Category Archives: Health Policy

The Rising Crisis of Underinsurance: How the Biden Administration May Shape Inequities in Patient Affordability

Posted on by • Posted in ACA, Employer-Based Health Insurance, Health Equity, Health Inequity, Health Insurance Benefit Design, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, Out of Pocket Expenses, Public Option, Underinsured, Uninsured • Leave a comment
The Rising Crisis of Underinsurance: How the Biden Administration May Shape Inequities in Patient Affordability
Image result for Health Underinsurance

The Affordable Care Act (ACA) made historic strides in expanding access to health insurance coverage by covering an additional 20 million Americans. President Joe Biden ran on a platform of building upon the ACA and filling in its gaps. With Democratic majority in the Senate, aspects of his health care plan could move from idea into reality.

The administration’s main focus is on uninsurance, which President Biden proposes to tackle in three main ways: providing an accessible and affordable public option, increasing tax credits to help lower monthly premiums, and indexing marketplace tax credits to gold rather than silver plans.

However, underinsurance remains a problem. Besides the nearly 29 million remaining uninsured Americans, over 40% of working age adults are underinsured, meaning their out-of-pocket cost-sharing, excluding premiums, are 5-10% of household income or more, depending on income level.

High cost-sharing obligations—especially high deductibles—means insurance might provide little financial protection against medical costs beneath the deductible. Bills for several thousand dollars could financially devastate a family, with the insurer owing nothing at all. Recent trends in health insurance enrollment suggest that uninsurance should not be the only issue to address.

A high demand for low premiums

Enrollment in high deductible health plans (HDHP) has been on a meteoric rise over the past 15 years, from approximately 4% of people with employer-sponsored insurance in 2006 to nearly 30% in 2019, leading to growing concern about underinsurance. “Qualified” HDHPs, which come with additional tax benefits, generally have lower monthly premiums, but high minimum deductibles. As of 2020, the Internal Revenue Service defines HDHPs as plans with minimum deductibles of at least $1,400 for an individual ($2,800 for families), although average annual deductibles are $2,583 for an individual ($5,335 for families).

HDHPs are associated with delays in both unnecessary and necessary care, including cancer screenings and treatment, or skipped prescription fills. There is evidence that Black patients disproportionately experience these effects, which may further widen racial health inequities.

A common prescription has been to expand access to Health Savings Accounts (HSAs), with employer and individual contributions offsetting higher upfront cost-sharing. Employers often contribute on behalf of their employees to HSAs, but for individuals in lower wage jobs without such benefits or without extra income to contribute themselves, the account itself may sit empty, rendering it useless.

A recent article in Health Affairs found that HDHP enrollment increased from 2007 to 2018 across all racial, ethnic, and income groups, but also revealed that low-income, Black, and Hispanic enrollees were significantly less likely to have an HSA, with disparities growing over time. For instance, by 2018, they found that among HDHP enrollees under 200% of the federal poverty level (FPL), only 21% had an HSA, while 52% of those over 400% FPL had an HSA. In short, the people who could most likely benefit from an HSA were also least likely to have one.

If trends in HDHP enrollment and HSA access continue, it could result in even more Americans who are covered on paper, yet potentially unable to afford care.

Addressing uninsurance could also begin to address underinsurance

President Biden’s health care proposal primarily addresses uninsurance by making it more affordable and accessible. This can also tangentially tackle underinsurance.

To make individual market insurance more affordable, Biden proposes expanding the tax credits established under the ACA. His plan calls for removing the 400% FPL cap on financial assistance in the marketplaces and lowering the limit on health insurance premiums to 8.5% of income. Americans would now be able to opt out of their employer plan if there is a better deal on HealthCare.gov or their state Marketplace. Previously, most individuals who had an offer of employer coverage were ineligible for premium subsidies—important for individuals whose only option might have been an employer-sponsored HDHP.

Biden also proposes to index the tax credits that subsidize premiums to gold plans, rather than silver plans as currently done. This would increase the size of these tax credits, making it easier for Americans to afford more generous plans with lower deductibles and out-of-pocket costs, substantially reducing underinsurance.

