that "[a]s more gene, cell and tissue-based therapies reach the market, the need for payment solutions is more pressing," ARM has identified multiple payment alternatives for one-and-done therapies that distribute cost and risk over time. These include:
Installment payments: Made over time with amounts and frequency based on lifetime patient benefit calculation.
Value-Based: Manufacturer reimbursement based on pre-defined health outcomes, with payment including discounts, rebates, and money-back guarantees.
Hybrid: Value-based model with incentive payments extended over more time.
Novartis is but one manufacturer getting onboard, including a hybrid financing-reimbursement solution for the previously mentioned Zolgensma that includes a five-year payment plan and partial rebates if the drug is not effective.
Each approach faces implementation barriers already common to healthcare innovation, from accounting rules based on point-of-service payment to coverage portability to the FFS chassis that still limits value-based purchasing strides. All of these require legal and/or regulatory intervention. Multiple, multi-stakeholder initiatives have emerged to address, including the Biotechnology Innovation Organization (BIO), the Institute for Clinical and Economic Review (ICER), the American Society of Gene and Cell Therapy (ASGCT), and the MIT-based NEWDIGS (New Drug Development ParadIGmS).
NEWDIGS, for example, is "focused on enhancing the capacity of the global biomedical innovation system to reliably and sustainably deliver new, better, affordable therapeutics to the right patients faster." Initiative members include manufacturers, payers, providers, industry groups, and even venture capital firms. Anthem, the Blue Cross Blue Shield Association, Harvard Pilgrim Health Care, Humana, Kaiser Permanente, and UnitedHealthcare participate on the insurer side.
Full-scale intervention is necessary. The ARM writes: "No one entity can achieve these changes on its own, nor will every solution be ideally suited to each new therapy or circumstance." Innovative therapies that lack innovative financing and reimbursement will strain industry attempts to make healthcare more accessible and affordable. More initiatives will be needed to help payers partner with drugmakers, government, and other stakeholders for solutions.
"What has been missing is the patient's perspective," says one industry consultant.
The future of clinical pathways is patient-centric: an approach that balances the long-standing focus on cost-effectiveness with personalized medicine choices, defined by patients and providers, to deliver results across the value chain. “What has been missing is the patient’s perspective,” says Winston Wong, PharmD. Wong—whose career has arced from health plan pharmaceutical executive to industry consultant and editor-in-chief of the Journal of Clinical Pathways (JCP)—states that has been the field’s most significant shift since 2015. This perspective includes many facets: financial, treatment tolerance, caregiver support, and a holistic view of the person receiving treatment.
Definitions and foundations
Many factors can and must contribute to patient-centered clinical pathways, many linked to the very dynamics that will help the healthcare industry shift from volume- to value-based care (e.g., provider integration, innovation, social determinants of health). By definition, a clinical pathway is an evidence-based treatment plan. Wong adds to this definition the “balance of efficacy, tolerability, and affordability [that] lead to the set of preferred treatment options,” with accountability for following the pathway being critical.
Built out further and based on definitions developed and updated between 2010–2016, JCPdefines clinical pathways as meeting four criteria: “(1) a structured multidisciplinary plan of care; (2) the translation of guidelines or evidence into an algorithm; (3) detailed steps within the pathway along a timeframe in a course of treatment/care plan; and (4) standardized care for a specific population.”
Oncology and outcomes
Clinical pathways cut their teeth in oncology and remain prevalent in a field marked by high treatment costs, expensive specialty pharmaceuticals, and a particular need for coordinated and integrated multidisciplinary care that spans every dimension of human need. Add to this the personal toll that a cancer diagnosis can bring.
There is no doubt that clinical pathways make a difference. “A clinical pathway will lead to better, more cost-effective care and outcomes,” says Wong. In addition to the efficacy, tolerability, and affordability cited earlier, he adds: “From a quality standpoint, it has been well documented that by decreasing the number of regimens, the staff becomes more familiar with the regimens being administered and they are able to support the patients better by being able to manage their experiences and toxicities.”
