ACA, Mergers, Value-Based Care Dominated Payer News in July

August 01, 2016 - Last month, the news cycle was busy for the health insurance industry. Some of the key areas that seemed to make the biggest splash for the health insurance market includes the ongoing disputes regarding the Affordable Care Act and the Department of Justice’s lawsuits against the two major health insurance mergers between Aetna and Humana as well as Anthem and Cigna. Additionally, the ongoing transition to value-based care reimbursement seen among public and private payers continues to make headlines.

Affordable Care Act

Last month, President Barack Obama outlined in The Journal of the American Medical Association (JAMA) some of the key advantages of the Affordable Care Act and the need to expand upon this landmark healthcare legislation. One of the biggest benefits includes the fact that the uninsured rate fell to a mere 9.1 percent in 2015.

The majority of states have expanded their Medicaid programs to eliminate any coverage gaps while young adults could remain insured on their parents’ health plans until age 26 and those with pre-existing conditions are no longer denied medical coverage.

During the Democratic National Convention, a panel of experts spoke about the future of the Affordable Care Act and how the Democratic Party is seeking to strengthen healthcare reform in the coming years.

“I think this has been a remarkable transformational moment in the country [due to the ACA],” former Senator Tom Daschle said at the panel. “The opportunity people have to enter the health insurance market is strong.  The opportunity for young people to get insured under their parents is impressive. Today, we have 21 million Americans who are insured due to the Affordable Care Act.”

“There’s a lot to be proud of but there’s a lot left to do. There’s a lot of work left to be done organizationally around payment reform and healthcare delivery. We’ve got to bring healthier people into the market and work on risk-sharing. We are looking to continue to build, to make the market stronger, and to encourage healthier people to enter the health insurance market,” Daschle concluded.

On the other side of the table sits the Republican Party, which is continually seeking to repeal the Affordable Care Act and has recently put forward a replacement plan for the ACA if the GOP wins the White House. This plan seeks to increase the eligibility age for Medicare, invest in health savings accounts, eliminate Medicaid expansion, and allow payers to sell health plans across state lines.

“There would be less to talk about and less activity if Hillary Clinton wins the White House,” Dr. Josh Luke, Professor at the University of Southern California and former Hospital CEO, told HealthPayerIntelligence.com. “Democrats would continue to push the Affordable Care Act and claim victory. I think tactically what you will see if the Democrats take the White House is a push to revive and tweak the exchanges and claim it was always successful but now they’re even better even though there is evidence to suggest that that program is not the strongest.”

“To date, Trump’s healthcare plan has been very vague. What you expect to see from Donald Trump, he has wanted to enhance privatization of healthcare, which is going to also create additional competition and similar to what you’ve seen in the Medicare Advantage space in recent years.”

Health insurance mergers

There has been wide speculation among healthcare organizations and political figures that the health insurance mergers planned by four of the top five national health payers may actually harm consumer interests and lead to a decrease in competition throughout the insurance market.

In the last weeks of July 2016, the Department of Justice went forward with filing lawsuits against these health insurance mergers to stop the anticompetitive stance from hurting the healthcare needs of Seniors and working families, Principal Deputy Associate Attorney General Bill Baer explained during a press conference.

“These insurance companies are thriving as independent firms. They do not need these deals to survive. These mergers are likely to harm competition [that would affect consumers] including seniors, working families, employers, as well as doctors and hospitals. Each of these deals poses unacceptable risk to competition,” Baer declared during the press conference.

Research from the Center for American Progress has also shown that the mergers would pose problems for Medicare Advantage beneficiaries. Even though Aetna put forward $1 billion in assets for divestment, antitrust attorney David Balto explained that these divestitures would not be enough to counter the significant harm that the health insurance mergers could cause for consumers.

Value-based care payments

Private payers have been following many of the strategies that the Centers for Medicare & Medicaid Services (CMS) has incorporated for decades. Value-based care reimbursement is no different. When CMS began its move toward ensuring half of all Medicare claims are administered in alternative payment models by the end of 2018, private payers have been quickly jumping on the bandwagon and investing in value-based care. For instance, Aetna has formed accountable care organizations and patient-centered medical homes to pay for value instead of volume.

Both the CMS Medicare Shared Savings Program and the Medicare Bundled Payment for Care Improvement (BPCI) program have brought more focus to paying for value and quality of care instead of the quantity of services. Payers who are committed to value-based care should work with their provider network to develop value-based contracts that incentivize providers to take on more financial risk.

“To succeed in bundled payments [and value-based care], payers will need to prepare middle-office and back-office workflows and systems as well as involve multiple departments. Product management, plan management, and contract management are also advised,” Jeff Rivkin, Research Director for Healthcare Payer IT Strategies at IDC Health Insights told HealthPayerIntelligence.com. “Other important factors to consider include care coordination/medical management, provider network management, and provider relations.”

Dig Deeper:

Opposition Increases to Aetna, Anthem Health Insurance Mergers

What Repealing the Affordable Care Act Would Mean for America