The most ambitious of Biden’s proposed health policies is a public option, which would create a Medicare-esque offering on marketplaces, available to anyone. As conceived in Biden’s proposal, such a plan would eliminate premiums and having minimal-to-no cost-sharing for low-income enrollees; especially meaningful for under- and uninsured people in states yet to expand Medicaid.

Moving forward: A need to directly address underinsurance

More extensive efforts are necessary to meaningfully address underinsurance and related inequities. For instance, the majority of persons with HDHPs receive coverage through an employer, where the employer shares in paying premiums, yet cost-sharing does not adjust with income as it can in the marketplace. Possible solutions range from employer incentives to expanding the scope of deductible-exempt services, which could also address some of the underlying disparities that affect access to and use of health care.

The burden of high cost-sharing often falls on those who cannot afford it, while benefiting employers, healthy employees, or those who can afford large deductibles. Instead of encouraging HSAs, offering greater pre-tax incentives that encourage employers to reabsorb some of the costs that they have shifted on their lower-income employees could prevent the income inequity gap from widening further.

Under the ACA, most health insurance plans are required to cover certain preventative services without patient cost-sharing. Many health plans also exempt other types of services from the deductible – from generic drugs to certain types of specialist visits – although these exemptions vary widely across plans. Expanding deductible-exempt services to include follow-up care or other high-value services could improve access to important services or even medication adherence without high patient cost burden. Better educating employees about what services are exempt would make sure that patients aren’t forgoing care that should be fully covered.

Health insurance is complicated. Choosing a plan is only the start. More affordable choices are helpful only if these choices are fully understood, e.g., the tradeoff between an HDHP’s lower monthly premium and the large upfront out-of-pocket cost when using care. Investing in well-trained, diverse navigators to help people understand how their options work with their budget and health care needs can make a big difference, given that low health insurance literacy is related to higher avoidance of care.

The ACA helped expand coverage, but now it’s time to make sure the coverage provided is more than an unused insurance card. The Biden administration has the opportunity and responsibility to make progress not only on reducing the uninsured rate, but also in reducing disparities in access and patient affordability.

Medicare Cuts Payment to 774 Hospitals Over Patient Complications

Posted on by • Posted in ACA, Health Policy, Health System, Hospital, Hospital Acquired Infections, Hospital Industry, Medicare, Medicare Payment, Medicare Payment Advisory Commission (MedPAC), Quality of Care, Readmission • Leave a comment
https://khn.org/news/article/medicare-cuts-payment-to-774-hospitals-over-patient-complications/
A man in a hospital gown sits on a hospital bed

The federal government has penalized 774 hospitals for having the highest rates of patient infections or other potentially avoidable medical complications. Those hospitals, which include some of the nation’s marquee medical centers, will lose 1% of their Medicare payments over 12 months.

The penalties, based on patients who stayed in the hospitals anytime between mid-2017 and 2019, before the pandemic, are not related to covid-19. They were levied under a program created by the Affordable Care Act that uses the threat of losing Medicare money to motivate hospitals to protect patients from harm.

On any given day, one in every 31 hospital patients has an infection that was contracted during their stay, according to the Centers for Disease Control and Prevention. Infections and other complications can prolong hospital stays, complicate treatments and, in the worst instances, kill patients.

“Although significant progress has been made in preventing some healthcare-associated infection types, there is much more work to be done,” the CDC says.

Now in its seventh year, the Hospital-Acquired Condition Reduction Program has been greeted with disapproval and resignation by hospitals, which argue that penalties are meted out arbitrarily. Under the law, Medicare each year must punish the quarter of general care hospitals with the highest rates of patient safety issues. The government assesses the rates of infections, blood clots, sepsis cases, bedsores, hip fractures and other complications that occur in hospitals and might have been prevented. The total penalty amount is based on how much Medicare pays each hospital during the federal fiscal year — from last October through September.

Hospitals can be punished even if they have improved over past years — and some have. At times, the difference in infection and complication rates between the hospitals that get punished and those that escape punishment is negligible, but the requirement to penalize one-quarter of hospitals is unbending under the law. Akin Demehin, director of policy at the American Hospital Association, said the penalties were “a game of chance” based on “badly flawed” measures.

Some hospitals insist they received penalties because they were more thorough than others in finding and reporting infections and other complications to the federal Centers for Medicare & Medicaid Services and the CDC.