A new focus: Patient-centered
But given that clinical pathways are not ubiquitous, what remains? Patient-centeredness, says Wong. He notes that while prior objectives were weighted heavily to cost control, “we’re now looking at total patient care, SDOH, and triple aim; what’s coming to fruition is patient satisfaction. We [at the JCP] arrived at the conclusion that clinical pathways are used more today as a total tool.”
This perspective is reflected in the findings of the Journal of Clinical Pathway’s 2020 Oncology Benchmarking Survey. The primary reasons that oncology practices report utilizing pathways are to decrease treatment decision variability, improve care quality and outcomes, and streamline data collection. “Cost control, per se, came in lower compared to 2019,” says Wong, “possibly due to the shift from fee-for-service reimbursement to overall performance/outcomes-based reimbursement.”
Clinical Pathways University adds: “In a health care landscape undergoing a paradigm shift from a traditional fee-for-service to a value-based care model, clinical pathways represent the uniting of real-world clinical and financial data with medical practice as a means to drive precision and optimization of patient care.” It’s also important to note this might mean a clinical pathway is not utilized for select patients. The example Wong gives is an 80-year-old patient who may not tolerate chemotherapy well or require it if the cancer is controlled.
The role of integration and consolidation
As clinical pathways diverge in the wood, who will define this road less travelled? Payers will continue to lead but they are not alone. Wong cites CareFirst BlueCross BlueShield, Cigna, and Humana as innovative carriers, either independently or by working with third parties such as New Century Health. Today, providers are also using New Century, including Mercy Health, Cancer Care Specialists of Illinois, and Conviva Care Solutions. The latter is a Humana-practice management which prompts what role integration will have in clinical pathways’ brave new world.
With more stakeholders working with the same third parties, expect to see a reduction in the number of clinical pathways in favor of consolidation and streamlining. Wong notes that even programs created independently “appear to be a moving back towards using guidelines and compendia as the base, and then pairing down the treatment options based upon the needs and demands of the practice.” Collectively, these practices—along with clinical pathway-EHR integration—help solidify and streamline, reducing the variation that causes pathways to die on the vine.
CALLOUT: 61% of providers access pathways via the EMR, 25% via a separate system, and 8% using hard copy paper orders (Source: JCP 2020 Oncology Benchmark Survey)
This also occurs when providers align their pathways to their largest payer populations or attempt to identify common factors across business lines. Aligning to size and consistency reflects the pros and cons of healthcare reform—using existing volume and existing mechanisms as the only starting point while building the kind of stakeholder consensus that breaks down silos and ensures innovation is moving in the same direction across stakeholders.
Precision medicine and more specialties
The opportunity to apply clinical pathway beyond oncology to rheumatology, gastroenterology, cardiovascular, and other areas are making headlines. Notably, clinical pathways are also moving beyond not only oncology but pharmacology. MedPage Today and the American Society of Clinical Oncology (ASCO) are calling for pathways that “reduce their reliance on drug utilization” as more genomic, immunology, and cellular treatments emerge. The rise of precision and personalized medicine through these therapies could be the tide that lifts clinical pathways to full patient-centeredness.
Click here for the full MedPage/ASCO study and here for more insights from The Journal of Clinical Pathways’ 2020 Oncology Benchmarking Survey.
The FFS claims submission process is still the primary means for capturing the broader encounter data needed for VBP analysis and payment.
Value-based purchasing (VBP) has been part of the national healthcare vocabulary for more than a decade. And while there is much to suggest that VBP is finding its place in the delivery system—with numerous government programs and thousands of payer-provider contracts spanning managed Medicare, commercial, and even Medicaid programs—VBP also has a long way to go. And the still-entrenched fee-for-service (FFS) chassis linked to every functional aspect of healthcare is why.
Value-based purchasing—sometimes referred to as alternative payment model (APM)—does not have a conceptual problem or even a "will" problem. There is a general consensus that healthcare is too expensive and that new strategies are necessary to control costs. Healthcare already represented 17.7% of U.S. Gross Domestic Product in 2019 and could represent nearly one-fifth of GDP by 2028.
