by Leo Tokar, Senior Vice President in the Health Care Practice, Lockton Companies
Featured in the July/August 2015 Colorado Medicine.
In today’s insurance environment, in order to answer the question “how do I care for my patients?” in a way that honors a doctor’s Hippocratic Oath, a physician is often forced to forgo an answer to the business question of “how do I get paid?” The answers to these questions are frequently not aligned. The only certainty is that changes in the insurance markets are forcing physicians to make changes in choosing a business model and with whom the physician will align. Those who don’t choose will inherently be disadvantaged as the pace of change quickens. Those who take a leadership role will adapt more quickly and find ways to be successful.
From HIPAA compliance to meaningful use, there is no shortage of pressure on a practice. However, the greatest pressure is occurring on the health care financing side. A partial list of current insurance trends include the following:
- Narrow and tiered networks.
- ACOs, including financial coordination and sharing of risk.
- Evolving forms of reimbursement.
- Price and quality transparency.
- Cost-based provider steerage.
- Products with increased patient cost-sharing.
In a prior “Final Word,” Jay Want, MD, wrote that health care has benefited from “lack of adult supervision of our spending patterns.” The dizzying myriad of initiatives being thrown at various aspects of health care, particularly the financing side, are meant to compensate for that lack of supervision by engaging all involved parties more meaningfully. Each one of them is somehow flawed, yet each one is a response to the need to better manage the escalating cost of health care.
Nowhere is this more true than in the employer insurance market. Employment-based insurance covers almost 150 million individuals in this country. Arguably, there is no natural connection between employment and health care. Nonetheless, employers are very much a driver of health care financing.
Even though national health expenditures have flattened relative to GDP, midsize to large employers are experiencing 8 percent health benefit cost increases on average (after years of double digit increases), with those numbers expected to pick up in 2016. Premium trends continue to outpace most measures of inflation, wage growth and business revenue growth. Since that type of premium escalation cannot be absorbed year over year, that leaves employers in the difficult position of making changes to their health benefit plans that affect employees and their families. Insurers and third-party administrators become the vehicles through which those changes are implemented.
Employers constantly scan the market, mine their data and push insurers for approaches that can be used to manage costs and provide alternatives to simply reducing benefits or increasing their employees’ benefit costs. In some cases, government programs like Medicare join in driving the market. Many of those approaches come down to making difficult choices for all parties – insurers, physicians, consumers (patients) and employers:
- Insurers are choosing to align with providers, and push alternate reimbursement models.
- Physicians are choosing to align with health systems and with increasingly narrow networks, and to provide greater price and quality transparency.
- Consumers are making trade-offs between premiums and benefit plan richness, breadth of network, cost of procedures and providers.
- Employers, as mentioned, are choosing between subsidizing premiums and shifting costs to employees, offering broad choice or tighter networks, and, among many other trade-offs, between managing costs and simply getting out of providing benefits.
The cost trends will not go away by maintaining the status quo. Those in the provider community who will be most successful will figure out how to manage within this evolving environment while also influencing its direction so that care quality is improved. Some opportunities for CMS and physicians include:
- Taking the lead in defining how quality should be measured in ways meaningful to consumers.
- Aligning with other physicians to present medical neighborhoods that can be used as the basis for narrow networks.
- Choosing business models that allow greater risk-sharing.
- Evaluating insurers based on criteria important to physicians.
- Identifying where practices drive the greatest value, proving it, and promoting themselves.
Health care delivery is driven largely by the physician community. Physicians have significant untapped opportunity to drive the financing side of the industry in a way that preserves their interests while also helping address the pressing cost management needs of the employer and consumer markets.