The coming year for healthcare will see the industry reckon with some of the massive changes set in motion last year, such as megamergers like CVS-Aetna and Cigna-Express Scripts and a judge's declaration that the Affordable Care Act is no longer constitutional.
On the policy front, newly-installed Democrats in Congress (and the party's 2020 presidential candidates) will be pushing for more comprehensive health coverage plans while the GOP considers tougher Medicaid restrictions at the state, and potentially federal, level.
Meanwhile, some familiar storylines are likely to continue. Effusive digital health funding and increases in mobile and telehealth services show no signs of abating, and neither does general M&A activity.
Here's a snapshot of a few big trends for the payer and provider crowds to watch for in 2019.
Providers: Behavioral care goes primary, investment in digital
1. Narrowing gaps in population, behavioral healthcare
Historically, behavioral health services have been mostly disparate, but increased spending in digital health and a focus on lowering out-of-pocket costs will help spur greater connectivity, Sandra Kuhn, national lead for behavioral health consulting at Mercer, told Healthcare Dive. She predicted "more partnerships between traditional medical and behavioral health carriers on smaller, targeted point solutions" as the industry already began to see last year.
The trend more broadly fits into the push to recognize and act on social determinants of health.
One partnership is the Utah Alliance for the Determinants of Health, a coalition of providers, community organizations and government agencies banding together to reduce the impacts of SDOH. Their plan seeks to address socioeconomic stressors like housing instability, food insecurity and transportation — circumstances with a direct effect on mental and physical health — before patients show up in the ER lobby. Intermountain Healthcare, a primary stakeholder, invested $12 million in the initiative.
Early efforts include experimental EHR technologies, value-based payments for even more population health management programs and wraparound services. Health Affairs highlighted two separate initiatives, each making inroads on social determinants by carrying out existing population health programs in tandem with trusted community partners.
Overall, Kuhn said, more organizations will step up with tactical solutions to what has otherwise been an intractable problem. That includes payers like state Medicaid programs, many of which have begun value-based payments for behavioral health services.
Progress on behavioral and population health is happening in tandem with — or perhaps existing symbiotically alongside — the growth of telemedicine. At Riverside Health System, a rural health network in Newport News, Virginia, a long-term telebehavioral health initiative has improved coordinated care among psychiatrists and clinical social workers, as well as replaced a chunk of services offered at the system's nursing homes.
Riverside isn't the first to find success with telebehavioral health, but the system's wider experimentation with programming, a happy accident triggered by a psychiatrist shortage, has certainly shown there's a market for it — one that Quartet, Lyra and Teladoc have been quick to capitalize on. This year will see a swath of players from across the industry tackle behavioral health gaps by complementing primary care with telemedicine.
2. Doubling down on digital
While larger health systems tend to have the means to be early adopters of new and robust healthcare technologies, physicians are beginning to integrate such services into their practices.
Use of telehealth among the commercially insured has been gradually rising since the mid-2000s, having grown 52% annually from 2005 to 2014 before spiking 261% between 2015 and 2017, according to JAMA.
Revenue cycle management firm SYNERGEN Health estimates digital health tech for remote use will grow by 30% this year, allowing patients to better manage their own healthcare, giving clinicians an opportunity to spend more time with more patients and, of course, generating new revenue streams.
As more payers hop aboard the telemedicine train and more services are covered, hospitals will continue see costs fall. A 2017 report from the Rural Broadband Association found that telehealth services were associated with an annual cost savings of $20,841 per U.S. hospital on average. The caveat here for hospitals is the very real possibility that large facilities will become increasingly more obsolete and overhead costs will become too costly as patients find yet another reason to stay away from their doors.
3. Price transparency still a question mark
Many are hoping the days of the $629 hospital bill for a wet towel and a Band-Aid are coming to an end, but it's not likely to happen in 2019.
Still, legislators and consumers alike are making price transparency an issue in hopes of curbing skyrocketing healthcare costs.
CMS took some action last year by finalizing a new rule mandating hospitals post chargemaster rates online in a machine-readable format. But the rule is effectively toothless. Hospitals were already required to make those prices available, and chargemaster rates only apply to the uninsured and balance billing. And despite the fact that the rule went into effect on the first day of the year, CMS admitted recently that it has no way of enforcing the mandate and would not comment on how many hospitals are currently in compliance with the rule.
"It is [our] expectation that all of them will comply," CMS Administrator Seema Verma said on a call with reporters.
The rule doesn't specify where hospitals need to post their charges. The only requirement is that they're made available online, which has allowed health systems like mega-operator Ascension to bury their charges behind a tangled maze of clicks.
The company has previously defended itself in a statement to Healthcare Dive by arguing the costs can be confusing for patients, as they don't take financial assistance and charity care into consideration. Chargemaster information, as some critics have pointed out, isn't a very useful measure of pricing for consumers. It can actually be counterproductive.
Not very useful, and may actually be misleading, to know "sticker prices" when that's rarely the price that actually gets paid.— (((Martin Gaynor))) (@MartinSGaynor) December 30, 2018
"Hospitals prices going public under new law, but is that a good thing?" https://t.co/aeD77KONbw via @nbcnews
Thomas Lee, chief medical officer at Press Ganey, speaking at the U.S. News Healthcare of Tomorrow conference, said economists don't believe price transparency has a noteworthy impact on cost and efficiency.
