Key Trends For Payers And Providers In 2023

Healthcare stakeholders offer their 2023 predictions | Modern Healthcare

Source: Healthcare Dive, by Samantha Liss

Providers will be forced to navigate a challenging year as they try to rein in expense growth fueled by pandemic-driven labor shortages.

This year’s outlook for a large chunk of the healthcare sector remains negative as inflation and pricier labor create difficult operating conditions for nonprofit providers, Moody’s Investor Service said.

As a result, health systems and hospitals are likely to clash with insurers over desired rate increases to offset higher expenses and providers will look to increase their revenue as much as possible by bargaining for higher rates.

Even though insurers have fared better than their provider counterparts, companies are still expected to face some headwinds this year. Still, Fitch Ratings says the 2023 outlook for the insurance sector is neutral.

A recession could also take a bite out of enrollment at the same time the government is poised to roll back consumer protections that kept millions enrolled in government-sponsored plans during the COVID-19 pandemic.

Losing members could put downward pressure on both the top and bottom line for insurers, analysts said.

Providers likely to push for rate increases

How much will healthcare prices increase in 2023?

“That’s by far and away the number one thing that we all want to know about,” said Kevin Holloran, senior director of U.S. Public Finance at Fitch Ratings.

Providers feeling the pinch are going to fight for rate increases in contracts that come due this year, Holloran said, adding that the two sides are “wildly apart” so far, according to his discussions with providers.

This year will be contentious as providers may opt to play hardball in bargaining for better prices and may walk away during negotiations, leading to out-of-network periods for patients, he said.

“It’s going to be very bumpy, very contentious this year,” Holloran said, characterizing 2022 as a terrible year for most providers.

Unlike other industries, many healthcare providers were unable to raise rates as inflation soared to record highs. Providers are locked into multi-year payment deals with insurers, bolstering their desire for higher rates in coming years.

Labor pains continue

Labor shortages and pricey contract rates are continuing to strain providers, contributing in large part to mounting financial pressures.

High labor costs have made it harder for hospitals to post positive margins, Erik Swanson of hospital consultancy Kaufman Hall recently said in the firm’s latest flash report.

“The big push is to get the agency contract labor costs out,” said Suzie Desai, senior director at S&P Global Ratings.

Some of the nation’s most recognized health systems were dragged into the red last year, weighed down by increased labor costs, including Mass General BrighamCleveland Clinic and Intermountain Healthcare.

The shortage is driven in part by burned out nurses who have left the bedside for other positions — or the industry entirely. Providers have had to turn to staffing firms to help fill the gap, with agencies commanding high rates amid demand to fill openings.

Hospitals are not the only facilities short on workers. Effects of nursing home shortages are rippling throughout the sector. Patient hospital stays are unnecessarily longer as nursing homes struggle to take on more patients without more staff, serving as an added financial burden for hospitals.

Eyes on utilization and commercial enrollment as possible recession looms

Some eonomists are expecting a recession to squeeze the U.S. economy this year and potentially spur job losses.

As a result, insurers may see a dip in enrollment, leading patients to think twice about seeking out healthcare services.

Health insurance coverage in the U.S. is tightly linked to employment, so job losses could pose a financial headwind for insurers if they result in coverage losses.

Patients may be reluctant to spend money on copays and deductibles for healthcare services as the threat of a recession looms, especially as record-high inflation grabs a larger chunk of American paychecks.

“Healthcare dollars are getting squeezed out of peoples’ budgets,” Jefferies Analyst Brian Tanquilut said.

Consumer confidence will also influence healthcare utilization, he added.

At one of the largest hospital chains, HCA Healthcare, volumes for this year are expected to be lower than historical averages, Tanquilut said.

However, the so-called tridemic — RSV, the flu and COVID-19 — could inflate volumes, especially if outbreaks are more severe.

Medicaid enrollment expected to drop after pandemic protections end

Pandemic protections shielded millions from losing health insurance at the onset of the COVID-19 pandemic.

As a result, enrollment in Medicaid soared, increasing 27% to cover more than 90 million people, with states barred from removing people from the program due to the public health emergency.

Those pandemic protections are set to end in 2023, threatening to cut off access to care for millions. An estimated 5 million to 14 million are expected to lose coverage as states resume eligibility checks, according to the Kaiser Family Foundation.

For insurers like Centene and Molina, prior revenue gains, as a result of the pause on eligibility checks, are expected to deflate.

Analysts are keeping a close eye on how many members insurers will be able to convert from the Medicaid program to Affordable Care Act exchange plans.

Home health push continues

Health insurers continued to place bets on the home health sector, an area that will remain a key focus in 2023.

“The crux of health insurance is keeping costs down,” said Dean Ungar, an analyst at Moody’s Investors Service.

