Chris Galanos, Director of Medical Services, Advanced Plan for Health
Our customers and partners rely on us to keep our finger on the pulse of what’s coming in the marketplace, and what we’re seeing trend within the member population in our Poindexter advanced and predictive analytics platform.
I recently performed a market scan and Poindexter information synthesis in support of providing a read-out on 2019 Medical Cost trend predictions, and felt it would be helpful to share a summary via the APH blog.
According to the PwC Medical Cost trend: Behind the numbers 2019 research, medical cost trend fell for seven years (2007-2014) before stabilizing at the 6 percent mark in 2018. That same stability is predicted by them for 2019 as well. Stability doesn’t equate to sustainability here. These are still unsustainable rates.
PwC recommends that “Efforts to cut utilization have run their course. Prices have continued to grow. To drive medical cost trend down, employers should tackle prices. These efforts should address more than just drug prices, which have been the focus of attention in the last several years.”
The report went on to say that “Healthcare expenditures as shares of GDP and wages have doubled since the 1980s.” Despite more consistent trends, the cost of healthcare continues to grow both as a share of the US economy and as a part of employee compensation. “National health spending has grown from an average of under 6 percent of gross domestic product (GDP) in the 1960s to a projected average of nearly 18 percent for the decade ending in 2020. Similarly, employer health spending has grown from 6 percent of total wages in 1988 to more than 12 percent in 2018.” They attribute this to the growth of healthcare prices as well as growth of utilization in medical as well as pharmacy – particularly expensive newer services and medications.
PwC further reported that “increases in disposable personal income have historically led to healthcare spending increases via increased utilization.” They demonstrated that disposable personal income is on the rise and they project that this indicates increased healthcare spend into 2020 and even 2021.
They highlighted three Healthcare Inflators for 2019 as:
Care Anywhere and Everywhere
Due to increased pressure from consumers for convenient access to care
Opens up more ways to receive healthcare
Short term result will likely be increased utilization, but long-term goal is decreased spend
Highlighting large-scale mergers between plans, PBMs and providers
Could result in price increases with competition decreases
Physician consolidation and employment
With more doctors as employees vs in private practice
Tends to drive higher prices
They covered three factors deflating prices in 2019 as well:
Predictions less severe in 2019
Leading to decrease in care utilization
Concierge-level consumer support for services
Delivering higher levels of engagement and guidance
Potentially leading to better quality at a lower cost
High Performance Networks
Limited provider networks with an emphasis on quality of care
Leading to higher customer satisfaction and potential for cost savings
Some employers beginning to form relationships directly with providers
The report covered recurring forces affecting medical cost trend that are expected to continue to influence in 2019
New health technologies and innovations – which can improve outcomes and satisfaction, but can come at a higher cost
Rising costs of specialty drugs and gene therapies
Continued changes in government regulation
Continued expansion of value-based payment models
And also covered economy-wide recurring cost drivers
The continued aging of Baby Boomers and related rising healthcare needs and costs
Social factors of health that impact utilization
The Continued Contribution of Virtual Healthcare
More and more of our clients are coming to rely on virtual doctor and behavioral health visits to bend their healthcare trend in many areas.
Healthcare IT News published the following information from Teladoc: "Increasingly, people who are suffering from behavioral health disorders are recognizing that virtual care can often be a highly effective solution. About 42 million Americans have anxiety disorders, and more than 16 million suffer from major depression. But most haven't received treatment in the prior year."
This is very concerning since “in the U.S., 70 percent of people with a behavioral health issue also have a medical comorbidity. For those dealing with multiple conditions, such as hypertension and depression, a single point of virtual access to answers to their healthcare needs means improved outcomes through better care coordination.”
With Mental Health among the costliest conditions and spend at $210B annually
Widespread Misdiagnosis and Waste
47% misdiagnosis rate
Limited Access to Care
65 million in the U.S. living in a primary care desert
Average wait times of 25 days for a behavioral health appointment
High utilization of internet and mobile devices
75% would use these means to receive more prompt care
They further covered many barriers to accessing behavioral healthcare that can be solved via virtual behavioral health:
Stigma and lack of anonymity
Lack of providers and related wait times
Inconvenience of in-office visits
Other challenges such as misdiagnosis, inadequate treatment, poor coordination, lack of integration and overutilization of drugs.
Trends APH is Seeing Within our Client Base
The experience of Advanced Plan for Health’s clients reflects the causal affects associated with the trends mentioned above. However, through our advanced and predictive analytics that uncover high risk trends within a customer’s population, efforts can be made to mitigate, if not, eliminate the negative impact on members and medical expense.
Our Poindexter analytics system points to opportunities to bend the medical cost trend such as – potential for benefit design changes, addressing member lifestyle habits, care / disease /utilization management intervention and member advocacy. Analytics insight also guides client conversations related to PBM pricing in areas such as specialty drugs and the opioid crisis.
These potential solutions are easy to rattle off, but take diligence, discipline, and dependency across all members and stakeholders within a client’s menu of services (DM, CM, UM, etc). The starting point to spur all of these actions is effective current state and predictive analytics based on core data such as medical and pharmacy claims, labs, biometrics, vision, dental and health risk assessments.
Contact us if you’d like to learn more about how our Poindexter advanced and predictive analytics platform can deliver the macro to micro-level visibility you need to identify and address areas that negatively impact the trend within your population.