As Brian Wheeler, vice president, provider collaboration and network transformation at CareFirst BlueCross Blue Shield, notes: "Payers and providers can't continue to haggle over unit cost."
What VBP does have is a functional problem that manifests operationally, technologically, and programmatically. Why? Because FFS is still the primary mechanism by which most services are billed, even in value-based contracting models. This billing is largely retrospective and occurs through the only means available to capture broader, patient and population encounter data: claims submission. Claims, in turn, are linked to multi-setting reimbursement coding, all of which are preset and hard-wired into existing program designs and platforms.
"Healthcare delivery system partners and payers are still very dependent on the flow of fee-for-service claims," says Wheeler. "Many benefit designs cannot be administered without a known unit cost for the service provided. Electronic health records [EHRs], the billing systems, the accounting systems—the whole system is built around this." Or as industry expert and policy analyst Paul Keckley has written: "The transition from volume to value is inevitable but the road from here to there is bumpy."
Current strategies, in essence, are work-arounds (e.g., FFS payments reconciled retrospectively to pre-defined VBP cost and quality targets, with assessment of provider performance over time.) On the pharmacy side strategies are even more challenging, with some health plans using retroactive rebates to account for VBP payments linked to prescription drug metrics. "The only way any plan has been able to figure out the drug portion is through providing back rebates," says Winston Wong, a former payer pharmacy management executive and now industry consultant. "It’s the only way for financials to go from a manufacturer back to a health plan. The financial processes are just not in place."
So how can payers and other stakeholders make more rapid and substantial VBP progress and move away from the FFS chassis while it’s still in place? Two solution categories are IT and integration. For the former, encounter data relevant to VBP must be liberated from the claims process.
CareFirst’s Wheeler reports: "We do this using analytic tools that capture patterns in utilization and quality based on the claims data. Once baselines are established, and adjustment factors are agreed on (e.g., changes in population size, changes in risk characteristics), progress can be measured and (the best part) rewarded."
CareFirst also has a unique provider partnership approach, a four-fold model that ranges from enterprise managers who provide total relationship management (for larger providers) to payment transformation, practice transformation, and care management teams that target improved data, workflow management, practice economics, and outcomes opportunities, including for high-risk patients. The carrier’s practice transformation team, for example, includes "master's-prepared" consultants who identify key, actionable insights from practice data. Practice transformation team members also share best practices for skilled, focused consulting.
There are many other industry factors that will impact VBP’s ability to fully migrate from the FFS chassis. Lack of model consensus and operationalized standards is a challenge. For example, Bailit Health has reported that state-designed Medicaid VBP contract designs follow a mix of Medicare- and/or commercial-based VBP strategies as they strive for harmony but grapple with market dynamics.
"MCOs noted that multi-payer alignment was beneficial to providers and plans, since they felt that providers would be more likely to engage in VBP arrangements if these arrangements were more standardized across plans and lines of business," the authors state. This hints at another VBP challenge: more providers with the desire and ability to assume downside risk (i.e., financial penalties in addition to rewards).
There is also the government's role. The Centers for Medicare & Medicaid Services (CMS), for example, prescribes much in the way of initiatives while mandating very little of how those initiatives should be achieved—a perpetual blessing and curse to the industry’s stakeholders. The agency’s 2020 proposed rule is another attempt to bring specificity and more results to VBP, this time related to prescription drugs.
But how fast should, or can, the industry move? Healthcare has a habit of racing to the next problem before fully solving the existing one, an expensive and inefficient strategy. The speed of innovation and digital transformation make some of this inevitable.
Artificial intelligence (AI), for example, could help decouple data locked in legacy systems for broader analytics needs. Olive AI hopes to achieve an "Internet of Healthcare" vision by using artificial intelligence to connect "all of healthcare’s disparate technology," eventually linking payer and provider revenue cycle from start to finish.