“The all-or-none penalty is unlike any other in Medicare’s programs,” said Dr. Karl Bilimoria, vice president for quality at Northwestern Medicine, whose flagship Northwestern Memorial Hospital in Chicago was penalized this year. He said Northwestern takes the penalty seriously because of the amount of money at stake, “but, at the same time, we know that we will have some trouble with some of the measures because we do a really good job identifying” complications.

Other renowned hospitals penalized this year include Ronald Reagan UCLA Medical Center and Cedars-Sinai Medical Center in Los Angeles; UCSF Medical Center in San Francisco; Beth Israel Deaconess Medical Center and Tufts Medical Center in Boston; NewYork-Presbyterian Hospital in New York; UPMC Presbyterian Shadyside in Pittsburgh; and Vanderbilt University Medical Center in Nashville, Tennessee.

There were 2,430 hospitals not penalized because their patient complication rates were not among the top quarter. An additional 2,057 hospitals were automatically excluded from the program, either because they solely served children, veterans or psychiatric patients, or because they have special status as a “critical access hospital” for lack of nearby alternatives for people needing inpatient care.

The penalties were not distributed evenly across states, according to a KHN analysis of Medicare data that included all categories of hospitals. Half of Rhode Island’s hospitals were penalized, as were 30% of Nevada’s.

All of Delaware’s hospitals escaped punishment. Medicare excludes all Maryland hospitals from the program because it pays them through a different arrangement than in other states.

Over the course of the program, 1,978 hospitals have been penalized at least once, KHN’s analysis found. Of those, 1,360 hospitals have been punished multiple times and 77 hospitals have been penalized in all seven years, including UPMC Presbyterian Shadyside.

The Medicare Payment Advisory Commission, which reports to Congress, said in a 2019 report that “it is important to drive quality improvement by tying infection rates to payment.” But the commission criticized the program’s use of a “tournament” model comparing hospitals to one another. Instead, it recommended fixed targets that let hospitals know what is expected of them and that don’t artificially limit how many hospitals can succeed.

Although federal officials have altered other ACA-created penalty programs in response to hospital complaints and independent critiques — such as one focused on patient readmissions — they have not made substantial changes to this program because the key elements are embedded in the statute and would require a change by Congress.

Boston’s Beth Israel Deaconess said in a statement that “we employ a broad range of patient care quality efforts and use reports such as those from the Centers for Medicare & Medicaid Services to identify and address opportunities for improvement.”

UCSF Health said its hospital has made “significant improvements” since the period Medicare measured in assessing the penalty.

“UCSF Health believes that many of the measures listed in the report are meaningful to patients, and are also valid standards for health systems to improve upon,” the hospital-health system said in a statement to KHN. “Some of the categories, however, are not risk-adjusted, which results in misleading and inaccurate comparisons.”

Cedars-Sinai said the penalty program disproportionally punishes academic medical centers due to the “high acuity and complexity” of their patients, details that aren’t captured in the Medicare billing data.

“These claims data were not designed for this purpose and are typically not specific enough to reflect the nuances of complex clinical care,” the hospital said. “Cedars-Sinai continually tracks and monitors rates of complications and infections, and updates processes to improve the care we deliver to our patients.”

Why Biden Has a Chance to Cut Deals With Red State Holdouts on Medicaid

Posted on by • Posted in ACA, Essential Health Benefits, Health Insurance Coverage Adequacy, Health Policy, Medicaid, Medicaid Block Grants, Medicaid Expansion, Preexisting Conditions, Public Option, Underinsured, Uninsured • Leave a comment
https://khn.org/news/article/why-biden-has-a-chance-to-cut-deals-with-red-state-holdouts-on-medicaid/
Image result for medicaid expansion map

President Joe Biden has an unexpected opening to cut deals with red states to expand Medicaid, raising the prospect that the new administration could extend health protections to millions of uninsured Americans and reach a goal that has eluded Democrats for a decade.

The opportunity emerges as the covid-19 pandemic saps state budgets and strains safety nets. That may help break the Medicaid deadlock in some of the 12 states that have rejected federal funding made available by the Affordable Care Act, health officials, patient advocates and political observers say.