Home health aides have a unique advantage to temper costs by working in a member’s home, enabling them to ensure people are taking needed medications and checking on other factors that influence a person’s health.

“They can identify things that can prevent emergency room visits by just being proactive,” Ungar said.

Some of the largest payers placed big bets on home health in 2022.

UnitedHealth Group signed a $5.4 billion deal to acquire home health provider LHC Group. The transaction is expected to close early this year.

CVS signed an $8 billion deal to acquire home health provider Signify, beating out other potential acquirers, including Amazon.

These moves follow Humana’s bid for home health giant Kindred. Humana acquired the remaining stake of Kindred in 2021 for $5.7 billion.

Medicare Advantage expected to surpass enrollment milestone

Medicare Advantage enrollment is expected to reach a milestone this year, exceeding 50% of the total Medicare population in 2023.

This change impacts providers too, as reimbursements rates can vary.

Enrollment in MA plans has more than doubled since 2007, according to the Kaiser Family Foundation. Still, the program has faced continued criticism over financial incentives to make members appear sicker in order to increase monthly capitation rates.

“I think the reason this is important is because it’s really a restructuring of the Medicare program,” said Jeannie Fuglesten Biniek of Kaiser Family Foundation. “As Medicare Advantage Plans play a bigger role, we see that there’s just a lot more variation introduced into what it means to have Medicare coverage.”

Will Your Smartphone Be the Next Doctor’s Office?

Will Your Smartphone Be the Next Doctor's Office? | Kaiser Health NewsSource: Kaiser Health News, by Hannah Norman

The same devices used to take selfies and type out tweets are being repurposed and commercialized for quick access to information needed for monitoring a patient’s health. A fingertip pressed against a phone’s camera lens can measure a heart rate. The microphone, kept by the bedside, can screen for sleep apnea. Even the speaker is being tapped, to monitor breathing using sonar technology.

In the best of this new world, the data is conveyed remotely to a medical professional for the convenience and comfort of the patient or, in some cases, to support a clinician without the need for costly hardware.

But using smartphones as diagnostic tools is a work in progress, experts say. Although doctors and their patients have found some real-world success in deploying the phone as a medical device, the overall potential remains unfulfilled and uncertain.

Smartphones come packed with sensors capable of monitoring a patient’s vital signs. They can help assess people for concussionswatch for atrial fibrillation, and conduct mental health wellness checks, to name the uses of a few nascent applications.

Companies and researchers eager to find medical applications for smartphone technology are tapping into modern phones’ built-in cameras and light sensors; microphones; accelerometers, which detect body movements; gyroscopes; and even speakers. The apps then use artificial intelligence software to analyze the collected sights and sounds to create an easy connection between patients and physicians. Earning potential and marketability are evidenced by the more than 350,000 digital health products available in app stores, according to a Grand View Research report.

“It’s very hard to put devices into the patient home or in the hospital, but everybody is just walking around with a cellphone that has a network connection,” said Dr. Andrew Gostine, CEO of the sensor network company Artisight. Most Americans own a smartphone, including more than 60% of people 65 and over, an increase from just 13% a decade ago, according the Pew Research Center. The covid-19 pandemic has also pushed people to become more comfortable with virtual care.

Some of these products have sought FDA clearance to be marketed as a medical device. That way, if patients must pay to use the software, health insurers are more likely to cover at least part of the cost. Other products are designated as exempt from this regulatory process, placed in the same clinical classification as a Band-Aid. But how the agency handles AI and machine learning-based medical devices is still being adjusted to reflect software’s adaptive nature.

Ensuring accuracy and clinical validation is crucial to securing buy-in from health care providers. And many tools still need fine-tuning, said Dr. Eugene Yang, a professor of medicine at the University of Washington. Currently, Yang is testing contactless measurement of blood pressure, heart rate, and oxygen saturation gleaned remotely via Zoom camera footage of a patient’s face.

Judging these new technologies is difficult because they rely on algorithms built by machine learning and artificial intelligence to collect data, rather than the physical tools typically used in hospitals. So researchers cannot “compare apples to apples” with medical industry standards, Yang said. Failure to build in such assurances undermines the technology’s ultimate goals of easing costs and access because a doctor still must verify results.

“False positives and false negatives lead to more testing and more cost to the health care system,” he said.

Big tech companies like Google have heavily invested in researching this kind of technology, catering to clinicians and in-home caregivers, as well as consumers. Currently, in the Google Fit app, users can check their heart rate by placing their finger on the rear-facing camera lens or track their breathing rate using the front-facing camera.

“If you took the sensor out of the phone and out of a clinical device, they are probably the same thing,” said Shwetak Patel, director of health technologies at Google and a professor of electrical and computer engineering at the University of Washington.