EHRs are a prime example and also critical to achieving VBP’s full potential. EHRs are still struggling with the core issues of burdensome, inconsistent data entry; maximum clinical decision support; and their chief aim: interoperability. One need only look at the Cerner EHR modernization debacle at Veterans Affairs (e.g., "Clinical and interdisciplinary workflows were not tested prior to ‘go-live’ in a manner that effectively reflected a real-world environment") to recognize that successful IT implementations are an abiding challenge—in healthcare and otherwise.
Maybe it’s something about the 10-year mark. The industry is entering its second decade of not only The HITECH Act and VBP but The Affordable Care Act and Clayton Christensen’s The Innovator’s Prescription. In that work, Christensen and colleagues Jerome H. Grossman, MD, and Jason Hwang, MD, highlight the challenge that ties healthcare’s hands as it attempts to disrupt itself: cost: "Reformers who focus solely on how to pay for rising healthcare costs fail to address the root problems of why care is so costly to begin with."
In this way, VBP remains dependent on not only the FFS chassis but how to deliver savings alongside ballooning expenditures.
Opponents' primary argument is that covering the uninsured, while noble, fails to address healthcare's other related albatross—skyrocketing costs, including for prescription drugs—with fixed premiums and lower reimbursement rates applying further constraints.
In May 2021, Nevada’s Democratically controlled legislature passed SB 420, authorizing a Public Option for uninsured residents who fall between Medicaid eligibility and up to and including marketplace options. Signed by Gov. Steve Sisolak, the Public Option also covers small businesses with The Wall Street Journal headlining that the "future of U.S. Healthcare may be playing out in Nevada."
We’ve heard this before, more than a decade ago in fact when Massachusetts was cited as the model for the Affordable Care Act (ACA). “Romneycare” and “Obamacare” had similarities and differences but one truth remains: government-sponsored healthcare remains a challenging discussion in the U.S. The groups opposing the new Nevada law cite potential destabilization of the current marketplace, a similar argument in 2009–2010. Bob Foesset of the Las Vegas Review-Journal writes: "I suspect secretly that many Republicans and some Democrats will be happy with the new 'public option' program that the Legislature just passed, as it is only partially 'public.'
This is true, given that private carriers will provide coverage—and one that operates against a relatively diverse payer landscape. Nevada is one of 15 states that operates its own health insurance exchange (HIE), with New Jersey and Pennsylvania joining the roster in November 2020. Five carriers currently offer Nevada HIE plan coverage: Health Plan of Nevada (HPN, from UnitedHealthcare), Silver Summit (Centene), Anthem, as well as Friday Health Plans (FHP), and Select Health. The former three also offer Nevada Medicaid plans. Anthem offered no exchange plans from 2018–2019 but re-entered, with FHP and Select entering the marketplace for 2021. Anthem, Select, and United also offer Medicare Advantage plans in Nevada, in addition to eight other carriers.
So how is Nevada's so-called Public Option unique and how is it more of the same: State small businesses plus Nevada residents who make more than 138% of the federal poverty level (FPL) —the upper limit of Medicaid eligibility—could purchase a Public Option plan from bidding commercial payers. So could those currently eligible for an ACA marketplace plan, which are now more affordable thanks to new subsidies enacted by the American Rescue Plan Act (ARPA) and in place through 2022. Nevada’s new program requires Public Option plans to be priced at 5% less than exchange plans and up to 15% less over the program's first four years.
Opponents' primary argument is that covering the uninsured, while noble, fails to address healthcare's other related albatross—skyrocketing costs, including for prescription drugs—with fixed premiums and lower reimbursement rates applying further constraints. Reimbursement rates are an ongoing challenge for which there is no easy answer. Kaiser Family Foundation captures the dilemma well: "Policymakers and analysts continue to debate whether relatively high payments from private payers are necessary to compensate for lower Medicare payments, and the extent to which providers could operate more efficiently to reduce costs." Noting that even efficient providers "appear to be ... losing money on Medicare patients over the past few years," KFF proposes a transition period for payer-provider adaptation.