Any breakthrough will require a delicate political balancing act. New Medicaid compromises could leave some states with safety-net programs that, while covering more people, don’t insure as many as Democrats would like. Any expansion deals would also need to allow Republican state officials to tell their constituents they didn’t simply accept the 2010 health law, often called Obamacare.

“Getting all the remaining states to embrace the Medicaid expansion is not going to happen overnight,” said Matt Salo, executive director of the nonpartisan National Association of Medicaid Directors. “But there are significant opportunities for the Biden administration to meet many of them halfway.”

Key to these potential compromises will likely be federal signoff on conservative versions of Medicaid expansion, such as limits on who qualifies for the program or more federal funding, which congressional Democrats have proposed in the latest covid relief bill.

But any deals would bring the country closer to fulfilling the promise of the 2010 law, a pillar of Biden’s agenda, and begin to reverse Trump administration efforts to weaken public programs, which swelled the ranks of the uninsured.

“A new administration with a focus on coverage can make a difference in how these states proceed,” said Cindy Mann, who oversaw Medicaid in the Obama administration and now consults extensively with states at the law firm Manatt, Phelps & Phillips.

Medicaid, the half-century-old health insurance program for the poor and people with disabilities, and the related Children’s Health Insurance Program cover more than 70 million Americans, including nearly half the nation’s children.

Enrollment surged following enactment of the health law, which provides hundreds of billions of dollars to states to expand eligibility to low-income, working-age adults.

However, enlarging the government safety net has long been anathema to most Republicans, many of whom fear that federal programs will inevitably impose higher costs on states.

And although the GOP’s decade-long campaign to “repeal and replace” the health law has largely collapsed, hostility toward it remains high among Republican voters.

That makes it perilous for politicians to embrace any part of it, said Republican pollster Bill McInturff, a partner at Public Opinion Strategies. “A lot of Republican state legislators are sitting in core red districts, looking over their shoulders at a primary challenge,” he said.

Many conservatives have called instead for federal Medicaid block grants that cap how much federal money goes to states in exchange for giving states more leeway to decide whom they cover and what benefits their programs offer.

Many Democrats and patient advocates fear block grants will restrict access to care. But just before leaving office, the Trump administration gave Tennessee permission to experiment with such an approach.

“It’s a frustrating place to be,” said Tom Banning, the longtime head of the Texas Academy of Family Physicians, which has labored to persuade the state’s Republican leaders to drop their opposition to expanding Medicaid. “Despite covid and despite all the attention on health and disparities, we see almost no movement on this issue.”

Some 1.5 million low-income Texans are shut out of Medicaid because the state has resisted expansion, according to estimates by KFF. (KHN is an editorially independent program of KFF.)

An additional 800,000 people are locked out in Florida, which has also blocked expansion.

Two million more are caught in the 10 remaining holdouts: Alabama, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Wisconsin and Wyoming.

Advocates of Medicaid expansion, which is broadly popular with voters, believe they may be able to break through in a handful of these states that allow ballot initiatives, including Mississippi and South Dakota.

Since 2018, voters in Idaho, Nebraska, Utah, Oklahoma and Missouri have backed initiatives to expand Medicaid eligibility, effectively circumventing Republican political leaders.

“The work that we’ve done around the country shows that no matter where people live — red state or blue state — there is overwhelming support for expanding access to health care,” said Kelly Hall, policy director of the Fairness Project, a nonprofit advocacy group that has helped organize the Medicaid measures.

But most of the holdout states, including Texas, don’t allow citizens to put initiatives on the ballot without legislative approval.

And although Florida has an initiative process, mounting a ballot campaign there is challenging, as political advertising is expensive. Unlike in many states, Florida’s leading hospital association hasn’t backed expansion.

Another route for expansion: compromises that could win over skeptical Republican state leaders and still get the green light from the Biden administration.

The Obama administration approved conservative Medicaid expansion in Arkansas, which funneled enrollees into the commercial insurance market, and in Indiana, which forced enrollees to pay more for their medical care.

Money is a major focus of current talks in several states, according to health officials, advocates and others involved in efforts across the country.

The health law at first fully funded Medicaid expansion with federal money, but after the first three years, states had to begin paying part of the tab. Now, states must come up with 10% of the cost of expansion.

