Published in Health Care

Crystal Ball 2019 Health Care Outlook: Transparency, escalating drug costs among top issues for 2019

BY Sunday, December 23, 2018 04:12pm

Health care goes into 2019 facing many of the same issues and trends that have been driving industry change in recent years: the movement to value-based contracting, more use of telemedicine, growing concerns about cybersecurity, and greater price and cost transparency for consumers.

A recent report by Deloitte LLP cited greater collaboration by health systems and health plans on patient care, increased focus on keeping people well rather than just treating illnesses, and the further emergence of medical technology in providing clinical care and accessing care providers as key trends in 2019.


“For the U.S. health care system, as we move toward a financial model that is based on value rather than volume, keeping people healthy and out of the hospital will be key. Rather than seeing people as patients, health systems should treat them more like members — something health plans already do (to varying degrees),”  Steve Burrill, vice chairman and U.S. health care leader for Deloitte, wrote in a recent perspective on the coming year.

Price transparency

Many health insurance carriers and plans such as Grand Rapids-based Priority Health have web-based tools that allow enrollees to look up the estimated cost for a procedure and get some idea of what they can expect to pay out of pocket.

Brian Peters, president and CEO of the Michigan Health & Hospital Association, sees the drive for cost transparency as only growing in 2019 and beyond. Hospitals need to do more in that area, although data nationally indicate the use of cost estimators remains relatively low in the low single digits, Peters said.

Priority Health’s cost estimator has been somewhat of an exception. MiBiz reported at midyear that the health plan’s cost calculator was getting used by about 10 percent of members.

“The general public views this price transparency issue as, ‘Hey, I want to know what am I going to pay if I go to hospital A for this procedure.’ The answer is obviously quite complex, but we have to do a better job of cracking that nut and conveying to our patients, ‘Here’s actually your exposure on these health care options,’” he said. “We haven’t done a very good job in that regard and we need to get our arms around that.”

Peters envisions “disruptors entering the industry to provide more ways for consumers to look up pricing and costs,” and potentially doing for health care what websites such as TripAdvisor and Yelp have done for lodging, restaurants and hospitality.

“I can see some new entrants in this space,” Peters said. “Right now, we’re at the very early stages of this revolution, and those very low usage rates are driven by a number of factors. But if you project out a few years, those numbers will continue to go up as the technology improves and the awareness improves. And, quite frankly, you have a whole younger generation who are not the high utilizers of health care. It’s the 65 and older population that uses the majority of health care.

“They aren’t wired to think the same way as this new generation of ‘I’m going to go on online and research everything at my fingertips.’ They’re demanding that, so it’s easy to project out over time that that’s going to become more of an ingrained feature of the health care system.”

Peters as well expects to see state and federal legislation next year on price transparency in health care, as well as more private-sector action.

High drug costs

The rising cost of prescription drug prices — particularly specialty medications that treat complex diseases — will continue to weigh on the health care industry and get more attention in 2019.

At Grand Valley State University’s recent monthly West Michigan Health Forum, speakers described the complex process of how drug prices are set, a process that involves pharmaceutical companies, pharmacy benefit managers that distribute to retailers, and health insurers. 

While price increases for some drugs “cannot be justified,” there is no single solution for curtailing the trend, said Eric Roath, clinical care coordinator for Grand Rapids-based SpartanNash Co. (Nasdaq: SPTN).

“Drug prices are already high and they look like they’re going to keep getting higher,” Roath said. “Generally speaking, this is not an easy issue. You’re going to have to decide philosophically how we want to address this.”

Speakers at the GVSU event noted that despite the high cost of a drug such as Harvoni — a medication that treats Hepatitis C — specialty medications are now curing previously incurable diseases.

The ability to cure diseases and a particular drug’s value must be considered when addressing high drug costs.

“Now you’re talking about offsets,” said Atheer Kaddis, vice president of pharmacy services at Blue Cross Blue Shield of Michigan. “If you’re curing disease, that’s a tradeoff.”

Lawmakers on both the state and federal level have offered legislation that would create greater transparency on what goes into setting drug prices. Congress also has considered legislation that would allow the federal Centers for Medicare and Medicaid Services to negotiate drug prices with pharmaceutical companies.

Rates moderate

Small employers in Michigan enter 2019 with relative stabilization in health insurance rates.

Under proposals approved in October by state regulators, 2019 rates for the small group market declined an average of 0.3 percent across 17 carriers. Priority Health on average lowered rates 2.6 percent for HMO and point-of-service plans that begin Jan. 1, and posted a 0.8-percent decrease in rates for PPO plans sold by subsidiary Priority Health Insurance Co. for employers with 50 or fewer employees.

Blue Cross Blue Shield of Michigan dropped small group rates an average of 0.1 percent statewide. The insurer’s HMO subsidiary, Blue Care Network, reduced rates 2.7 percent for 2019.

The small group rates for 2019 continued a period of stabilization over the last few years for the market.

Whether that rate stabilization can continue for the small group market remains the unknown, said Dominick Pallone, executive director of the Michigan Association of Health Plans, a trade group that represents HMOs in Michigan.

“Right now, it’s really a best guess,” Pallone said.

The individual insurance market also experienced rate moderation for 2019, although that came after major average increases of 26 percent in 2017 and 16 percent for 2018, Pallone notes. He’d like to see the new governor and state Legislature look at ways to maintain rate stability for the individual insurance market.

“All sides are interested in rate stabilization,” Pallone said.

ACA uncertainty

As the health care industry headed toward the end of 2018, a federal judge in Texas created even greater uncertainty over the ACA and Medicaid expansion. On Dec. 14, Judge Reed O’Connor ruled the individual mandate unconstitutional, making the entire law invalid, although he did not issue an injunction.

Supporters of the ACA vowed to appeal the ruling, which will likely end up before the U.S. Supreme Court.

As that case plays out, there are fewer worries at the state level about legislative rollbacks for Michigan’s Medicaid expansion and the Healthy Michigan Plan. Gov.-elect Gretchen Whitmer was Senate Minority Leader in 2013 when the state Legislature created Healthy Michigan, working with Republican Gov. Rick Snyder to secure passage.

In 2018, the legislature enacted work requirements for Medicaid recipients to meet to maintain coverage eligibility, which Gov. Snyder signed.

Pallone views that move as Republicans in the legislature “taking some ownership of the program themselves.”

“They put their own thumbprint on it,” Pallone said. 

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