For Nevada’s Public Option participants, a transition could be particularly helpful as carriers will be expected to "use ... payment models that increase value for persons enrolled ... and the State," including pay-for-performance, while offering aggregate reimbursement rates that are "comparable to or better than ... Medicare." America's Health Insurance Plans (AHIP) joined a variety of opponents, responding to the legislation this way:
"Creating a new set of health plans that look identical to other plans but with capped reimbursement rates does not address the underlying high costs of care, and will only serve to raise costs outside of the individual market as health care providers seek higher reimbursements to remain whole."
SB 420 also requires participating carriers to "[d]emonstrate alignment of networks of providers between the Public Option and Medicaid managed care, where applicable" and for current Medicaid and Public Employees' Benefits Program providers to participate "in at least one network" for the Public Option.
Despite pushback, it is unlikely that the state's current and largest plans would decline to participate. HPN, Silver Summit, and Anthem are the likely candidates to cover this as-yet un-served sliver of the market, given their size and that they also offer Medicaid plans in Nevada, with those providers required to participate in at least one Public Option network. The state's current Medicaid plans are required to bid. This sliver will be larger if the subsidies offered by ARPA are not made permanent—a move that many (including AHIP) support. If not, the Public Option's participating health plans are looking at two different cost scenarios within the 5%–15% lower premiums to be achieved over time.
There is evidence, however, that plans with Medicaid lines of business tend to be more successful on the exchanges. While commercial plans tend to enter the Medicaid market slowly, the Urban Institute and Robert Wood Johnson Foundation have found that:
Medicaid insurers tend to lower and maintain lower premiums across the marketplace
"Preexisting relationships" with providers who serve lower-income populations is advantageous and adds to member volume
This is true for providers as well, who gain leverage from existing contracts
Managed Medicaid plans often have lower administrative costs and more utilization controls, which give their commercial-only counterparts more runway to adopt
The dynamics answer an important question, one that could be framed: What is the business model of plans that know how to succeed on the ACA marketplace? Consistent marketplace participation is another important consideration for Nevada's new Public Option success. Beginning in 2021, three or more plans participated in the marketplace for the first time since 2015. Only one to two plans participated in most of the state between 2016–2019 with a portion of the Las Vegas Metropolitan Statistical Area (MSA) flip-flopping between lesser and fewer plans over time.
While the ship may have sailed given that SB 420 is now law, implementation will reinvigorate discussion that could lead to compromise. Pre-passage proposals from opponents included:
Enrolling Nevadans in existing, subsidized programs they are already eligible for. However, plans and other opponents—including AHIP—contend that the sliver would still be just a sliver and that state policymakers should "focus on getting the most vulnerable populations enrolled in the affordable coverage that is currently available." This includes the 65% of Nevadans who are eligible for but not enrolled in either Medicaid or a current zero-cost exchange plan. Conversely, and accurately, "[t]here is simply a portion of the population who will not enroll."
Along these lines, providing additional State-initiated subsidies or initiatives to support existing options. These include a 1332 waiver or a more automated eligibility process for Medicaid and Exchange plans, encouraging easier enrollment.
With the Public Option, the state could largely be hedging its bets and creating a more permanent, homegrown solution if exchange-plan subsidy increases disappear after 2022 and in light of past perpetual challenges to the ACA. The latter may be waning, however, given the Supreme Court's June 2021 ruling that essentially dismissed the latest challenge because the plaintiffs' claims lacked merit of injury.
Conversely, claims that the Public Option would erode the stability of current marketplace and employee plans may be exaggerated. Is that likely to occur if all 0.5% of eligible Nevadans (less than 15,000 people—many of whom may be unemployed and not receiving company coverage)—are enrolled in the Public Option? The Public Option could increase awareness of and enrollment in the existing Medicaid and exchange plans which may appear more trusted by comparison—particularly given Medicaid’s continuously open eligibility period and recent marketplace open enrollment extensions.
So, will what happens in Nevada stay in Nevada or will others join the Silver State and its predecessors (Washington and Colorado) in these stop-gap efforts? It will be a space worth watching as Nevada lawmakers, payers, and providers come to the bidding and bargaining table later this year.