Even that small share is a challenge for states, many of which are reeling from the economic downturn caused by the pandemic, said David Becker, a health economist at the University of Alabama-Birmingham who has assisted efforts to expand Medicaid in that state.

“The question is: Where do we get the money?” Becker said, noting that some Republicans may be open to expanding Medicaid if the federal government pays the full cost of the expansion, at least for a year or two.

Other efforts to find ways to offset state costs are underway in Kansas and North Carolina, which have Democratic governors whose expansion plans have been blocked by Republican state legislators. Kansas Gov. Laura Kelly this month proposed using money from the sale and taxation of medical marijuana.

Some Democrats in Congress are pushing to revise the health law to provide full federal funding to states that expand Medicaid now. Separately, in the stimulus bill unveiled last week, House Democrats proposed an additional boost in total Medicaid aid to states that expand.

Other Republicans have signaled interest in partly expanding Medicaid, opening the program to people making up to 100% of the federal poverty level, or about $12,900, rather than 138%, or $17,800, as the law stipulated.

The Obama administration rejected this approach, but the idea has gained traction in several states, including Georgia.

It’s unclear what kind of compromises the new administration may consider, as Biden has yet to even nominate someone to oversee the Medicaid program.

Some Democrats say it’s time to give up the search for middle ground with Republicans on Medicaid.

A better strategy, they say, is a new government insurance plan, or public option, for people in non-expansion states, a strategy Biden endorsed on the campaign trail.

“Democrats can no longer countenance millions of Americans living in poverty without insurance,” said Chris Jennings, a Democratic health care strategist who worked in the White House under Presidents Bill Clinton and Barack Obama and served on Biden’s transition team.

“This is why the Biden public option or other new ways to secure affordable, meaningful care should become the order of the day for people living in states like Florida and Texas.”

Uninsured rates among young people dropped under ACA: Urban Institute

Posted on by • Posted in ACA, Access & Quality of Healthcare, Essential Health Benefits, Health Equity, Health Insurance Coverage Adequacy, Health Policy, Medicaid, Medicaid Expansion, Preexisting Conditions, Underinsured, Uninsured, Vulnerable Populations • Leave a comment
https://www.fiercehealthcare.com/payer/uninsured-rates-among-young-people-dropped-under-aca-urban-institute?mkt_tok=eyJpIjoiTURSaU16RmxOR0prWm1VMyIsInQiOiJxWmphemtCdVFZOFhzMFFaUXREQkJZd29veTJVNnVYc1BVR25nWFd0V28ycUZyK1NRaWxNRG4yNHZtbHNjN2JuVUdvMFNPZUo5aW5DOXpZM2tib0N3K3ZCaEFlQ3U1RG5hbEVpbERycndJSjEyUGxWeXJQR3diT2xCdGw0S1V0WCJ9&mrkid=959610

Young adults were among the most likely to be uninsured prior to the Affordable Care Act, but the law’s Medicaid expansion had a significant impact on those rates, according to a new study.

Research published by Urban Institute, this week shows the uninsured rate for people aged 19 to 25 declined from 30% to 16% between 2011 and 2018, while Medicaid enrollment for this population increased from 11% to 15% in that window.

The coverage increases were felt most keenly between 2013 and 2016, when many of the ACA’s key tenets were carried out, including Medicaid expansion and the launch of the exchanges, according to the study.

“Before the ACA, adolescents in low-income households often aged out of eligibility for public health insurance coverage through Medicaid or the Children’s Health Insurance Program as they entered adulthood,” the researchers wrote. “Further, young adults’ employment patterns made them less likely than older adults to have an offer of employer-sponsored insurance coverage.”

States that expanded Medicaid saw greater declines in the number of young people without insurance, the study found.

On average, the uninsured rates among young people declined from nearly 28% in 2011 to 11% in 2018, according to the analysis. In non-expansion states, however, the uninsured rate decreased from about 33% to nearly 21%.

In expansion states, Medicaid enrollment for people aged 19 to 25 rose from 12% in 2011 to close to 21%, according to the study, while enrollment in non-expansion states remained flat.

Urban’s researchers estimate that Medicaid expansion is linked to a 3.6 percent point decline in uninsurance among young people overall, and had the highest impact on young Hispanic people. Uninsurance decreased by 6 percentage points among Hispanic young people, the study found, and that population had the largest uninsured rate prior to the ACA.