Google’s research uses machine learning and computer vision, a field within AI based on information from visual inputs like videos or images. So instead of using a blood pressure cuff, for example, the algorithm can interpret slight visual changes to the body that serve as proxies and biosignals for a patient’s blood pressure, Patel said.

Google is also investigating the effectiveness of the built-in microphone for detecting heartbeats and murmurs and using the camera to preserve eyesight by screening for diabetic eye disease, according to information the company published last year.

The tech giant recently purchased Sound Life Sciences, a Seattle startup with an FDA-cleared sonar technology app. It uses a smart device’s speaker to bounce inaudible pulses off a patient’s body to identify movement and monitor breathing.

Binah.ai, based in Israel, is another company using the smartphone camera to calculate vital signs. Its software looks at the region around the eyes, where the skin is a bit thinner, and analyzes the light reflecting off blood vessels back to the lens. The company is wrapping up a U.S. clinical trial and marketing its wellness app directly to insurers and other health companies, said company spokesperson Mona Popilian-Yona.

The applications even reach into disciplines such as optometry and mental health:

  • * With the microphone, Canary Speech uses the same underlying technology as Amazon’s Alexa to analyze patients’ voices for mental health conditions. The software can integrate with telemedicine appointments and allow clinicians to screen for anxiety and depression using a library of vocal biomarkers and predictive analytics, said Henry O’Connell, the company’s CEO.
  • * Australia-based ResApp Health got FDA clearance last year for its iPhone app that screens for moderate to severe obstructive sleep apnea by listening to breathing and snoring. SleepCheckRx, which will require a prescription, is minimally invasive compared with sleep studies currently used to diagnose sleep apnea. Those can cost thousands of dollars and require an array of tests.
  • * Brightlamp’s Reflex app is a clinical decision support tool for helping manage concussions and vision rehabilitation, among other things. Using an iPad’s or iPhone’s camera, the mobile app measures how a person’s pupils react to changes in light. Through machine learning analysis, the imagery gives practitioners data points for evaluating patients. Brightlamp sells directly to health care providers and is being used in more than 230 clinics. Clinicians pay a $400 standard annual fee per account, which is currently not covered by insurance. The Department of Defense has an ongoing clinical trial using Reflex.

In some cases, such as with the Reflex app, the data is processed directly on the phone — rather than in the cloud, Brightlamp CEO Kurtis Sluss said. By processing everything on the device, the app avoids running into privacy issues, as streaming data elsewhere requires patient consent.

But algorithms need to be trained and tested by collecting reams of data, and that is an ongoing process.

Researchers, for example, have found that some computer vision applications, like heart rate or blood pressure monitoring, can be less accurate for darker skin. Studies are underway to find better solutions.

Small algorithm glitches can also produce false alarms and frighten patients enough to keep widespread adoption out of reach. For example, Apple’s new car-crash detection feature, available on both the latest iPhone and Apple Watch, was set off when people were riding roller coasters and automatically dialed 911.

“We’re not there yet,” Yang said. “That’s the bottom line.”

Spending Bill Extends Telehealth Coverage For HDHPs Through 2024

Spending bill extends telehealth coverage for HDHPs through 2024 |  BenefitsPRO

Source: BenefitsPRO, by Willa Hart

When the pandemic hit, many measures were implemented to make telehealth more accessible to patients, including a rule in the 2020 CARES Act which says companies could choose to offer telehealth coverage to employees insured under HSA-qualifying high-deductible health plans, even before their deductible was met. Originally intended to expire at the end of 2021, the policy was later extended through the end of 2022. Now, it’s been extended a second time, with the most recent government spending bill reinstating the provision through at least December 31, 2024, according to the Society of Human Resource Management.

The recent spending bill also authorized the continued use of telehealth for Medicare patients for two more years, SHRM reports.

“Pre-deductible coverage helps employees because it allows insurance providers to cover telehealth services without requiring a co-pay or deductible upfront,” comments SHRM chief of staff, head of public affairs, and corporate secretary Emily Dickens, in their coverage of the change. “Employers need the flexibility to design benefit plans that improve employees’ wellbeing and help retain top talent.”

 

According to the Kaiser Family Foundation, around 17% of companies who provide health insurance to employees offered HSA-qualifying HDHPs in 2021. HSA-qualifying HDHPs are particularly popular amongst companies with over 200 employees, more than half of whom offer these high-deductible plans, per KFF.

Likewise, as high deductible health plans are growing in popularity, so is telehealth. Nearly a quarter of all respondents to a 2021 government survey say they had used telehealth services within the last month, with Medicare and Medicaid users reporting even higher usage rates of 27.4% and 29.3% respectively.

But there are some concerns about telehealth services, including its accessibility: promoted by some as telehealth’s biggest virtue, ease of access has led others to worry about opportunities for fraud and spiking costs, according to Mercer.

Last Updated 01/25/2023

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