"I'm predicting not much will happen and people won't pay attention to it because the charges aren't actually relevant to the vast majority of people," Lee said. "If people are uninsured, I doubt they're looking at these things either."
If the ACA taught economists and legislators anything about American consumers, it's that they want healthcare, but don't want to take the time to shop around for it. In a recent Health Affairs survey, just 13% of respondents responsible for cost-sharing in their last healthcare encounter sought cost information before receiving care. Only 3% compared prices of different providers.
History seems to be repeating itself, as CMS hopes its "first step toward price transparency" will be picked up by market forces. By mandating the information be made available in a different file format, CMS believes it has "set the stage" for that data to be used by private third parties that can develop tools for consumers to use.
"There's nothing in the rule that prevents hospitals from going further with this," Verma said. "Hospitals can do that today."
But they aren't. In fact, the percentage of hospitals unable provide patients with price information jumped from 14% to 44% between 2012 and 2016, according to a JAMA study.
In short, the CMS rule is much more of a light nudge than a forceful shove into price transparency, and without regulation and the means of enforcing it, hospitals have little to no incentive to change. But expect the wheels of the price transparency conversation to continue turning in 2019, regardless.
Payers: Contract fights, a focus on value and more managed care
1. Contentious negotiations and contract disputes
As insurers have bulked up in scale after blockbuster mergers last year, Fitch Ratings expects relationships between providers and payers to be even more contentious during contract negotiations even in a value-based payment setting.
Some recent headline-grabbing squabbles include UnitedHealthcare's contract impasse with Envision Healthcare, an ER staffing firm. Tenet and Cigna’s contract negotiations stalled and finally reached a multi-year deal this year.
Hospitals can also expect low rate increases from commercial insurers, according to Moody's.
In markets where there is a dominant insurer and multiple hospitals, "Each hospital will need to demonstrate why it is indispensable to the insurer ... and why it should be included in a network," Moody's reports.
However, there are potential glimmers of hope. As more states have expanded Medicaid, it puts pressure on other states to do so, which would provide a means of payment for hospitals that have gone without payment caring for the uninsured.
2. Value-based momentum
Payers and providers will continue to enter into value-based contracts in 2019 at varying degrees, according to Moody's.
Many hospitals are engaging in contracts that offer incentives or alternative payment models for reaching certain quality measures, but very few are taking on full risk, or both the upside and downside risks within a contract, according to Moody's.
That will continue into 2019: few are likely to take on downside risk, or the possibility of losing money, Moody's reports.
However, while the popularity and use of these payment models continues, its cost-savings benefits have yet to be realized, according to a recent report.
Meanwhile, CMMI continues to test for ways to drive change in the healthcare by paying for quality as opposed to quantity. For instance, CMMI is testing whether it can reduce utilization and ultimately costs by addressing social-needs such as housing for Medicare and Medicaid beneficiaries. CMMI’s director Adam Boehler said he won't force organizations to take on risk, but will help them take on a level of risk they’re comfortable with.
But in an about-face, the Trump administration seems to be signaling that it may institute mandatory payment models that could put providers at risk of losing money.
3. Medicare Advantage still lucrative, popular
Medicare Advantage will continue to be a profit center for insurers, which typically enjoy a 5% margin, according to 2016 data from the Medicare Payment Advisory Commission.
As the population ages, it presents a growth opportunity for payers. Enrollment in MA plans grew by 8% from 2016 to 2017, according to a recent MedPAC report, as many more seniors are choosing to enroll in plans run by traditional insurers. About 34% of beneficiaries choose MA, a significant increase from a decade ago when just 10% enrolled in such plans.
Beginning this year, MA plans have greater flexibility to offer non-traditional benefits such as adult daycare, meals or in-home care to improve the overall health of patients, particularly those will high needs. CMS Administrator Seema Verma previously said 270 MA plans will offer these new benefits in 2019.
These new benefits also pose an opportunity for nontraditional healthcare companies such as Lyft and Uber, which are looking for ways to shuttle seniors to appointments and pharmacies.
Payers including Cigna touted the future growth opportunity it sees for MA. "We are well positioned today and going forward for existing and new markets," Cigna CEO David Cordani said of MA, according to Forbes.
4. Medicaid managed care growth
As states weigh expanding Medicaid, it's another potential opportunity for managed care plans to contract with states. As more states expand the program, it puts pressure on the remaining holdouts.
Last year, some red states took the issue to the ballot box and got approval for expansion, potentially providing a roadmap for stakeholders to replicate in other states where the legislatures balk at expansion. California Gov. Gavin Newsom is backing an idea that would expand Medicaid eligibility in his state to undocumented young adults, providing another opportunity for Medicaid managed care firms.
Likely potential winners are Centene and Molina. Centene is the nation's largest Medicaid managed care firm with operations in 21 states covering more than 8 million people. Molina serves more than 3 million in 13 states and Puerto Rico.
Just recently, Molina CEO Joseph Zubretsky said even without expansion ushered in by the Affordable Care Act, $1 billion of new revenue opportunity exists in Molina's existing footprint because of states like Illinois that are expanding Medicaid managed care statewide.