“The effects of Medicaid expansion on young adults’ health insurance coverage and health care access provide evidence of the initial pathways through which Medicaid expansions could improve young adults’ overall health and trajectories of health throughout adulthood,” the researchers wrote.

“Beyond coverage and access to preventive care, Medicaid expansion may affect young adults’ health care use in ways not examined in our report. Thus, ensuring young adults have health insurance coverage and access to affordable care is a critical first step toward long-term health,” they wrote.

How Transparent is Price Transparency?

Posted on by • Posted in Consumerism, Health Insurance Coverage Adequacy, Health Policy, Health System, High Deductible Health Plans, Hospital, Hospital Industry, Market Power, Market Trends, Out of Pocket Expenses, Price Transparency, Rev Cycle Management, Revenue Cycle • Leave a comment

Click to access Industry_Insights_2.17.21.pdf

With nearly 30% of workers now having a high deductible health plan
and a typical family being responsible for on average the first $8,000 of
costs, consumers are increasingly weighing care versus cost.
Historically, with a small copay, you would conveniently take care of an
ailment without shopping around, but with the average person now bearing the brunt of the initial
costs, wouldn’t you want to know how much a service costs and what other providers are
charging before you “buy” the service?


CMS believes “consumers should be able to know, long before they open a medical bill, roughly
how much a hospital will charge for items and services it provides.” Cue the hospital price
transparency rule that just went into effect January 1, 2021. Hospitals are now required to post
their standard charges, including the rates they negotiate with insurers, and the discounted price a
hospital is willing to accept directly from a patient if paid in cash. As a consumer, the intent is to
make it “easier to shop and compare prices across hospitals and estimate the cost of care before
going to the hospital.”


There are a few different angles to analyze here:


Are hospitals following the rules?

Each hospital must post online a comprehensive machine readable file with all items and services, including gross charges, actual negotiated prices with insurers, and the cash price for patients who are uninsured. Additionally, hospitals must post the
costs for 300 common “shoppable” services in a “consumer-friendly format.” Some hospitals and
health systems have done a good job at posting these prices in a digestible format, like the
Cleveland Clinic or Sutter Health, but others have posted complicated spreadsheets, relied on
online cost estimator tools, or simply not posted them at all. An analysis from consulting firm
ADVI of the top 20 largest hospitals in the U.S. found that not all of them appeared to completely
comply with this mandate. In some instances, data was not able to be downloaded in a useable
format, others did not post the DRG or service codes, and the variability in the terms/categories
used simply created difficulty in comparing pricing information across hospitals. CMS has stated
that a failure to comply with the rules could result in a fine of up to $300 per day. As with most
new rules, there are growing pains, and hospitals will likely get better at this over time, assuming
the data is being used for its original intent.


Is this helpful to consumers?

Consumers will able to see the variation in prices for the exact
same service or procedure between hospitals and get an estimate of what they will be charged
before getting the care. But how likely is the average person to go to their hospital’s website, look
at a price, and change their decision about where to get care? In addition, awareness of these
price transparency tools is still low among consumers. Frankly, it is competitors and insurers that
have been first in line to review the data. Looking through a number of hospital websites, and even certain state agency sites that have done a good job at summarizing the costs, like Florida Health Price Finder, the price transparency tools are helpful, but appear to be much more suited for relatively standardized services that can be scheduled in advance, like a knee replacement. It’s highly unlikely you will be telling your ambulance driver what hospital to go to based on cost while in cardiac arrest…Plus, it’s all still confusing – even physicians have shared their bewilderment, when trying to decipher and compare pricing. Conceptually, price transparency should be beneficial to consumers, but it will take time; and it will need to involve not just the hospitals posting rates, but the outpatient care facilities as well. Knowing what you will pay before you decide to go to a physician’s office or a clinic or an urgent care or an ED will hopefully help drive consumers to make more educated decisions in the future.


Will this ultimately drive down costs?

I sure hope so. Revealing actual negotiated prices between hospitals and insurers should
push the more expensive hospitals in the area to reduce prices, especially if consumers start using the other hospitals, instead.
However, it could also have an inverse effect, with lower cost hospitals insisting on a payment increase from insurers; thereby driving up costs. In the end, as has historically been the case, the market power of certain providers will likely dictate the direction of costs in a given region. That is, until both price AND quality become fully transparent and the consumer is armed with the tools to shop for the best care at the lowest cost – consumerism here we come.

