Care Deferrals, Digital Tools Will Shape 2022 Medical Cost Trend

June 09, 2021 - The medical cost trend for 2022 may not be as high as expected, but it is still higher than the trend from the past few years with the exception of 2021, the PwC Health Research Institute found in its annual medical cost trend report.

The projection for 2022 is a 6.5 percent medical cost trend. In 2021, the trend is expected to hit 7.0 percent.

Prior to 2021, the most recent year that the medical cost trend reached or exceeded 6.5 percent was in 2015 when the medical cost trend was 6.8 percent.

The PwC report outlined three major causes for increased healthcare spending and two trends that are producing downward pressure on spending.

The first factor driving healthcare spending upward is the impact of deferred care during the coronavirus pandemic.

READ MORE: Employers: Healthcare Spending Is on an Unsustainable Trajectory

For example, 52 percent of employer-sponsored health plan members deferred their annual preventive exams and 30 percent deferred routine visits for chronic disease management. Over half of provider participants (52 percent) stated that surgery deferrals were higher than before the pandemic and nearly 40 percent said that they saw a drop in lab tests and screenings.

These deferrals were expected to impact the 2021 medical cost trend, but PwC experts have confirmed that the downstream effects of deferred care will continue to influence the overall healthcare spending trajectory into 2022 as well.

“Go beyond analyzing the impact of worsening population health on spending,” the report recommended to insurers and employers.

After assessing member populations that will see an increase in healthcare spending due to the pandemic’s aftermath, payers should consider spending on chronic disease management programs, mental healthcare benefits, and wellness programming, PwC suggested. Machine learning tools can help payers target the right individuals with their programs.

Payers may also seek to collaborate with pharmaceutical and life sciences companies to deliver mental healthcare digital therapeutics to members.

READ MORE: How Payers Can Identify, Reduce Low Value Care Spending Patterns

Second, after being caught off guard by the coronavirus pandemic, the healthcare industry will invest in protective measures against the next nationwide health emergency in 2022. 

Health systems will purchase or develop new forecasting tools such as real-time data analytics and may alter their supply chains and infrastructures, among other actions. These needed adjustments will likely result in higher prices for insurers and employers.

Payers will need to collaborate well with partners in order to manage costs, PwC emphasized. They can also improve their health equity strategies in response to the pandemic’s impact.

Third, healthcare organizations will invest in better digital tools for patient engagement and care delivery. The coronavirus pandemic exposed a significant portion of the patient population to telehealth. The healthcare industry will try to build on that momentum in 2022.

Providers are on board with increasing digital patient engagement, with 78 percent reporting that they see EHRs as important, 57 percent seeing online patient portals as important, and 52 percent seeing patient medical devices that are integrated with an EHR as important. Also, 44 percent stated that mobile apps are important to helping patients manage their conditions.

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For payers, this means that they can lean into digital tools for care coordination and continuity of care. Customer relationship management (CRM) platforms could be key to that strategy, helping payers assess the patient journey and coordinate appropriately-timed interventions.

“Foundational investments in chatbots and automation can help smooth the experience of members trying to get information on their plans and healthcare costs,” the report added.

Among healthcare spending deflators, payers may find that members are more willing to go to lower-cost sites of care post-pandemic.

As members grow more comfortable with telehealth, urgent care centers, and home healthcare services, payers may find that their savings increase.

Well over three-quarters of participating consumers stated that they would be willing to see an in-home clinician, urgent care, or retail clinic again after their experience with the stated option before or during the pandemic.

If members use the emergency department for non-emergent conditions 10 percent less frequently, employers could save $864 million each year compared to the costs in 2018.

This trend has significant implications for employers in particular as the workplace environment shifts to the home.

“Make sure the care options available to your employees meet evolving preferences and needs,” the report stated. “Employers should continue to encourage appropriate utilization through plan design and effective communication.”

Insurers should emphasize emergency department alternatives through primary care services.

“Integrating telehealth, urgent care, and other visits used in place of ED visits back into primary care will be important to lowering spending and improving members’ health,” PwC explained.

Lastly, the healthcare system can continue to be innovative in order to decrease costs.

Insurers can lean into technology to improve medical and administrative savings, focusing on data and analytics and using the price transparency rule to decrease spending.

Employers can strengthen their understanding of their insurers’ rates compared to other insurers’ rates in order to bolster their negotiations.

Drug spending, cybersecurity spending, and the new surprise billing regulation will all be trends to note in 2022.