In its “2018 Healthcare Industry Outlook,” Avalere predicted a year full of changes to the healthcare system, including a continued move to value-based care, possible attempts to repeal the Affordable Care Act (ACA), mergers and consolidations and technological changes.
Avalere said data reliability and accessibility, including capturing information and creating algorithms, will drive outcomes-based contracting, innovative network design and a transition toward alternative payments models (APMs).
Medicare Advantage (MA) will remain popular with payers, but the end of the individual mandate penalty may cause some insurers to leave the exchanges.
Avalere said the transition to APMs remains steady despite Medicare bundled payment changes and cancellations. Nearly 50% of the largest commercial plans’ medical spend are going to APMs and they plan to increase those percentages. Despite the Trump administration’s move away from mandatory models for Medicare, CMS is creating models to “incorporate drugs and Medicare Advantage,” according to Avalere.
Avalere expects Medicare will continue to nudge providers to manage cost and quality via the Quality Payment Program. “In 2018, these penalties will stiffen with providers being paid based on cost performance for the first time in the program,” the report states.
On the payer side, one of the healthcare stakeholders that will continue to benefit will be Medicare Advantage payers. Avalere expects MA will remain a key growth opportunity for health plans. MA covers 32% of Medicare enrollees in MA, which is an increase from 20% in 2007. Payers have become more interested in MA and that will only intensify through payer successes and a recent CMS proposal to grant MA plans more flexibility to tailor benefit designs “to increase access to services for individuals with certain conditions,” Avalere said.
Avalere predicted health plans will continue to seek more flexibility in MA network design and ways to reduce cost of care. Payers have found success tailoring benefits to meet specific needs of beneficiary groups, including Special Needs Plans. These efforts have led to fewer hospitalizations and readmissions, said Avalere.
While payers have found success in MA, the individual market has not been nearly as stable. Higher premiums, departing payers and lower enrollment all mark issues for the ACA exchanges. The lower enrollments are at least partly because of administration efforts to weaken the program through a shorter open enrollment time and a constant drumbeat criticizing the exchanges and predicting their demise.
The GOP tax bill's repeal of the ACA individual mandate penalty is another problem for the exchanges. Avalere said this may further weaken the exchanges and cause more payers to leave. While some policymakers will continue to take aim at the ACA, others will look for ways to stabilize the market, including a reinsurance program and re-instituting the cost-sharing reduction (CSR) payment program for payers.
Despite its issues, individual insurance continues to roll on with some payers finding success and more government subsidies to reduce lower-income member premiums.
“Enrollment in federally-run insurance exchanges for 2018 fell 5% behind prior years due to a shorter sign-up period and political uncertainty about the ACA. Nonetheless, there continues to be a core group of enrollees — highly subsidized individuals and those with chronic health needs — who underpin the market. As insurers have gained more experience, they have been able to improve their financial performance by pricing products appropriately for the true health needs of the covered population,” Avalere said.
Meanwhile, Avalere expects more payer/provider partnerships in 2018. Payers and providers are no longer stuck in their silos as greater collaboration is becoming the norm in healthcare. These partnerships are especially important in value-based care that utilizes data sharing to track patients.
"In 2018, acceptance of real-world data and evidence to support decision making will continue to grow as payers, manufacturers and providers begin to generate insights that position them to deliver better value to their customers,” Avalere said.