Molina expects utilization to remain depressed in 2021

Posted on by • Posted in ACA, Deferred Healthcare, Health Insurance Industry, Health Policy, Market Trends, Medicaid, Medicaid Expansion, Pandemic, Utilization Trends • Leave a comment

https://www.healthcaredive.com/news/molina-expects-utilization-to-remain-depressed-in-2021/594895/

Dive Brief:

  • Molina’s net income fell sharply in the fourth quarter as the insurer was forced to refund rates to some of its state partners as COVID-19 continues to depress normal care utilization, CEO Joe Zubretsky told investors Thursday.
  • Although utilization remained curtailed, COVID-19 costs were higher in the fourth quarter than any other quarter in 2020, Zubretsky said. As such, Molina’s medical care ratio for the quarter increased to 90.8% from 86% the prior-year period.
  • Still, Molina remained in the black for the full year of 2020. Looking ahead, the company expects utilization to improve, though does not expect it to rebound entirely. At the same time, the company expects direct COVID-19 costs to come in lower than last year.

Dive Insight:

Insurers have largely remained unbruised from the pandemic, unlike some providers, but the fourth quarter was a different story.

The pandemic took a bite out of Molina’s net income in the fourth quarter as the company reported that figure fell to $34 million from $168 million in Q4 2019.

The biggest contributor to the impact on the bottom line was Medicaid refunds to states, including California, Michigan and Ohio. States have clawed back some of the money they pay insurers like Molina as members continue to defer care, which is a benefit to insurers as they then pay out less.

Molina painted a clearer picture of this scenario during Thursday’s conference call with investors.

For the full year, Molina estimated that medical cost suppression amounted to $620 million while direct COVID-19 costs amounted to $200 million. In other words, curbed utilization continued to outweigh direct COVID-19 costs, resulting in a $420 million benefit from the pandemic, which the company characterized as a surplus.

But states took back a total of $565 million through rate refunds. Overall, the net impact of COVID-19 was a $180 million hit to Molina for 2020 when factoring in other costs.

Looking ahead, executives seemed cautiously optimistic for 2021 but noted headwinds from the pandemic will persist. While the forecast reflects future growth, Zubretsky said, “it is a constrained picture” of the company’s potential earnings.

Some of those headwinds include Medicare risk scores that don’t fully capture the acuity of their Medicare members. As seniors put off care in 2020, companies like Molina were unable to capture diagnosis codes to help them determine how sick members are and the ultimate risk they pose.

Still, there are some bright spots. As the public health emergency is likely to be continued throughout the remainder of the year, it means that redeterminations will remain halted, or, in other words, Medicaid members will not be kicked off coverage.

This was a boon for Molina in 2020, as it allowed them to pick up a significant number of new members. Overall, it was a major catalyst for Medicaid membership growth in 2020, Zubretsky said.

Molina expects care utilization to improve this year but not fully return to normal. Instead, it expects utilization suppression to be about one third of 2020 levels.

Molina, which solely focuses its portfolio on government sponsored and marketplace plans, said it expects to pick up as many as 30,000 additional members during the Affordable Care Act special enrollment period.

Opening up a special enrollment period was one of the first moves made by the new administration in the White House. Zubretsky seems enthused by the recent moves through executive orders and the unfolding bill developments in Congress that are looking to raise premium subsidies on the exchanges.

Those early actions “just couldn’t be better for government sponsored managed care, and we’re pleased to see that progress already being made,” Zubretsky said.

Aetna to reenter the Affordable Care Act market

Posted on by • Posted in ACA, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Medicaid, Medicaid Expansion, Supreme Court • Leave a comment

https://www.healthcarefinancenews.com/news/aetna-reenter-affordable-care-act-market

New CVS Health President and CEO Karen Lynch
New CVS Health President and CEO Karen Lynch

The ACA business has improved and Aetna will sell individual coverage in 2022, CEO says.

After a three-year hiatus, Aetna is reentering the Affordable Care Act market.

Karen Lynch, the new president and CEO of CVS Health, said during an earnings call on Tuesday that Aetna will reenter the ACA business. The ACA business has improved, she said, and Aetna will rejoin the ACA marketplace, selling individual coverage in 2022. 

“We’ll accelerate the pace of progress via targeted investments that will drive consumer-focused strategy,” Lynch said. “We will create future economic benefit for CVS Health and its shareholders.”

WHY THIS MATTERS

Aetna said in 2017 that it would leave the market in 2018.

Aetna joined other insurers in leaving or downsizing its footprint as premiums rose and insurers lost money.

The ACA market has grown since the exodus and shown strength in 2021, in lower premiums for consumers, steady enrollment numbers and insurers expanding their marketplace reach.

As COVID-19 has cost many their employer-based health insurance, the Biden Administration has opened a new enrollment period that started on February 15 and goes through May 15.

THE LARGER TREND

President Donald Trump and Congressional GOP members attempted to get rid of the Affordable Care Act that was passed into law by his predecessor, President Barack Obama.

Trump’s successor, President Biden, has promised to strengthen the market, even as the Supreme Court considers whether the ACA law remains valid without the individual mandate’s tax penalty. The Supreme Court is expected to hand down a decision by June.

In 2018, Aetna became part of CVS Health in a $69 billion merger.

Paying due attention to the “why” of strategy

Posted on by • Posted in Alignment, Compelling, Framing, Health Policy, Health System, Hospital, Hospital Industry, Leadership, Leadership Alignment, Leadership Implementation, Leadership Messaging, Leadership Vision, Strategic Alignment, Strategy, Succinct, Vision • Leave a comment

https://mailchi.mp/41540f595c92/the-weekly-gist-february-12-2021?e=d1e747d2d8

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We spend a lot of our time helping health system executives craft and communicate enterprise-level strategy: entering new markets or businesses, developing new services, responding to competitive threats, exploring partnership opportunities. Strategy is about the “what” and “when”—what moves are we going to make, and when is the right time to make them? Answering those questions requires an understanding of industry and market forces, organizational capabilities, and consumer needs. But there’s another important component that often goes missing in the rush to get to the “how” of strategy execution: the “why”.

Yet understanding why we’re pursuing one path and not another is critical for aligning stakeholders: physicians, operators, and (importantly) the board. Joan Didion famously wrote that “we tell ourselves stories in order to live”, and we’d agree; the “why” is about storytelling. What’s the strategic narrative, or story, that frames our intended actions? Making sure that everyone involved—including our patients and consumers—has a clear understanding of why we’re opening a new facility, or launching a new service, or entering into a new partnership, is a key to success.

It’s about sharing the vision of our desired role as a system, and the part we see ourselves playing in improving healthcare. We’re sometimes criticized for spending so much time on “framing” and drawing “pretty graphics”, but we’ve come to believe that the ability to succinctly and compellingly describe the “why” of strategy is as important as coming up with the vision in the first place. And then, of course, delivering on the “why”—a job made easier if all involved are clear on just what it is.

Bolstering coverage availability with consumer education

Posted on by • Posted in ACA, Health Insurance Coverage Adequacy, Health Policy, Medicaid, Medicaid Expansion, Pandemic, Underinsured, Uninsured • Leave a comment

https://mailchi.mp/41540f595c92/the-weekly-gist-february-12-2021?e=d1e747d2d8

Starting next week, millions of uninsured Americans will have the opportunity to sign up for coverage on the federal insurance marketplace, the result of President Biden’s executive order to create a 90-day special enrollment period. The graphic above highlights the potential impact of this enrollment period on the uninsured population.

According to a Kaiser Family Foundation analysis, of the nearly 15M uninsured who are marketplace-eligible, nearly 9M qualify for free or subsidized coverage. Enrollment of these individuals will come with added challenges, as they tend to be less educated, younger, more rural, and less likely to speak English, as compared to the general population. An Urban Institute survey found almost half of uninsured individuals are unfamiliar with marketplace coverage options, and nearly two-thirds lack an understanding of available financial assistance. 

The federal government is dedicating $50M to advertise the special enrollment period, to assist with outreach and education. Given the population most likely to have lost insurance due to the COVID pandemic, this funding will be critical to making sure eligible people take advantage or free or low-cost coverage.